29 July 2016
Find out more

Corporate actions impact trading, share prices - study

18 May 2006  |  9768 views  |  0 zeroes

Even routine corporate actions events can have a significant impact on share prices and trading activity, according to research conducted by consultancy Oxera and sponsored by the Depository Trust & Clearing Corporation (DTCC).

The report studied five corporate action event types - takeovers, stock splits, spin offs, rights issues and exchange offers - and how they impacted share prices and trading activity.

The study found that corporate actions have potentially strong effects on share prices and trading activity, although these effects depend on the type of corporate action and the particular point in the corporate action processing cycle. According to the study, takeovers, spin-offs, stock splits and rights issues have the strongest effects, while exchange offers have only a limited impact.

James Femia, managing director, DTCC global corporate actions, says the study highlights the need for firms to make sure that trading desks have access to accurate, timely data on corporate actions in order to execute proper trading strategies.

"What this study demonstrates is that trading can be significantly impacted by even routine announcements, and that organisations need corporate actions information quickly and accurately throughout their operations," he says.

The results of the Oxera survey will be used to develop the DTCC's existing Global Corporate Actions Validation Service.

Femia says trading desks are increasingly pushing for better and more timely data on corporate actions and the DTCC is working on a new service that has an emphasis on speedy delivery of initial announcements information that is customised for trading desks, even if all the data hasn't been verified or completed.

"Traders and investors need early visibility of events. They can't necessarily wait until all the details of the event have been validated and verified," says Femia.

Earlier this week a new working group - jointly chaired by the British Bankers' Association (BBA) and CrestCo - was established to ensure that firms in the UK comply with new pan-European corporate action standards.

Comments: (0)

Comment on this story (membership required)

Finextra news in your inbox

For Finextra's free daily newsletter, breaking news flashes and weekly jobs board: sign up now

Related stories

DTCC hires Tata for corporate actions overhaul

DTCC hires Tata for corporate actions overhaul

15 November 2005  |  10059 views  |  0 comments
JPMorgan puts corporate actions documents on the Web

JPMorgan puts corporate actions documents on the Web

08 June 2005  |  6068 views  |  0 comments
Singapore Exchange to distribute corporate actions via Swift

Singapore Exchange to distribute corporate actions via Swift

08 April 2005  |  6228 views  |  0 comments
CSFB signs to DTCC corporate actions service

CSFB signs to DTCC corporate actions service

01 March 2005  |  7117 views  |  0 comments
Clearstream talks up corporate actions

Clearstream talks up corporate actions

18 January 2005  |  5189 views  |  0 comments
LSE delivers corporate actions data over Swift

LSE delivers corporate actions data over Swift

16 August 2004  |  8336 views  |  0 comments
DTCC issues blueprint for automating corporate actions

DTCC issues blueprint for automating corporate actions

18 June 2003  |  5050 views  |  0 comments
DTCC launches global corporate actions service

DTCC launches global corporate actions service

25 April 2003  |  4026 views  |  0 comments

Related company news

 

Related blogs

Create a blog about this story (membership required)
Visit VocaLink.comFind out moreVisit www.abe-eba.eu

Top topics

Most viewed Most shared
satelliteContactless Bitcoin startup Plutus Tap &am...
9601 views comments | 10 tweets | 4 linkedin
Telefonica Germany launches Fidor-backed mobile banking serviceTelefonica Germany launches Fidor-backed m...
6813 views comments | 16 tweets | 22 linkedin
hands typing furiouslyManaging Big Data After Brexit
5984 views 0 | 6 tweets | 8 linkedin
UK and South Korea build 'fintech bridge'UK and South Korea build 'fintech bridge'
5971 views comments | 13 tweets | 14 linkedin
Finextra paper explores blockchain as an enabler of operational resilienceFinextra paper explores blockchain as an e...
5400 views comments | 12 tweets | 9 linkedin

Featured job


Brussels (Belgium) or Paris (France)

Find your next job