DTCC upgrades global corporate actions validation service
16 January 2004 | 294 views | 0
The Depository Trust & Clearing Corporation (DTCC) today announced the launch of a custodian verification enhancement to its Global Corporate Actions (GCA) Validation Service.
This new feature adds another level of validation for customers by comparing custodians' announcement notifications with announcements generated by the GCA Validation Service to enhance the overall quality of the information.
The GCA Validation Service, which was launched in 2003, provides financial institutions with a comprehensive outsourcing solution, giving them access to a standardized source of accurate and timely corporate action information for securities. It offers customers global coverage, handling securities traded in the Americas, Europe and Asia. The service is provided by Global Asset Solutions LLC, a wholly owned subsidiary of DTCC.
"This enhancement makes GCA Validation unlike any corporate action information service because it takes into account all of the parties involved in the corporate action announcement process," said James Femia, managing director, DTCC Asset Services. "This includes custodians, sub-custodians and central securities depositories, all of which play a vital role providing corporate action information, especially for non-U.S. events."
James McDade, executive director, Operations, UBS Investment Bank, a user of the service, said, "Industry-wide, the amount of risk that corporate action departments deal with on a day-to-day basis is staggering." He noted that UBS considers the service to be a major step toward reducing risk and eliminating a great deal of manual, cumbersome processing associated with multiple custodian and market data notifications.
Managing custodian messages
Every day, financial institutions get hundreds of custodian messages notifying them of corporate action events, such as rights offerings, elective dividends, tender offers, conversions, spin-offs and stock splits. They then compare these notifications against vendor data and other sources, to verify information. The GCA Validation Service's new custodian feature will free customers from this essential, yet labor-intensive work.
"In Europe, we rely heavily on custodians for corporate action information, but the process of sorting out this information can be unwieldy for us," said McDade. "Centralizing the flow of this information at DTCC, an organization that we have confidence in and one that has a deep understanding of the processing complexities of corporate actions, is a benefit for us."
The service analyzes data through an intricate process of mapping, normalizing and consolidating information - generally referred to in the industry as "scrubbing" - from a variety of commercial data providers. A composite record is derived from this process and is enriched with follow-up research by teams of highly skilled professionals in DTCC's New York and London service centers.
"Our goal is to provide our customers with a single right answer on a corporate action," said Femia, "so that they can avoid the manual, time-consuming and risk-prone processing involved in collecting, consolidating and verifying announcement information."