Data Management

Establish reliable data sources: Use at least two independent data providers to cross-check corporate actions announcements and catch errors early. Set up automated alerts to notify teams immediately when new events are announced.

Implement timing controls: Create a master calendar tracking all relevant dates with buffer periods for complex events. Standardize workflows by event type - routine dividends flow automatically while mergers or spin-offs follow defined approval processes with quality control checkpoints.

Ensure system integration: Corporate action processing should automatically update portfolio systems, trigger accounting entries, and generate client notifications to eliminate manual errors and speed processing.

Maintain oversight: Regular reconciliation with custodian records and market data helps identify problems before they escalate. Detailed documentation ensures compliance and audit readiness throughout the process.

Quality control: Include checkpoints to flag unusual events before processing and establish clear escalation procedures for complex scenarios requiring manual intervention.

Corporate actions processing is how financial institutions handle events that affect the securities they hold. It includes dividend payments, stock splits, mergers and spin-offs. When a company announces it's paying a dividend or splitting its stock, that information needs to flow through multiple systems to update portfolios, calculate new positions and show that client accounts reflect changes accurately.

The process starts when companies announce these events and ends when all the necessary updates are complete across trading systems, accounting platforms and client records. It sounds straightforward, but it quickly becomes complex when you're dealing with thousands of securities and multiple data sources, not to mention different rules for different types of accounts.

Most firms handle this through a combination of automated systems and manual oversight. Simple events like regular quarterly dividends often process automatically, while complex situations like merger offers with multiple options require human review and decision-making.

Validating and cleansing corporate actions data involves reviewing and tidying event information received from providers before it enters your systems. Data often arrives in different formats or with errors, so upfront checks help reduce the chance of costly mistakes later.

During validation, teams verify important details such as dividend amounts or event dates to make sure everything aligns. Cleansing ensures that the data is standardised and fills in gaps wherever possible. It also helps with highlighting potential issues requiring manual attention.

Managing corporate actions is necessary because even minor errors can create problems in portfolios or complicate reconciliations. Automated systems catch many obvious issues, but complex scenarios generally benefit from human oversight.

Corporate actions can be categorized based on their purpose and whether they require shareholder involvement:

Cash events: Include dividends and interest payments where shareholders automatically receive payments based on their existing holdings without any action required.

Stock-related actions: Such as stock splits that affect the number of shares in circulation but typically require no shareholder action, as changes are applied automatically.

Reorganization events: Cover structural changes like mergers or spin-offs that alter a company's structure or securities. These may involve creating or removing securities and sometimes provide shareholders with multiple options.

Optional events: Require active shareholder decisions, such as tender offers where shareholders choose whether to sell their shares, or merger scenarios offering different payment options with distinct implications.

Optional events require particular attention since shareholder choices directly affect outcomes, making accurate processing and clear communication essential for proper execution.

The corporate actions processing lifecycle covers everything from the initial announcement of a corporate event to when all updates are completed in your systems and client records. It starts with capturing corporate action information from sources such as market vendors or regulatory announcements.

After capturing the data, it goes through validation and enrichment to confirm accuracy, standardise formats and include any extra details required for processing. Following that, impact analysis identifies which clients or portfolios will be affected, along with any specific handling needed.

During processing, positions and cash flows are updated accordingly, along with any related system adjustments. At the end, reconciliation ensures the updates have been applied and that stakeholders receive clear reporting. Quality checks occur at multiple stages, and when automated processes can't handle an event fully, manual intervention takes place.

Reduced manual work: Automation handles routine events like dividend payments and stock splits, allowing staff to focus on complex cases requiring human judgment. This is essential when managing hundreds or thousands of corporate actions monthly.

Increased speed: Processing time is reduced from days to minutes or hours, which is critical given shorter settlement cycles and client expectations for timely account updates.

Improved consistency: Automated systems follow identical rules and calculations each time, minimizing human error and simplifying reconciliation while supporting compliance with internal policies and external regulations.

Enhanced efficiency: By streamlining routine processing, automation enables organizations to handle higher volumes without proportional increases in staffing or operational costs.

Corporate actions processing keeps market information accurate by staying connected to various data sources in real-time. It also uses validation rules to identify any issues early, before they reach your systems.

Part of the process involves cross-checking new announcements against previous events to identify anything unusual. If something unexpected pops up, it's reviewed with more scrutiny. Security files and pricing data are then updated to reflect these corporate events so the correct information reaches all your internal platforms.

Reconciliation is another important step, where internal records are regularly compared against external data sources. If discrepancies appear, they're quickly addressed to avoid any problems affecting valuations or client communications.