Corporate Actions: Two Roads Diverge – But Only One Starts at the Source
Market Insights
David Baxter
Recent industry discussions around the automation of corporate actions processing have increasingly centred on AI, and distributed ledger technology.
At the same time, initiatives such as the DTCC’s issuer-focused infrastructure work continue to pursue a more direct objective: improving the quality and structure of information at source.
While both approaches seek to improve corporate actions processing, they fundamentally differ in philosophy.
One approach attempts to establish what might be described as a ‘golden interpretation’ of issuer announcements through AI-driven interpretation and reconciliation.
The other seeks to establish a true ‘golden record’ directly from the issuer or issuer agent through structured standards-based communication.
The distinction matters.
Using increasingly sophisticated technology to interpret fragmented or inconsistently structured announcements may improve downstream processing, but it does not eliminate the underlying fragmentation itself.
The more effective long-term solution is likely to be issuer-originated structured data delivered directly into the market using globally recognised standards such as ISO 20022.
This is precisely the direction initiatives such as SRD II have been attempting to move toward.
The real challenge facing the industry is therefore not simply interpreting information more intelligently but reducing the need for interpretation in the first place.
That requires:
issuer engagement
structured data capture at source
standards adherence
interoperability
and workflow orchestration capable of enabling consistent connectivity and controlled interaction between participants within the processing chain.
AI and DLT technologies undoubtedly have roles to play within market infrastructure, but the industry must remain careful not to apply increasingly complex technologies to problems that can be resolved more effectively through better process design, standards implementation and issuer connectivity.
