New York, May 28, 2009 – The Depository Trust & Clearing Corporation (DTCC), SWIFT and XBRL US announced today a plan to fundamentally change corporate actions announcement processing, bringing greater accuracy, reduced risks and costs, by improving transparency and communication between issuers and investors. The collaboration will promote straight-through-processing by electronically capturing data directly from issuers or offerors at the point that a corporate action is announced and in a standardized format.
The plan, outlined in a "Statement of Direction," was unveiled at today's XBRL US and Securities Operations Forum Conference, "Corporate Actions 2009: Improving Issuer-Investor Communications." The conference, the first of its kind, was designed to help promote agreement between public companies and custodians and other intermediaries that are processing corporate actions announcement data.
"Together, we're dedicated to fostering increased automation and transparency for U.S. corporate actions announcements and to promoting best practices for global messaging standards," said Donald F. Donahue, Chairman and CEO, DTCC. "Through this joint initiative we have an opportunity, at last, to bring clarity to the often manual, labor intensive and unnecessarily risky business of interpreting information related to corporate action announcements. This is especially critical today when the market is seeking greater transparency of issuer information. DTCC places a high priority on our work with SWIFT and XBRL US to bring greater certainty and improve the communications chain on corporate actions announcements."
On average, approximately 200,000 corporate actions such as dividends, bond redemptions, rights offerings and mergers are announced each year by publicly traded companies and other issuers or offerors in the U.S. alone. Because the processing of these announcements throughout the corporate actions lifecycle today is mostly handled manually, these practices remain beset by error-prone, time-consuming inefficiencies, thus creating the potential for heavy losses and significant negative impact on investors in these securities and the financial community.
A 2006 study by an independent research firm Oxera (UK) found losses on corporate actions worldwide were between €300 and €700 million euros -- or $400 and $900 million U.S. dollars -- each year. Industry sources (Financial Services Research 2006) suggests that upwards of 10% of financial intermediaries' operational budgets are held against corporate actions claims by investors for losses.
The plan developed by DTCC, SWIFT and XBRL US looks to build on the existing ISO standards that have already brought important efficiencies in the corporate actions process by integrating the benefits of XBRL electronic data tagging technology, already used by public issuers in the U.S., to streamline the processing of corporate action announcements. It includes the following steps:
"ISO TC68 is pleased to work with XBRL US in aligning their taxonomies with ISO 20022 so that they can be used by SWIFT, DTCC, and in the future to expand to international markets for corporate actions announcements," said Karla McKenna, Chair, ISO TC68, the technical committee for Financial Services that maintains and manages the ISO 20022 standard. ISO (International Organization for Standardization) develops international standards through its worldwide network of national standards bodies.
"DTCC and SWIFT's leadership on this issue will enhance the overall adoption of XBRL in the U.S. and dramatically improve the corporate actions process throughout the U.S. financial supply chain and, ultimately, in the global marketplace," said Mark Bolgiano, President and CEO, XBRL US. "This initiative builds on our unified digital dictionary built around US GAAP and it leverages XBRL's momentum in the U.S. financial markets."
Chris Church, CEO of Americas and Global Head of Securities at SWIFT, stressed that "our initiative will increase the return on investment for the industry's existing market infrastructures by bringing greater efficiencies and reducing the costs and risks associated with processing corporate actions. Manual interpretation, re-keying and manual exceptions in corporate action processing will be significantly reduced."
DTCC, through its subsidiaries, provides clearance, settlement and information services for equities, corporate and municipal bonds, government and mortgage-backed securities, money market instruments and over-the-counter derivatives. In addition, DTCC is a leading processor of mutual funds and insurance transactions, linking funds and carriers with their distribution networks. DTCC's depository provides custody and asset servicing for more than 3.5 million securities issues from the United States and 110 other countries and territories, valued at US$27.6 trillion. In 2008, DTCC settled more than US$1.88 quadrillion in securities transactions. DTCC has operating and data facilities in multiple locations in the United States and overseas. For more information on DTCC, visit www.dtcc.com.
SWIFT is a member-owned cooperative that provides the communications platform, products and services to connect over 8,500 banking organisations, securities institutions and corporate customers in more than 200 countries. SWIFT enables its users to exchange automated, standardised financial information securely and reliably, thereby lowering costs, reducing operational risk and eliminating operational inefficiencies. SWIFT also brings the financial community together to work collaboratively to shape market practice, define standards and debate issues of mutual interest.
For more information, please refer to our website www.swift.com.
XBRL US is the non-profit consortium for XML business reporting standards in the United States and is a jurisdiction of XBRL International. It represents the business information supply chain, including accounting firms, software companies, financial databases, financial printers and government agencies. Its mission is to support the implementation of XML business reporting standards through the development of taxonomies relevant for use by US public and private sectors, working with a goal of interoperability between sectors, and by promoting adoption of these taxonomies through the collaboration of all business reporting supply chain participants. XBRL US has developed taxonomies to support U.S. GAAP and common reporting practices under a contract with the Securities and Exchange Commission. The XBRL US GAAP Taxonomies are available for review at http://xbrl.us/usgaappublicreview/Pages/default.aspx.
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