New York, June 17, 2010 — The Depository Trust & Clearing Corporation (DTCC), SWIFT and XBRL US today announced the results of a business case advocating a transformation in the way corporate actions announcements are communicated in the United States, allowing investors to receive information on such corporate actions as mergers, dividends, stock splits and other events in a more timely, accurate and less costly way, directly as specified by the issuer or offeror.
The business case, developed with key stakeholders from across the corporate actions processing supply chain – issuers, intermediaries and investors – documents the existing announcement process, highlights current problems, and provides recommendations to solve those issues.
The recommendations call for, among other things, a single set of global standards for corporate actions processing, which, according to the business case, will bring greater accuracy, reduced risks and lower costs by improving transparency and communication between issuers and investors. A pilot program will be initiated late this year to implement the recommendations and further evaluate costs and benefits, with participation from issuers, intermediaries and investors.
The business case makes clear that use of the global standards by issuers will allow them to provide their key messages directly to investors or potential investors without the delays or potential errors inherent in the reliance, under today's process, on interpretation by financial intermediaries. It also examines, for the first time, the complete corporate action process from announcement to completion, using a case study of Pfizer's acquisition of Wyeth in 2009.
Specifically, the business case highlights four critical issues raised by issuers, intermediaries and investors in today's corporate action announcement process that the proposed solution is designed to address:
To address these issues, the business case makes three principal recommendations:
James Anderson, Manager Financial Reporting at AGL Resources, said, "Implementing these recommendations would result in corporate action information that is computer-readable, eliminating the need for intermediaries to interpret and transform our messages into structured data. This allows us to remain in control of these important disclosures, and ensure they are communicated exactly as we intended. This enables greater transparency, accuracy and timeliness of our data that is extracted from regulatory filings and press releases that we issue, giving our shareholders more time to make decisions. We believe our investors and those who receive our corporate action information will embrace this initiative."
Survey results and discussions with members of the stakeholder group yielded expected benefits of implementation including:
Elisa Nuottajarvi, Manager, at the Securities Industry and Financial Markets Association – Asset Management Group, said: "The Issuer-to-Investor: Corporate Actions Business Case is a major effort which makes it very clear that there is a need to automate the corporate actions process by using new technologies and standards, such as XBRL and ISO. Industry-wide collaboration on this effort is a key step in the process of resolving this age-old and very costly problem."
For a copy of the business case to improve corporate actions communications, please click here. For more information about Issuer to Investor: Corporate Actions initiative, please visit http://xbrl.us/i2i.
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 3.6 million securities issues from the United States and 121 other countries and territories, valued at US$33.9 trillion. In 2009, DTCC settled more than US$1.48 quadrillion in securities transactions. DTCC has operating and data facilities in multiple locations in the United States and overseas.
SWIFT is a member-owned cooperative that provides the communications platform, products and services to connect more than 9,000 banking organizations, securities institutions and corporate customers in 209 countries. SWIFT enables its users to exchange automated, standardized 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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