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White Papers

Report prepared for: The Depository Trust & Clearing Corporation | May 30, 2006
Oxera Executive Summary

In recent years, there has been considerable interest in the risks associated with corporate action processing. Several industry initiatives have acknowledged the potential impact of this limitation on the risks to which intermediaries and investors are exposed, principally in the operations of the back office. However, market participants are increasingly recognising the advantage that accurate and timely corporate action information can provide in the implementation of their trading strategies and provision of investment advice to their clients.

The overall objective of this research project is to examine the ways in which accurate and timely corporate action information could benefit financial organisations and their customers by improving the effectiveness of their trading strategy and quality of advice offered to their clients. For example, investors might use corporate actions information to develop strategies that make use of predictable movements in share prices, or take advantage of the ability to predict changes in share price volatility. At the same time, predictable movements in trading activity are likely to provide greater understanding of the trading liquidity that investors can expect to observe on a given day.

Share prices and trading activity over the corporate action processing cycle