• prod
  • s7connect
  • crx3
  • samplecontent
  • publish
  • crx3tar

Corporate Actions in Australia: The Case for Transformation

An in-depth report on the challenges for corporate actions processing in Australia and the business case for change

The last few years have seen unprecedented change in the corporate actions landscape - with markets, vendors and investors instigating major transformation across the lifecycle.

ASX is proud to sponsor an industry-wide benchmarking program on corporate actions processing in Australia, conducted by The Value Exchange. Insights from over 60 firms in the Australian corporate action community are detailed in a comprehensive report designed to help financial organisations chart the right course for change tomorrow.

Research shows the average business unit faces annual costs of USD2 million due to corporate action errors and the majority of these costs are derived from data sourcing and management. This report discusses the challenges and opportunities for corporate actions processing in Australia and presents the case for change.

 

Key highlights

Source:  Corporate Actions in Australia: The Case for Transformation produced by The Value Exchange

Australia, a uniquely complex landscape

The legacy model for Australian corporate actions is unique in the world in terms of its complexity – as is the infrastructure that supports it.

Amongst high volume events in Australia, dividends and stock splits appear easy to automate while takeovers, mergers and share buy-backs are harder to manage here than in other parts of the world.

Hidden costs to the industry

Extreme market complexity in Australia has made corporate actions a siloed, scale business.

While Australian brokers report that it costs more to source basic event data than it does to process the event through the system, custodians have difficulty managing their data processing costs. It is clear that the complexity of the operating model is directly impacting the P&L of market participants.

Market inertia curbs change

Despite significant inefficiencies, market participants seem unwilling or unable to reshape their operating models.  

In comparison with their global peers, Australian market participants seem to be more confident in their ability to process mainstream corporate actions than many of their global peers. Unfortunately investors don’t agree. Beneficial owners see their corporate action data and processing as being worse than their global peers.

The journey towards transformation

Today’s leading market practitioners are leveraging a range of innovative market solutions to forge ahead.

Over the next 3 years, 48% of the market plans to revise their data sourcing – focusing specifically on new data feeds. These plans are being prioritised over hiring and deploying robotics, clearly demonstrating that investors and their intermediaries are all focused on a single, common objective: getting the data right.

The impact of trust, speed and scalability

Australian market participants may vary in their understanding of current challenges, but the market is consistent on two core points: corporate actions are a data problem and ASX has been entrusted to help resolve it.

ASX’s Real Time Corporate Actions service now provides a range of corporate event information to subscribers in the exact way that it was sourced from corporate issuers - without manipulation or data corruption. In addition, the feed’s ISO 20022 format has delivered major efficiencies in the delivery and processing of complex corporate events.

In removing all of this complexity and manual processing, the Service also significantly increases the velocity of customer event notifications. Where it may have taken custodians up to four hours to notify their customers of new events in the past, investors can now be made aware of new events within two minutes.

Early adopters of the service are reporting significant benefits with one user quoting an 80% increase in STP rates from using the new ASX corporate action feed.

Comprehensive insights from the Australian corporate actions community

ASX joined industry experts for a webinar on "Corporate Actions in Australia: The Case for Transformation." Hosted by Barnaby Nelson at The Value Exchange, this virtual panel offered exclusive insights into major challenges associated with corporate actions processing in Australia and a discussion on the compelling business case for change.

Watch the session recording to hear from a series of experts on the key highlights from the Corporate Actions benchmarking project.