1 / 12

Introduction and Background

International Securities Market Advisory Group (ISMAG) Standardising the Processing of International Securities. 1. Introduction and Background. 2. Recommendations. 3. Conclusion. Corporate Actions Pre-advising events , e.g. puts, calls, conversions, warrant exercises

shellie-farmer
Télécharger la présentation

Introduction and Background

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. International Securities Market Advisory Group (ISMAG)Standardising the Processing of International Securities 1. Introduction and Background 2. Recommendations 3. Conclusion

  2. Corporate Actions Pre-advisingevents, e.g. puts, calls, conversions, warrant exercises Need to advise applicable dates (payments), deadlines (for instructions) Sending concise event notifications to customers, also making full (applicable) documentation available Ensure cash or security proceeds received and credited to holders without delay Provide updates for any adjourned meetings and voting requirements, etc. Income Processing Record and notify security holders of forthcoming income events Need to pre-advise applicable dates (record, payment, fixing and/or determination) Need to pre-advise accurate income entitlements, limiting reversals/amendments Processing payments by confirming cash amounts processed the day prior to value-date, enabling same-day use of funds 1. IntroductionAsset Servicing through ICSDs - Summary Pro-active value added services The ICSDs have to receive timely and accurate information for onwards STP delivery to their clients (for onwards delivery to their underlying clients)

  3. Issuer Data Vendors ICSD PPA CD Issuer ’ s Investors Agent IntroductionCurrent inefficiencies & risks in Information flows Issuer Issuer • * * Each party : • to receive the information, • to understand/interprete it • to store it •  creating its own golden copy No STP No STP ** Issuer = Golden soure & copy Data Data Vendors Vendors No STP No STP No STP No STP No STP No STP STP ICSD ICSD No STP No STP STP PPA PPA CD CD Issuer Issuer ’ ’ s s Agent Agent ** ** ** ** Access to each ICSD Access to each ICSD security and event database security and event database -> lack of a unique golden source & copy (various golden copies e.g. payment dates, ..) -> lack of Information « push » from Issuer and its agent (current « pull/chasing » from downstream parties) -> lack of STP from upstream parties (starts with ICSDs providers) ISMAG objective: to address current high inefficiencies, costs and risks related to International Securities Asset servicing (New Issues, Corporate Action & Income) information coverage, timeliness and quality

  4. 1. Introduction ISMAG Organisation : End-to-end from Issuers to Investors G.E. EIB JP Morgan Barclays Goldman Sachs UBS Crédit Suisse Rabobank Commerzbank Royal Bank of Scotland BNP & SG Citibank N.A. Deutsche Bank BNYM HSBC BP2S Société Generale BAML ICMSA ICMA as observer AGC & Northern Trust ISSA

  5. IntroductionStatus & Next steps 2007 2008 2009 2010 Increase STP by converging § Information checklists to ISO standards 2011 + P I L L A R 1 I M P L E M E N T A T I O N Define benchmarks & guidelines of best practices = MPB Feb 2011 PILLAR 2 Raise market awareness on MPB to foster implementation • Monitor adherence to MPB benchmarks : KPIs • NI closing +1 BD (IPA/LM) • Income rate fixing (Calculation Agent) • Reversals volumes + timeliness (Offender) • + TBD CA e.g. fixing on Cash/Shares redemption (Calculation Agent) P I L L A R 3 Market framework definition and implementation: Letter of representation (LoRs), ISMAG label, reporting to issuers/agents §

  6. 2. ISMAG Recommendations in line with ISSA principles • defined with & for upstream parties, i.e. Issuers, their Legal counsels and their Agents • to address inefficiencies and risks linked to information provision processes • Information coverage (completeness & accuracy) • Information timeliness • Information processing  adherence to and usage of the best practices will ensure an efficient and effective service to investors through end-to -end processing chain Operational Market Practice Book (MPB)- February 2011

  7. 2. ISMAG Recommendations – MPB 2011 “Bottom-up” approach • ISMAG taxonomy : information checklists and specific recommendations  to achieve completeness and common understanding • End-to-End Roles & Responsibilities at issuance and during securities lifecycle • who needs to do what to whom by when • by when - specific information benchmarks E.g. variable rate notification - no later than Fixing / Determination Date + 1 Business Day from Calculation Agent to Paying Agent • Processing best practices • E.g. Paperless corporate action processing – electronic instead of paper instructions • E.g. Root cause of income amendments (who, why, what)

  8. 2. ISMAG RecommendationsImplementation monitoring e.g. rate fixing timeliness -> Calculation Agents’ performance • Ref. benchmarks: Fixing/ Determination date + 1 BD  Calculation Agents to work differently: from Payment Date to Fixing/Determination Date Sources: IPA data from BP2S, BNYM, CITI, Deutsche Bank

  9. Investors 3. Conclusion: Market Framework To foster best practices implementation by the Market • Proposed ICSDs framework aims to: achieve increased transparency Market Framework to increase transparency Issuer on securities portfolio & expected service level : ISMAG Adherent or ISMAG exempt ? on securities service level : ISMAG compliant or not ? • optimise end-to-end operational efficiencies and reduce risks : from a downstream parties pull model to an upstream parties push model

  10. 3. Conclusion : Market FrameworkLetter of Representation : engagement to implement MPB standards Service quality to Investors highly dependent from various Issuer's Agents performance  Market framework (starts on a voluntary basis) : 1. Issuer LoR (and exemption possibilities for rate fixing timeliness) 2. Issuers’ Agents LoR Issuer LoR Issuers Issuer/Agents agreements Issuer Agent / Trustee(Representative) Market Practice Book Agents’ Monitoring via KPI’s ICSD’s Various Agents CD / CSP Issuer’s Agent LoR

  11. 3. ConclusionISMAG =end-to-endbenefits … for Investors • Improved service levels in asset servicing / Corporate Actions / Income events i.e. timeliness, completeness and accuracy of information & processing • Increased transparency on their assets performance/structure (e.g. New Reversal Communication) … for Issuers • Increased Investors’ satisfaction • Attractive and competitive issuance model to expand Investor base • Better servicing and increased efficiency, leading to reduced costs and risks … for Intermediaries • Improved service level towards Investors and Issuers, • Attractive issuance model to expand Investor base • Better cost control in a volume increasing and complex environment • Better risk controls through increased efficiency and standardisation • Increased communication amongst various Market players

  12. ismag.pmo@euroclear.com www.euroclear.com/ISMAG Additional Information? ismag_pmo@clearstream.com www.clearstream.com/ISMAG

More Related