Lights, Camera, Action
Data management is no easy task, whether it is preceded by the word "reference," "historical," or any other jargon found in a market-data department. One prefix in particular that is almost always met with sighs, eye rolls and headaches is "corporate actions."
With a mass of data sources and a host of mediums, the standardization of corporate-actions data, and its resulting processes, are often just a utopian dream for many Wall Street firms.
Mellon Global Securities Services (MGSS), an arm of Pittsburgh-based Mellon Financial, has recently made an effort to revamp its corporate-actions procedures to ensure shared success with its various alliances formed over the past few years.
"When we expanded our global strategic alliances, we expanded the breadth and complexity of our global markets and corporate actions that we supported," explains Amy Harkins, first vice president and director of Mellon's Global Asset Servicing Division.
With its many new sites came many operational systems and workflows, adds Liz Crivelli, MGSS' first vice president and project manager. "We wanted to treat the whole corporate-actions process holistically," she says, allowing one corporate action to be worked on at all four locations: Pittsburgh, Toronto, London and Everett, Mass.
At the base of the challenge, Harkins begins, is the fact that corporate-actions information is a "dynamic creature," based on time, location and corporate cultures. Each company has a distinct way of doing business, so each corporate-action varies. For example, she continues, an Australian firm might offer a security in a particular method and call it "X," while a U.S. firm could offer the same security but term it "Y."
Harkins says standards would fix the problem "if companies would consistently offer the same type of corporate actions, without different variations, and offer them through one single depository. But you're not going to get every Fortune 500 company to do that."
While the market is overflowing with third-party options, at the time Mellon approved the project's funding, nothing seemed to fit the bill. "There have been various vendors who take corporate actions from a reference-data-scrubbing and management-process (standpoint), or look at message handling. But as a global custodian, we need to see it as a lifecycle."
After deciding to build instead of buy, MGSS' first task was putting more than 200 corporate-action professionals on the same page.
MGSS then attacked the project according to the lifecycle of a corporate action, focusing on short phases of strategic and tactical wins along the way. "This nut is so huge you could never deliver it all at once," says Crivelli.
The team began with the information coming into the firm from more than 80 global sub-custodians, depositories and agents. MGSS brings in the information, scrubs it and places it - using a common format - in a database.
The corporate-actions professionals then map the events, using an event-matrixed system. Harkins notes MGSS has mapped at least 54 types of corporate actions, a number likely to increase.
The project will never be fully finished, Harkins says, due to the dynamic nature of the challenge. Future enhancements include incorporating additions in Swift messaging - standards for communicating corporate actions - as well as increasing incoming data feeds. "It's a process of building on the foundation of what we've already begun," agrees Crivelli.
MGSS has already witnessed a return on investment, Crivelli adds, citing increased productivity. At the same time, she says, the firm has maintained staffing costs and reduced operational risk.
While MGSS has taken the first step to meet the challenge of corporate actions, Harkins cautions that technology can't solve all of the problem. "You probably can never fully automate the lifecycle," she says. "If you can get to 80 percent, you've done a wonderful job."