SMPG European Commission Discussion about uniqueness of corporate - - PowerPoint PPT Presentation

SMPG – European Commission

Discussion about uniqueness of corporate actions event reference

Brussels, 24 April 2009 Bernard Lenelle, Co-chair Corporate Actions SMPG

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Agenda of the presentation

• 1. Background on the SMPG
• 2. SMPG structure
• 3. Unique CA Event reference – background
• f the issue
• 4. Initial Problem Solving
• 5. Current Problem Solving Process
• 6. In what respect could the European

Commission help?

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• 1. Background on the SMPG
• SMPG created by SWIFT in 1998
• Now divided in 3 streams:

– Settlement and Reconciliation,

–Corporate Actions, and –Investment Funds

• Main tasks are to:

Standardise and document market practices Provide guidance and clear recommendations Consolidate NMPG feedback and ensure compliance

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SMPG recommendations arise from the constant interaction between SMPG and different NMPGs. Market Institutions Market Institutions

S&R Working Group

CA S&R

National Market Practice Groups (NMPGs)

Global SMPG Funds

• 2. SMPG structure

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• 3. Unique CA Event reference – background of the

issue

At the origin, Investment Managers have raised concerned about the fact that the same event was announced with different references depending on the provider > Discussion started within SMPG to try to find a solution

Fund Manager Custodian A Custodian B Custodian C Issuer Market Market CORP A CORP B CORP C

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• 4. Initial Problem Solving Process…

Issue was tackled by the SMPG from different angles:

• 1. Work on a common algorithm:

E.g. :20C::CORP//11!c4!n1!n where:

– 12!c is the 12 characters of the underlying ISIN. – 2!n is the country code of the market place announcing the event (as for the same ISIN, there may be different event characteristics or scenarios based

• n the place where the instrument is listed). Note: If the need for MIC is

required, the proposal would accommodate it. – 2!n is a number count of the events having taken place on the instrument since the beginning of the year, including competing offers on the same

• instrument. This number could be maintained as an element of the

securities master database.

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• 4. Initial Problem Solving Process

Issue was tackled by the SMPG from different angles:

• 2. Allow for a new optional element in the standards (COAF).

Obj: distinguish between internal reference for processing and official reference NB: Initially optional element is implemented

• 3. Generate the code centrally

E.g.: SWIFT could have centralised the creation > hardly feasible

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• 5. Current Problem Solving Process

Only 2 viable options are left from SMPG perspective

• Identify a central body market by market

> This has started from SMPG initiative but bears the main disadvantage that in some markets the situation is not clear- cut: CSD or Stock exchange? (e.g. Spain, Austria)

• Mandate the issuers or their agents to issue the reference

> This has always been the preferred solution but more long-term. It was not yet considered by the SMPG because the main pre-requisite was the support from legal authorities

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• 6. In what respect could the European Commission

help?

Open discussion

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BACK UP SLIDES

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• 3. SMPG core solutions – Standardise…

The goal: standardise market practices and formats.

Representation

E.g. representation at the last SMPG meeting in Madrid: 22 markets in CA and Settlement; 12 markets in Investment Funds

Decision making

Decisions are taken in every meeting (consensus

• r vote) resulting in common recommendations

Cooperation

E.g. Strong cooperation with data vendors on corporate action side. Objective: end-to-end consistence

Alignment

Efforts to streamline processes across markets

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• 3. SMPG core solutions – … & Document

Visit WWW.SMPG.INFO and get the info!

Global Doc.

n Global Market Practice official documents n Other global documents in parallel

Market Specifics

E.g.: for CA, 11 markets have provided a Market Practice Document in line with global recommendations

Grids

E.g.: for CA, Event Interpretation Grid (EIG); Complex Events Grid; MT567 Matrix

Samples

In both CA and IF, samples have been produced in

• rder to help implementation of the

recommendations

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Current solution for Semi-centralised reference creation

• The home market for each security should assign the official

references for events involving each home market security.

• To avoid assignment of duplicate numbers globally, the

‘Official Corporate Action Event Reference’ should contain a 2-character alphanumeric code unique to the official body assigning the number as the first 2 positions of the reference. The 2-character ISO country code should not be used for this purpose as more than one official body can exist for a market.

• The Latin character set (0-9 and Latin uppercase (A-Z))

should be used for this 2-character code.

• SMPG will vet the use of the 2-character codes for

uniqueness.