Corporate Actions is a comprehensive source for understanding a major component of operational processing. The individual components and their relation to each other within the corporate actions lifecycle are explained in detail, through which the reader will gain a clear and thorough understanding of the lifecycle together with potential processing risks and the strategies to mitigate
Corporate Actions is essential reading for all those involved in the securities industry, from new recruits to those involved in both the day–to–day operations process and those within executive management. It will also prove invaluable to those providing consultancy and software solutions to the securities industry.
Corporate Actions is the first major work on this subject. Many people within the securities industry have heard of corporate actions – many people know they can be highly risky – many organizations have lost vast sums of cash in attempting to process them – very few understand them!
About the Authors xxiii
PART I INTRODUCTORY ELEMENTS 1
1 Basic Corporate Action Concepts 3
2 Event Description and Classification 9
3 The Securities (and Corporate Actions) Market Place 23
4 Static Data 37
5 Securities Position Management 49
PART II MANDATORY EVENTS 57
6 Overview of the Generic Corporate Action Lifecycle 59
7 Straight Through Processing 63
8 Event Terms Capture and Cleansing 67
9 Determining Entitlement 79
10 Communication of Event Information 113
11 Calculation of Resultant Entitlements 123
12 Passing of Internal Entries 139
13 Collection/Disbursement of Resultant Entitlements 151
14 Updating of Internal Entries 161
15 Examples of Mandatory Events 167
PART III EVENTS WITH ELECTIONS 185
16 Concepts of Events with Elections 187
17 Management of Mandatory with Options Events 193
18 Management of Voluntary Events 219
PART IV MULTI–STAGE EVENTS 233
19 Concepts of Multi–Stage Events 235
20 Management of a Rights Issue 247
21 Example of a Rights Issue 261
22 Concepts of Takeover Events 275
23 Management of Takeover Events 285
PART V TAXATION 299
24 Concepts and Management of Taxation 301
25 Management of Income Tax 307
PART VI ISSUER NOTICES 331
26 Concepts and Management of Issuer Notices 333
PART VII OBJECTIVES AND INITIATIVES 341
27 Objectives and Initiatives 343
Glossary of Terms 353
In recent years, Michael has worked as head of business consultancy within a global computing services firm, and is now an independent analyst and trainer. Michael s areas of expertise include all aspects of the fixed income and equity trade lifecycle and related activities, including operational risks and controls. Recent assignments include the offshoring of operational activities to India and operational risk analysis (the Sarbanes Oxley act). In addition, he creates and delivers training courses on the workings of the securities industry and associated operational aspects to audiences around the world.
Michael is author of Securities Operations: A Guide to Trade and Position Management published by John Wiley & Sons, which describes the fundamental components of operational activities from a first–principles perspective.
ELAINE DALGLEISH has spent her working life within the operational areas of investment banking and stock broking, working directly for international banking firms and financial software providers. Elaine s hands–on experience spans various middle and back office operational disciplines in multiple markets. Whilst working directly in investment banking and stock broking, this has ultimately included the managerial responsibility for a number of operational areas.
The focal point of Elaine s working history is the consistent involvement with Corporate Actions operations, initially with the manual processing of events as a custodian, and subsequently working as a Senior Business Analyst, specialising in Corporate Actions, analysing client requirements, and consulting in process re–engineering for Tier 1 and 2 investment banks.
As a consequence, Elaine has both observed and been directly involved in the evolution of global market practices of Corporate Actions operations and the move to automation.