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Steven Palstermans

Steven Palstermans. 5th Annual AECSD Meeting - Almaty. 1 – 4 October 2008. Agenda. AECSD objectives Corporate actions Initiatives in other CSD associations Proxy voting How can SWIFT support you. AECSD Objectives. Harmonization of the regulatory framework

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Steven Palstermans

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  1. Steven Palstermans 5th Annual AECSD Meeting - Almaty 1 – 4 October 2008

  2. Agenda • AECSD objectives • Corporate actions • Initiatives in other CSD associations • Proxy voting • How can SWIFT support you AECSD_20081002

  3. AECSD Objectives • Harmonization of the regulatory framework • Establishment of depository links among the members to support cross-border securities transactions • Standardization of the technologies for the depository operation, procedures for depository transaction processing, and rules and regulations governing the depositories' activities • Adoption of international messaging standards for depository transactions and their use in the national practice • Development of Electronic Document Interchange • Supporting a coordinated process to enable the Association members to integrate into the global depository system AECSD_20081002

  4. Common Standards? Central Depository of Armenia The National Depository Center (Azerbaijan) Republican Central Securities Depository (Republic of Belarus) Georgian Central Securities Depository National Securities Depository of Moldova Central Securities Depository (Kazakhstan) Central Depository (Kyrgyzstan) State CSD of the Republic of Uzbekistan Interregional Stock Union (Ukraine) The National Depository of Ukraine Depository Clearing Company (Russian Federation) The National Depository Center (Russian Federation) AECSD_20081002

  5. Agenda • AECSD objectives • Corporate actions • Initiatives in other CSD associations • Proxy voting • How can SWIFT support you AECSD_20081002

  6. Beyond the standard: improving Corporate Actions data quality 5th Annual AECSD Meeting - Almaty 1 – 4 October 2008

  7. Complex and difficult • A real prospectus: • Exchange offer • 531 pages • 7 classes of stock • 3 month timetable • Extraordinary meeting Your challenge: find the right 40 pages with the the right data for a notification message – or - verify which of your three sources is correct! AECSD_20081002

  8. Market Need– Manual data entry problem Issuer Issuer Issuer Registrar On-Line (very few markets) CSD Custodian ISO 15022 Investor AECSD_20081002

  9. Do corporate actions affect you? “…notes in red where non-usage of industry standard messaging occurs.” ISSUER ISITC Corporate Actions Diamond- the lifecycle of corporate actions Co / Lead-Manager/ Exchange Agent/ Conversion Agent REGISTRAR / AGENT Appointed by issuer to maintain register CUSTODIAN’S NOMINEE Name on register CSD Where shares are Ultimately held BROKER / DEALER Execution of tradeswhere necessary CUSTODIAN Appointed by investor FUND MANAGER Appointed by investor INVESTOR AECSD_20081002

  10. Market need– Corporate Actions • Challenges • Significant shortfall in message quality and market practice compliance • Limitations of software vendor solutions • Difficult business case – management buy-in for improvement projects • Drivers • Losses / risk mitigation • Operational efficiency • Reducing costs • Regulatory compliance • Customer Service • Maximise portfolio performance • Achieve scalability • The Drive for STP • Standards • Market practice and tools • Best practices AECSD_20081002

  11. Agenda • AECSD objectives • Corporate actions • Initiatives in other CSD associations • Proxy voting • How can SWIFT support you AECSD_20081002

  12. Corporate Actions and Standards • Provide input to the next generation of ISO messages - ISO20022 • Create a 'Corporate Actions Best Practice Guide' for ACSDA members • Create National Market Practice Groups in markets where this kind of a group does not exist • Continue participation at SMPG • Share ACSDA Corporate Actions survey results, now covering 17 countries, with interested members of ACG • Expand Agenda to Include Issuer Services, extending ECSDA work

  13. Elimination of the Giovannini barriers • Barrier 1 : Diversity of IT platforms / interfaces (SWIFT) • Final Protocol recommendation • Gap analysis • Full implementation of the Protocol (March 2011) • Barrier 3 : Corporate actions (in cooperation with other European industry associations : Corp. Action Joint Working group) • Distributions • Reorganisations • Transaction management • General meetings • Barrier 4 and 7 : intraday settlement finality / op. hours and settlement deadlines • Ten standards for issuer CSDs • Under way : cross-border issue (investor CSDs / banks) ►Monitoring : European Commission (CESAME Group) AECSD_20081002

  14. Existing standards working groups for CSDs Giovannini working groups • Global CSD working group • Consolidate CSD views • on standards AECSD_20081002

  15. National Market Practice Groups www.smpg.info NMPG countries NMPG countries specified on EIG AECSD_20081002

  16. …regarding Corporate Actions “There are two kinds of securities messaging: high maintenance and low maintenance....” “Which one am I?” “You're the worst kind. You're high maintenance, but you think you're low maintenance.” With apologies to the writers of “When Harry Met Sally” AECSD_20081002

  17. Folks! We’ve got a situation here! • Risk of significant claims • Manual processing dependency • Difficult business case for improvement AECSD_20081002

  18. STaQS for Corporate Actions • Simulation Testing and Qualification Service (STaQS) • Test MT 564 Notification and MT 566 Confirmation messages for compliance to market practice … a health check for Corporate Actions messages • What can you do with this service? • Measure conformance • Identify improvement areas • Benchmark progress • Improve counterparty automation AECSD_20081002

  19. Agenda • AECSD objectives • Corporate actions • Initiatives in other CSD associations • Proxy voting • How can SWIFT support you AECSD_20081002

  20. Shareholders’ Meetings and Proxy Voting • The problems: • corporate actions standards are inadequate • process transparency • confirmation of vote lodged • communication of results • seasonal concentration of meetings • compressed deadlines • The result . . . Shareholders are being disenfranchised by the process! AECSD_20081002

  21. What can we do about theseProxy Voting problems? • Automation and standardisation • A new solution and standard • Tailor-made for Proxy Voting • Industry agreement • Supports EU Shareholders’ Rights Directive • Auditable process • Confirmation of votes lodged • Results reporting AECSD_20081002

  22. Automation and harmonisation Market practice conformance Streamlining your data providers Improve proxy voting services Corporate Actions solution STaQS for Corporate Actions Data Distribution solution Proxy Voting solution The asset servicing solutions AECSD_20081002

  23. Agenda • AECSD objectives • Corporate actions • Initiatives in other CSD associations • Proxy voting • How can SWIFT support you AECSD_20081002

  24. Strategic goals for Eastern Europe • Get buy-in from regulators, professional associations. • Use ISO standards for domestic and international operations. • Offer the use of the SWIFT network to MIs for the domestic business. • Gain the critical mass of Broker/Dealers and Investment Management Institutions (Top 15). • Set up and open the Moscow office. AECSD_20081002

  25. Securities Market Infrastructures on SWIFT>80 institutions from 50 countries Hungary Indonesia Ireland Keler KSEI Euroclear UK & Ireland Argentina Caja de Valores Singapore Slovakia The Central Depository (Pte) Ltd Monetary Authority of Singapore Bank of Slovakia CDCP Australia Australian Securities Exchange Austraclear Israel Tel Aviv Stock Exchange Austria OeKB Slovenia Central Securities Clearing Corporation – KDD Italy CCGMonte Titoli Belgium Euroclear Belgium Euroclear BankMTSNational Bank of Belgium South Africa STRATEJSE Ltd Japan Bank of JapanJasdec Spain IberclearMEFFMTS Kazakhstan Central Securities Depository Kazakhstan Stock Exchange Brazil CBLC Canada CDS Korea Korea Securities Depository Sri Lanka Central Bank of Sri Lanka (LankaSecure) Croatia Sredisnja Depositarrna Agencija Latvia Bank of LatviaCentral DepositoryOMX Czech Republic UNIVYC Sweden NCSD Sweden – VPCOMX OMX VP Denmark Lebanon Midclear Central Depository Switzerland SISSIS x-clear Estonia Estonian Securities Depository OMX Lithuania OMX Taiwan Taiwan Depository & Clearing Corporation Luxemburg Clearstream Banking SA Egypt MCSD MISR for Clearing, Settlement and Depository Thailand Thailand Securities Depository Co. Ltd. Mexico S.D. Indeval Finland NCSD Finland – APKOMX Turkey ISE Settlement and Custody Bank INC Netherlands Euroclear NederlandMTS UAE - Dubai DIFX France Euroclear FranceEuronext Paris – MATIFMTS New Zealand RBNZ Austraclear NZX Ltd United Kingdom Euroclear UK & IrelandLCH.ClearnetLondon Stock Exchange Germany Eurex ClearingClearstream Banking AGMTS Norway VPS USA Chicago Mercantile ExchangeClearing CorporationDTCCFederal Reserve BanksOmgeoOptions Clearing Corporation Poland National Depository for Securities – KDPW Greece Central Securities DepositoryBank of Greece Portugal Banco de Portugal – SITEMEMTS Hong Kong Hong Kong Exchanges and Clearing Hong Kong Monetary Authority (CMU) Russian Federation Depository Clearing CompanyThe National Depository Center Zimbabwe Reserve Bank of Zimbabwe AECSD_20081002

  26. Common Standards? Central Depository of Armenia The National Depository Center (Azerbaijan) Republican Central Securities Depository (Republic of Belarus) Georgian Central Securities Depository National Securities Depository of Moldova Central Securities Depository (Kazakhstan) Central Depository (Kyrgyzstan) State CSD of the Republic of Uzbekistan Interregional Stock Union (Ukraine) The National Depository of Ukraine Depository Clearing Company (Russian Federation) The National Depository Center (Russian Federation) AECSD_20081002

  27. Questions? AECSD_20081002

  28. Thank you AECSD_20081002

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