The network is collaborating with seven securities players – including American Century Investments, Citi, Vanguard and Northern Trust – to drive efficiencies in communicating significant corporate events. The project will trial a solution powered by Symbiont’s enterprise blockchain platform.
As SWIFT officials explained on their website, ‘when an event takes place at a publicly traded company – dividend payments, exchange offers, mergers, Dutch auctions or other corporate actions – the information needs to be quickly shared with investors, creditors and all other key stakeholders. Automation of these communications has improved in recent years, but it’s still heavily dependent on manual processes that create both added costs and risks for market participants.’
This issue is multiplied by the number of intermediaries – central securities depositories (CSDs), local and global custodians, fund managers, paying agents etc. – who make up the investment chain. Each one has to pass on data about the event and, because they follow different data standards, may communicate about it slightly differently.
Asset managers, custodians, brokers, and other recipients downstream encounter issues as they receive information about the same event from multiple issuers and, in some instances, with missing, contradictory or inaccurate data. This is why they then have to manually discern, compare and clean the data to arrive at a single accurate picture of the event so they can make relevant decisions.
Jonathan Ehrenfeld, Strategy Director at SWIFT explains that ‘according to our analysis, manual activities – such as data cleansing, formatting, and interpretation – account for around 30% of the costs involved in processing corporate actions. That’s why we are collaborating with our community to deliver a solution that delivers accurate corporate action data to market participants in near real time.’
SWIFT’s goal is to increase the accuracy of the corporate action workflow. As such, the financial messaging network is trialling fintech Symbiont’s proprietary technology platform, Assembly, using its smart contracts and blockchain capabilities to create a network effect that leverages the 11,000+ institutions connected to SWIFT globally.
By bringing Symbiont’s Assembly and smart contracts together with SWIFT’s extensive network, the aim is to harmonise data from multiple sources of a corporate action event. Furthermore, corporate action data from SWIFT messages is translated by the SWIFT Translator and uploaded in Symbiont’s blockchain. According to SWIFT officials, Symbiont’s smart contract technology can then compare information shared between participants and flag discrepancies, contradictions or inconsistencies across custodians.
Symbiont’s private blockchain solution creates a single unalterable record, which provides a digital audit trail, privacy, versatility, and the delivery of key statistical data.
The solution reportedly has the potential to allow asset managers and custodians to automate how they compare corporate action information sent to them from multiple sources, leading to further back-office savings, this being just one of the possible positive outcomes, if the project succeeds and gets more traction.
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