The financial services industry is known for its reliance on efficiency, consistency and regulatory adherence. Yet, one area that continues to generate frustration and inefficiencies is the management of corporate actions. Whether it’s mergers, acquisitions, stock splits or fund reconstructions, corporate actions are crucial to the health of the financial system but have long been plagued by errors, delays and operational headaches. These issues arise because different stakeholders, including asset managers, custodians and platforms, each interpret and manage data in their own way. This lack of consistency and communication has led to significant inefficiencies, increased operational risks and costly regulatory fines. Despite the importance of these actions, the financial industry has not yet embraced a unified, standardised approach.
The top five countries by assets under management
Source: TeamBlockchain/Allianz Wealth report
The challenge of corporate actions
Corporate actions are any event initiated by an organisation that impacts its shareholders and investors. These actions can range from something as simple as a dividend payout to more complex processes like mergers or acquisitions. Each action requires careful management, including timely notifications, regulatory approvals and shareholder communications. However, as many financial services professionals can attest, managing corporate actions is often more complex than it should be. The process is typically manual, and the data involved is not always uniform across platforms, making it difficult for different stakeholders to communicate effectively. For example, the key data points that need to be shared - such as dates, merger terms, shareholder approval or dividend payments are often inconsistent. This lack of uniformity results in confusion, errors, delays and ultimately, higher costs for asset managers, custodians and platforms. In the words of one industry expert: “The data can be misrepresented, leading to costly errors down the line.” These errors, whether they involve missing key details or misinterpreting the information, can have far-reaching consequences. Not only do these errors damage operational efficiency, but they also expose firms to regulatory scrutiny and potential fines. Regulatory bodies, such as the Financial Conduct Authority (FCA) and the European Securities and Markets Authority (ESMA), have clear rules around corporate actions. Non-compliance or mistakes in managing corporate actions can lead to penalties, litigation and reputational damage.
The need for standardisation
The solution to these issues lies in the adoption of a standardised approach to corporate actions. If the data required for corporate actions was communicated in a consistent, clear and easily interpretable format, the entire process could become more efficient, transparent and reliable. The creation of a unified template for corporate actions is a key step towards improving the accuracy and speed of the process. A standardised template would serve as a universal framework, ensuring that all participants asset managers, custodians, platforms and even regulators are working from the same data. This would make it easier for stakeholders to share information and ensure that corporate actions are processed quickly and without errors. Furthermore, adopting a standardised approach would foster transparency, as all parties involved would be able to track the progress of corporate actions more easily. However, the importance of standardisation extends beyond operational efficiency. It’s also about managing risk. By creating a unified approach to corporate actions, firms can ensure compliance with regulatory requirements and reduce the likelihood of penalties. As one expert at a recent TURN-hosted session noted: “A standardised template reduces the risk of errors and ensures that regulatory obligations are met.” A unified, industry-wide template would also bring significant cost savings. By eliminating confusion, reducing errors and improving efficiency, asset managers, custodians and platforms would benefit from lower operational costs. These savings would ultimately be passed on to the end clients, improving the overall value proposition in the financial services industry. A blockchain-powered platform could enable a comprehensive, open standard template that streamlines corporate actions across the industry, focusing on industry collaboration, and ensuring that all stakeholders asset managers, custodians, and regulatory bodies are involved in the process of creating this standard. For standardisation to be successful, all parties must be engaged and aligned with the shared goal of reducing risk and improving efficiency. As one participant at TURN’s recent session remarked: “The key to success lies in collaboration.” Without collaboration from all the stakeholders involved, the shift towards a standardised approach would be much more difficult. This collaboration should involve not only the technical development of the standard but also a shared commitment to adopting it across the financial services ecosystem.
The role of technology in standardisation
As with many challenges in modern finance, technology will play a critical role in the standardisation of corporate actions. Today, many corporate actions are managed through outdated manual systems, which are prone to errors and inefficiencies. As the financial services industry continues to evolve, there is a clear need for digital solutions that can simplify and automate the process of managing corporate actions. Blockchains, in particular, offer enormous potential in this area. A blockchain-powered solution can provide a secure, transparent and decentralised way to share data offering a standardised platform for corporate actions. With blockchain, data can be shared securely across different entities, and all stakeholders can have access to the same, accurate information in real-time. This would drastically reduce the chances of errors and ensure that corporate actions are processed more efficiently. Moreover, blockchain technology can also help solve some of the challenges associated with data security. In an environment where sensitive financial data is constantly being exchanged, ensuring the integrity of that data is crucial. Blockchain’s immutability ensures that once data is recorded, it cannot be altered or tampered with, providing an additional layer of protection for corporate actions data. The potential for automation within this process is also significant. Once corporate actions are standardised, automated systems can process them in a fraction of the time it currently takes. Automation will not only improve the speed of data processing but will also help prevent errors that result from manual intervention.
Overcoming obstacles to standardisation
While the benefits of standardisation are clear, there are several obstacles to achieving widespread adoption. One of the primary challenges is the need for buy-in from all industry participants. For standardisation to work, asset managers, custodians, platforms and regulators must all agree on the data points, protocols and technologies that will be used. This is no small task, given the complexity of the financial services landscape and the diversity of stakeholders involved. Another challenge lies in the implementation of the standardised template. While the development of a unified template is essential, ensuring that it is widely adopted will require time and effort. One of the most important tasks will be to educate stakeholders about the benefits of standardisation and the tools available to help them transition to the new system. This will require active engagement from industry leaders and regulatory bodies to provide guidance and support to firms throughout the process. Despite these challenges, there is a growing recognition of the need for standardisation in corporate actions. The industry has reached a point where the benefits of a unified system are clear, and there is a concerted effort to move in this direction. With the right leadership and collaboration, the financial services industry can overcome these obstacles and create a more efficient, secure and transparent system for managing corporate actions.
Looking ahead: a collaborative future
The future of corporate actions is one of standardisation, collaboration and technological innovation. As industry leaders continue to advocate for a unified approach, it is clear that the financial services industry is ready to embrace a new, more efficient way of managing these critical events. By adopting a standardised approach to corporate actions, the industry can reduce operational inefficiencies, mitigate risk, improve regulatory compliance and deliver better outcomes for investors. But achieving this vision will require the active engagement of all stakeholders and a shared commitment to creating a system that benefits everyone in the ecosystem. With the right collaboration, the future of corporate actions can be one of transparency, efficiency and innovation a future in which firms can manage corporate actions with confidence and accuracy, ensuring better outcomes for both businesses and investors alike.
Corporate actions are a fundamental part of the financial ecosystem, yet the lack of standardisation has created significant inefficiencies and risks. The solution lies in embracing a unified, collaborative approach to corporate actions. By leveraging technology, creating shared standards and fostering industry-wide collaboration, the financial services industry can overcome the challenges of corporate actions and deliver a more efficient, secure and transparent process. The future is clear: standardisation is key to unlocking the potential of corporate actions, and the time to act is now.
This article first appeared in Digital Bytes (20th of May, 2025), a weekly newsletter by Jonny Fry of Team Blockchain.