Closing the gap between Issuers and Investors demands greater interaction

Closing the gap between Issuers and Investors demands greater interaction

Posted on October 23, 2023 by Cathy Wright

Closing the gap between Issuers and Investors demands greater interaction

Capital markets are continuing their journey to real-time operations. The barriers brought by legacy systems and time zone differences are crumbling and will soon be knocked down entirely.

Part of the motivation to operate in real-time is the certainty of trade date plus one day settlement (T+1) that starts next year in North America  on the 28^th May The United States is moving on May, 28^th and Canada moves a day earlier. T+1 is also being explored in the UK and the EU, while India has even started discussions to move settlement to T+0.

All this means that investors will be able to have faster settlement of their transactions in more jurisdictions, which in turn will enable faster reinvestment. Equally, traders will be able to trade more frequently which will further increase liquidity in the market. Some experts anticipate that the financial and risk benefits of these changes will filter down towards the investor. Issuers will meanwhile benefit by gaining greater visibility of shareholder activity, measured in one day rather than two, as is in most places today.

Fundamentally the legacy systems that feature in many market players around the world, including Central Securities Depositories (CSDs), will have to be cranked up to speed or replaced.

Real-time access to data to supply information to market intermediaries, so they can better service investors, will also need to improve. The complex supply chains of market and reference data will also require upgrading and be implemented on an international scale, across multiple time zones to provide near real-time access and usage.

Issuer and investor needs must always take precedence for market players, but governments and fluctuating economic conditions can bring challenges for service providers that stall innovation. Technology advancements today can not only assist firms to meet an array of challenges, but can also enable business opportunities and improve the investor and issuer experience.

The necessity to operate services in real time clearly puts huge emphasis on technology to not just back up services but to also provide new service offerings, because it is always better to be ahead of client requirements.

There is technology available today that is able to provide investors and issuers with what they need and want, such as the Broadridge Communications Cloud ^SM. Which enables the provision of transformational service levels, data insights, and enhanced customer experience, whilst reducing costs. This type of technology can aid in forging closer relationships between issuers and investors, especially for ESG.

Issuers with stated ESG policies need to be able to produce auditable data that matches the objectives of their policies and to demonstrate compliance to investors, the market and, increasingly, the regulators.

Data and information that derives from the issuer can now be presented in real-time. However, presenting is one half of the story, interacting with them is an important second half.

As the international markets move to process transactions in real-time for T+1, they can utilise technology that allows real-time interaction between issuers and investors While also taking full advantage of the real-time environment by honing down costs and risks and ramping up additional and new services.

It is clear that capital markets need to enhance services to the standards required by today’s investors. Undoubtably change is upon us and a new age of high-quality data and information access in real-time is banging on the front door. The noise is getting louder by the day. Hopefully the changes planned and being delivered will not only meet the needs of the issuers and investors but will exceed them. Isn’t that what a service industry is all about!