This is the second part of a three part series in preparation of our webinar series on the 16th of July. We will be discussing how Blockchain, Natural Language Processing & Machine Learning can be used world-wide in the issuance of securities, such as LEI & ISIN, as well as in Corporate Actions & Announcements.
For more information and registration, click the link below!
Clarifying the Landscape
Before digging deeper into the benefits and risk associated with digitizing processes related to LEIs, ISINs and Corporate Action Announcements, it’s worth reiterating what each of these are and how they operate:
- LEIs or Legal Entity Identifiers are unique 20-character alphanumeric codes - and associated set of six reference data items - used to uniquely identify a legally distinct entity that engages in financial market activities. They are most commonly issued to financial institutions such as banks and investment houses. A large international bank, for example, may have an LEI identifying the parent entity, plus LEIs for each of its children - legal entities that buy or sell stocks, bonds, swaps, or engage in other financial market transactions. LEIs are issued by Local Operating Units (LOUs), which are in turn overseen by the Global Legal Entity Identifier Foundation (GLEIF)
- ISINs (International Securities Identification Numbers) are 12-character strings used to identify financial instruments issued on behalf of a publicly-traded company or government entity. Currently, an ISIN can be assigned to most forms of securities including equity shares; units and/or depositary receipts; debt instruments including bonds; commercial paper; stripped coupons and principal amounts; T-bills; rights and warrants; derivatives; commodities; and currencies. ISINs are issued by National Numbering Agencies (NNAs), overseen by the Association of National Numbering Agencies (ANNA)
- Corporate Actions are changes made to the capital structure or financial position of the issuer of a security (typically a public or private entity - not a bank) that may affect any of the securities that institute has issued. Rights issues, tender offers, conversions, takeovers, mergers, early redemptions and dividend payments are just a few examples. Corporate Actions are approved by a company's board and sometimes the shareholders, but the action itself is executed by a financial representative i.e. a bank. Corporate Actions are significant in the context of LOUs because they can take place at the Child LOU level, but have risk implications (legal, financial, security) at the parent level.
- Corporate Action Announcements are publicly accessible legal documents to inform the public about a Corporate Action. These can be created by a bank or financial institution on behalf of the company or government entity, or produced in-house by the organization itself. These can take many forms including press or news releases; specially formatted Corporate Action Announcements; investor calls; proxy statements, 8-K filings, or physical documents delivered through the mail. One example is the London Stock Exchange News Hub used to share information on all Corporate Actions in a structured, fully-indexed fashion. The workflow process to deliver Announcements can be quite complex, and varies from one type of Announcement to another. The diagram below illustrates what the announcement process might look for a publicly-traded firm in the U.S.
To register for the webinar series, click the link below!