Leveraging AI for Streamlined Corporate Actions Processing

In the swiftly changing financial landscape, being ahead of the curve is essential for financial institutions and their associated service providers to gain a competitive edge. This is the case with the effective management of corporate actions. Handling corporate actions ― including dividend payments, mergers, rights issues, stock splits, and more ― is a challenging task requiring meticulous attention to detail and a thorough understanding of market dynamics. However, with the emergence of Artificial Intelligence (AI), financial institutions and their service providers are finding new ways to streamline and enhance the corporate actions processing workflow.

Enhancing efficiencies with hard to manage data

The S&P Global Market Intelligence Managed Corporate Actions and Corporate Actions Solution harnesses AI in multiple ways to optimize this complex function, including corporate actions data extraction and processing. Corporate actions data still resides in unstructured sources, such as news articles, press releases, and regulatory filings, making it hard to extract and interpret the information. In addition, when details are received via custodian feeds, there are often long narratives attached containing important terms and conditions. AI, particularly Natural Language Processing (NLP), is employed by S&P Global Market Intelligence to efficiently extract and interpret relevant information from these unstructured sources.

By identifying key details, AI algorithms ensure that critical information is captured accurately and promptly, while also presenting the information to a user for additional manual scrutiny. AI services at S&P Global Market Intelligence leverage 15+ years of corporate actions training history to teach NLP models how to assess the accuracy of upcoming corporate actions. In addition, we are working on specific generative AI use cases that are trained on an array of datasets to learn the underlying patterns and structure to generate new data with similar characteristics. This will help create customized terms based on customer type and preference and automated events, plus include data anomaly detection, helping clients increase efficiencies with automation and minimize manual errors.

Meeting requirements for timely communications

AI within our Corporate Actions Processing solution uses Robotic Process Automation (RPA) that employs software bots to automate repetitive tasks. Data validation, reconciliation, and notification generation are thereby streamlined, enhancing productivity, and enabling operations staff to focus on more strategic and creative aspects of their roles. This is especially important given recent communications from regulators highlighting the importance of timely communications in corporate actions processing to keep investors, fund managers, and other stakeholders up to date on developments.

AI-driven machine learning models enable our solutions to categorize and classify corporate actions based on their type and potential impact on securities, plus assess risks by analyzing the impact on stock prices, identifying conflicts of interest and sanctions, and more. This data-driven approach helps organize and prioritize actions for further processing to help avoid overlooking important events.

Leveraging AI for dividend forecasting

S&P Global Market Intelligence also offers a comprehensive Dividend Forecasting service that leverages an "event prediction AI" that delivers precise forecasts of the size and timing of payments based on bottom-up fundamental research, the latest company news, and insight from a proprietary advanced analytics model. The Dividend Forecasting dataset contains independent dividend amount and date estimates for 28,000+ global stocks, ETFs, and ADRs up to five years in the future. This predictive analytics enables financial institutions to utilize these forecasts to confidently price derivatives, enhance investment strategies, and better understand dividend risk.

Embracing additional capabilities moving forward

As we delve into more AI-based use cases, we are focused on obtaining the necessary applications to provide our clients with action-oriented information on the impacts of corporate actions and corresponding tax implications. Furthermore, we are actively exploring the use of AI technology to enhance the scalability and security of our application, including the ability to identify possible security threats or breaches during integration processes.

We are excited to be helping to revolutionize corporate actions processing in the financial service industry by harnessing the power of AI to help our clients achieve greater efficiency, accuracy, and automation in this important area. As the power of AI continues to escalate, we believe that embracing the technology is no longer a choice, but a necessity for success.

S&P Global provides industry-leading data, software and technology platforms and managed services to tackle some of the most difficult challenges in financial markets. We help our customers better understand complicated markets, reduce risk, operate more efficiently and comply with financial regulation.

This article was published by S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.