Yesterday SWIFT shared the results of its latest corporate actions blockchain pilot, which it declared a success with plans to progress the work. The latest experiments involved six organizations, including American Century Investments, Citi and Northern Trust. In the previous trial, Vanguard was also a participant.
With corporate actions, whether it’s dividends, general meetings or a stock split, the problem is that intermediaries receive data from multiple sources, which invariably does not match. As a result, asset managers, custodians and brokers must do a lot of manual work to establish the correct data. The goal of this pilot is to create a golden copy of the data which is shared amongst the participants.
“Our analysis found that asset managers often receive notifications from up to 100 different sources about the same corporate event, and the data is often different or contradictory from one source to another,” said Jonathan Ehrenfeld, Securities Strategy Director, Swift.
The trial used SWIFT messaging standards and supported the participants in sharing data across the blockchain network. Where there were sufficient data matches, a proposed shared version was created. In the next phase, machine learning will be incorporated to help in the matching process. Rather than focusing on simpler corporate actions such as dividends, the tests involved complex ones such as tender offers and share splits.
In the next phase of work, a wider group of industry participants will aim to establish the requirements for a scalable and automated solution for corporate actions. This will involve different types of intermediaries, new features, and identifying the best partners.
Symbiont was the blockchain technology partner for this phase of the solution. As previously reported, the company entered Chapter 11 bankruptcy in December 2022. There is some prospect that its issues might be resolved, but that remains to be seen. Symbiont raised an invoice to SWIFT after the bankruptcy commenced. SWIFT acknowledged the situation in its report, saying the corporate actions solution is intended to be agnostic to the underlying blockchain. “We are currently in the process of identifying the most qualified technology partner to play this role moving forward,” states the report.