How did the idea for Calastone Dividends come about?
Our distributor clients had flagged up dividend event processing as an area requiring high levels of manual resource. The distributors had been receiving dividend event information from the fund managers and transfer agents (TAs) in numerous formats, sent across fax, email and even post.
These manual processes have been used not just from the release of information from the TA to the distributor, but also through the onward flow of information and payment to the end investor. The inefficiency of this model was increasing cost and risk, and often causing late payment to investors.
Over time many of our distributor clients had approached us to ask if we could automate the process. With our unique position in the market we have been able to streamline the process by working with participants across the whole transaction chain to create our Calastone Dividends solution.
So how exactly does it work?
Calastone Dividends electronically connects fund managers, TAs and distributors to diminish the flow of manually generated messages. The solution takes the dividend event data in its raw form from the transfer agent and delivers this direct to the distributor in their preferred format, be that csv file, SWIFT or a download from our Execution Management System (EMS). This ensures full straight-through-processing for the transaction.
The process enables the provision of detailed event and account level information directly from the transfer agent. Furthermore, all of this information is available via EMS. It can be viewed at an account level for both current and historic events, accompanied by an audit trail detailing delivery timeline.
What does Calastone’s dividend product mean for the funds industry?
While most other asset types are already automated, dividend event processing has fallen behind, using out-dated and risk-prone manual methods. Calastone Dividends ensures that investors can be paid on time, and in doing so the automation significantly reduces the complexity of the process and lowers the cost for all involved parties.
Can you go into more detail on what impact this has on the end investor?
During our workshops with the industry, we looked at the process between market participants, however it became quickly apparent that along with the cost and risk to the processor, there was significant detriment being felt by the end investor, where they were regularly receiving dividend payments into their accounts well beyond the scheduled pay date. In some cases they we were seeing delays in excess of 20 business days.
In the current environment of instant demand and regulatory scrutiny, this is an inexcusable position for the industry to be in. By automating the delivery of information, we expect this to have a positive effect on the investor experience.
What is required to implement Calastone Dividends?
Implementing Calastone Dividends is simple, as clients can use current connectivity methods used on other Calastone services. We can also work with clients to provide a bespoke connectivity specification.
If a client does not want to use regular connectivity, they can also use the service by accessing our online execution management system.
How do you see the landscape for Calastone Dividends developing in the future?
Calastone Dividends is a global service and we are already seeing demand from all corners of the globe. The service will not stop at the delivery of dividend information, and during 2018 we are looking to introduce the concept to other types of corporate event information.
