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Digitization Working Group

Purpose

The main objective of this Working Group is to focus on the digitization and digitization journey of ISSA participants to understand the challenges and opportunities to promote digital standardization, share best practices and improve efficiency, risk mitigation and investor experience within the industry.

Scope

This Working Group looks at the digitalization of processes as opposed to specific digitization of securities or currencies. Areas of focus are topics which would benefit from best practice and industry standardization and also interoperability between participants.

The current in scope topics are:

  • Account opening and KYC
  • Tax documentation, at source or reclaimed
  • External non-digital communications (to the client and to the market)
  • Corporate Actions & Proxy Voting – to achieve the acceptance of the machine
  • ACTIVE TOPIC: Digitizing market and client communications such as manual processes involving paper & wet signatures
  • APIs – Development of industry standard APIs to support the digital agenda (covered in Asset Servicing WG)
  • DLT standards and market adoption (covered in the Distributed Ledger Technology WG)
  • Private markets As demand for investment in this sector increases, there will be a need to review and improve front-to-back processes and deliver better investor outcomes and transparency.

Digitizing Market and Client Communications

The Working Group agrees with the hypothesis that non-digital communication is inefficient and a potential source of risk. The market drivers for non-digital communication range from the “legal requirement for a wet signature”, which is difficult to modify rapidly, to the “we have always sent a fax”. The Working Group aims to identify opportunities for Securities Service Providers to further digitize market and client communications. From this, the Working Group will review the current challenges and propose solutions for the market, taking into account ISSA standards, controls, best practices and old and new (disruptive) technologies. The benefits are seen in the savings achieved through digitization, but also in aligning with the ESG agenda, serving clients and reducing risk.

Key Deliverables

Digitizing Market and Client Communications

Definition of terms:

Full connectivity defined as communication that enables straight-through processing (STP) Examples include APIs, SWIFT, FIX, SFTP that are received or generated without manual intervention.
Digital defined as communication that is transmitted in a digital format but does NOT enable STP Examples include emailed PDFs, MT x99s i.e. the information exists and can be copied into a system.
Manual i.e. not digital, such as filling in forms. Examples include account opening, signature cards and tax forms such as W8 Ben. This category also includes faxes and telexes where the information is available and has to be re-keyed into a system.

  • Identification of the opportunities and the challenges
  • Identification of solutions (tactical and strategic)
  • Publication of best practice paper

Publications

Private Markets – Call to Action (10/2022) > PDF 2.5 MB

Working Group Co-Chairs

  • Michael McPolin, Broadridge Financial Solutions
  • Ian Pledger, BNY Mellon

Executive Sponsor

  • Roland Chai, Nasdaq

Instititons Represented by Experts in the Working Group

  • Accenture
  • Banco Bilbao Vizcaya Argentaria S.A. (BBVA)
  • Broadridge Financial Solution Inc.
  • Central Depository Services (India) Limited
  • Cognizant
  • Datos Insights
  • Deutsche Bank AG
  • Euroclear
  • European Central Securities Depositories Association ECSDA
  • GlobeTax Services, Inc.
  • Grupo Bolsa Mexicana de Valores
  • Hong Kong Exchange and Clearing Limited
  • HSBC Holding Plc
  • JP Morgan Chase & Co.
  • Marsh & McLennan Companies Inc. Oliver Wyman Group
  • Myriad Group Technologies Ltd
  • Northern Trust Corporation
  • NowCM
  • Rand Merchant Bank – Custody Services
  • S&P Global/IHS Markit
  • Saphyre, Inc
  • Saudi Stock Exchange (Tadawul)
  • State Street Corporation
  • Strate (Pty) Ltd
  • The Bank of New York Mellon Corporation
  • The Depository Trust & Clearing Corporation
  • The Mauritius Commercial Bank Ltd.
  • The Standard Bank of South Africa
  • U.S. Bank N.A.
  • UBS Group AG
  • UniCredit S.p.A.