IMPORTANT DOCUMENTS

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Committees: Corporate Actions Committee

The Corporate Actions Committee was formed to pursue operational enhancements related to collection and processing of corporate actions data. This committee meets periodically to discuss topical industry developments.

September 24, 2007

The AMF Corporate Actions Committee is working on providing the asset management industry best practices in connection with processing mandatory and voluntary corporate actions. The Committee is focusing on two projects, i.e., mandating the exchange of 144a securities and creating a consistent, standard set of information in corporate actions announcements.

The Committee held a joint meeting on August 14, 2007, with representatives of the SIFMA Corporate Actions Division, ISITC and SMPG to compare templates for corporate actions announcements. As a result of the meeting, a gap analysis is now taking place of the overlapping existing templates (mergers and tender offers). The goal is to create one template for each event type which then could be shared with the issuer as they file the information of the corporate action with the SEC and distribute the information to the financial markets.

Meanwhile the AMF Corporate Actions Committee is moving forward with its slightly narrower scope project. The committee has a meeting scheduled for September 24, 2007, where they plan to begin the process of creating sample templates for announcements sent from custodians to asset managers. Any existing industry-agreed templates will be used as the basis for this work.

In connection with mandating the exchange of 144a securities, the Committee is the process of setting up a meeting with legal counsel at Willkie Farr & Gallagher in Washington DC. In recent years the market for securities released under the SEC Rule 144a has grown rapidly. Many asset managers, as qualified institutional buyers, participate in this restricted market by purchasing the 144a securities. There are cases where the restricted 144a security is subsequently, through a corporate action, changed to an unrestricted public security. The majority of asset managers currently instruct custodians to always make the exchange from the restricted 144a security to the new, unrestricted security. However, as this is a voluntary corporate action, there is still a risk that an exchange period might be missed. This risk would be reduced if the industry adopted a mandatory exchange for these securities. For those that do not automatically want to exchange, an opt-out alternative could be provided. The Committee plans, with the help of the legal counsel, to approach issuers and underwriters to develop a business case and then request regulators to approve a mandatory rule (with an opt out provision).

The AMF Corporate Actions Committee is committed to a program of education in the industry in connection with the corporate actions process and best practice recommendations. Committee members will speak on a corporate actions panel at the SIFMA Fixed Income and Derivatives Operations conference in Fort Lauderdale, October 25-27, 2007.

The AMF Corporate Actions Committee is co-chaired by Lorraine Morrison of DTCC, Michael Stern of Morgan Stanley Investment Management and Tina Davis of BNY Mellon, who also acts as a liaison to the AMF Steering Committee. If you would like to participate in the Corporate Actions Committee, please contact Elisa Nuottajarvi of the AMF staff at 646-637-9266.


June 18, 2007 — Feedback Needed on Action Types

The AMF has recommended standardizing the information in corporate actions announcements to reduce the risk of misinterpretation and to better enable standardization in the industry. A joint working group (AMF, SIFMA CA Division, ISITC) will develop sample templates of complete announcements for action types in plain English. These templates can be used by custodians as they send announcements to asset managers, as well as the issuers as they send the initial announcement of the corporate action to the depository and custodians. These templates will be based on the information identified in the EIG (event identification grid) which has been agreed-upon industry-wide. The templates would also be harmonized with any work done by the SMPG and the DTCC announcements to ensure industry coordination. The AMF Corporate Actions Committee agreed to gather feedback from asset managers as to which corporate actions types are most high risk or high volume, and should thus be tackled first. All feedback should be sent to Elisa Nuottajarvi of the AMF staff at enuottajarvi@sifma.org..


December 1, 2006 — Corporate Actions Best Practices

The Asset Managers Forum Corporate Actions Committee has defined best practice recommendations to identify solutions in order to reduce financial, operational and reputation risk related to processing corporate actions. The Committee believes these best practice recommendations will stimulate discussion in the investment community and lead to adoption by the industry in order to mitigate the related risks. These best practices were published for comment at AMF hosted Lunch and Learn on October 4th. The AMF is committed to further educate the industry members about these best practices and to promote dialogue in order to solicit constructive comments and to develop plans for implementation.

The 17 best practice recommendations are fully defined and explained within the best practices document which is available here.

All comments regarding this documentation should be emailed to Elisa Nuottajarvi of The Asset Managers Forum’s staff at enuottajarvi@sifma.org.

The following comments have been received in connection with the AMF’s white paper on corporate actions best practices. The AMF Corporate Actions Committee will review these comments and incorporate into the white paper.