SIX Financial Information, DST Systems, State Street, and FINRA also had recent FinTech announcements.
JPMorgan, Northern Trust & Banco Santander Aid Broadridge Pilot
This is the season for blockchain/distributed ledger technology pilots as Broadridge Financial Solutions, JPMorgan, Northern Trust and Banco Santander have announced that they been working on a pilot test project that uses blockchain technology to improve “global proxy vote transparency and analytics,” officials say.
The pilot marks Broadridge’s first application of the technology, and “adapts distributed ledger technology capabilities to provide daily insight into vote progress throughout the issuer’s proxy voting period, from meeting announcement date to the annual general meeting,” officials say. The pilot application “ensures role-based access to voting data through use of cryptography and smart contract technology and is built on an Ethereum blockchain platform.”
The pilot supported a corporate issuer’s annual general meeting (AGM) and included “the participation of Santander Investment, the issuer’s agent,” officials say. “The pilot was run in parallel of the AGM, with the blockchain being utilized to produce a ‘shadow’ digital register of the proxy voting taking place in the traditional model.”
SIX Financial Information Targets CRS/AEoI Requirements
SIX Financial Information has launched a new common reporting standard (CRS)/ automatic exchange of information (AEoI) data service, intended to help financial institutions meet the requirements being phased in from June 2017, SIX officials say.
The new offering targets the member states of the Organization for Economic Co-operation and Development (OECD), which is requiring the automatic exchange of information regarding individuals with accounts outside their tax residence, following a common reporting standard, officials say.
OECD member states agreed to the automatic exchange of tax information in 2014. National tax authorities around the world must exchange individuals’ tax information in a standardized way via the CRS.
“As of January 2017, all financial institutions in Switzerland must begin collecting client data ready to report to the Swiss national tax authority starting from June 2018 onwards. The financial industry is heavily engaged with preparing to fulfil the complex requirements of this regulation,” SIX officials say.
“Wave one [OECD] countries, including Germany, France and the UK, will exchange information for the first time in 2017,” according to SIX. “A further 47 jurisdictions in wave two are committed to start exchanges in 2018, including Switzerland, Australia and Canada.”
The SIX CRS/AEoI service “identifies CRS-reportable client income by flagging relevant corporate actions, simplifying resource-intensive data cleansing and alleviating the annual reporting burden for organizations,” SIX officials say. “The service is commercially available from April, with retrospective data available from 1 January 2017.”
The CRS push “requires institutions to have detailed knowledge of the instruments and transactions that trigger reporting obligations. By making it easier for our clients to implement compliance processes, this new offering is an example of how we are using our expertise in corporate actions and regulatory data as the basis for innovative services that solve new industry challenges,” says Robert Jeanbart, divisional CEO of SIX Financial Information, in a statement.
DST Acquires Remaining Interests in Joint Ventures with State Street
DST Systems, an advisory, technology, and operations outsourcing vendor, and State Street Corp., recently announced definitive agreements for DST to acquire State Street’s ownership interest in the Boston Financial Data Services, Inc. (BFDS) joint venture, and the International Financial Data Services Ltd. (IFDS U.K.), a joint venture in the U.K.
“BFDS provides innovative shareholder recordkeeping, intermediary and investor services, and regulatory compliance solutions to financial services clients in the United States,” officials say. “IFDS U.K. is an investor and policy holder administrative services and technology provider to the collective funds, insurance, and retirement industries.”
After the acquisitions are done, DST will own 100 percent of the equity interests in BFDS and IFDS U.K., officials say. The IFDS U.K. acquisition closed in March and the BFDS acquisition is expected to close during April.
“DST and State Street will continue to service offshore and cross-border markets in Canada, Ireland and Luxembourg through the 50/50 joint venture International Financial Data Services, L.P.,” officials add.
“We are pleased to become the sole owner of BFDS and IFDS U.K.,” says Steve Hooley, chairman, CEO and president of DST.
FINRA’s National Adjudicatory Council Unveils Sanction Guidelines
The Financial Industry Regulatory Authority (FINRA) reports that that the National Adjudicatory Council (NAC) has changed the Sanction Guidelines so that they include protection against the financial exploitation of vulnerable individuals or individuals with diminished capacity.
“The NAC is FINRA’s appellate tribunal for disciplinary cases and is a 15-member committee composed of industry and non-industry members. It first published the Sanction Guidelines in 1993 to familiarize member firms with some of the typical securities law or FINRA rule violations that occur, and the range of disciplinary sanctions that may result from those rule violations,” FINRA officials say. “The Sanction Guidelines do not prescribe fixed sanctions for particular violations, and are intended to assist FINRA’s adjudicators — hearing panels and the NAC — in imposing appropriate sanctions consistently and fairly in disciplinary proceedings.”
FINRA’s Market Regulation and Enforcement Departments also consult the Sanction Guidelines in determining the appropriate level of sanctions to seek in settled and litigated cases, officials say. The NAC last updated the Sanction Guidelines in May 2015.
The NAC changes also include three new guidelines relating to systemic supervisory failures, borrowing and lending arrangements, and short interest reporting, officials say. “Additionally, the NAC revised the guidance concerning sanctions imposed by other regulators, indicating that these sanctions may be considered as mitigating factors,” officials add.
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