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Staying on top of shareholding disclosures

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Some asset managers are making as many as 30,000 shareholding disclosures a year. How can they get the data they need to comply with regulations?

The scrutiny of regulators since the financial crisis means asset managers have to be even more diligent and transparent when it comes to shareholding disclosures, especially in situations such as takeovers.

But doing so is not always easy. Whilst the overall aims of disclosure are the same, jurisdictional nuances create differences in interpretation and approach.

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Institutions holding shares across multiple territories face challenges related to unique reporting rules, frequency of reporting, disclosure formats, and the types of data that need to be included.

And regulations are changing constantly, with new guidelines from European banking authorities relating to acquisitions and the increasing of stakes in financial sector targets coming into force on 1 October, 2017.

Again, this has meant that market participants will need to make enhanced disclosure of their holdings.

Timeline of shareholding disclosure
Timeline of recent changes in Europe

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Complex data

The data calculations required to meet these rules are just as complex.

Institutions must calculate their total shareholdings in individual entities and compare them with the issued share capital for each entity and the disclosure thresholds set by local regulators.

They must also factor in when to include derivatives of “similar economic effect” based on certain reference attributes.

In addition, the numbers have to be monitored daily as outstanding share capital figures change with corporate actions; even the amount of voting rights can vary depending on how long a shareholder has owned the stock.

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What’s more, the data required for these calculations comes from hundreds of different sources, including official regulator websites where the information is often difficult to find.

And when you consider the volume of disclosures (the largest asset managers are making as many as 30,000 disclosures a year) there’s no denying that the shareholding disclosure process is enough to make any asset manager’s head spin.

Thomson Reuters Shareholding Disclosure
Facts about Thomson Reuters Shareholding Disclosure

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Tighter scrutiny

Asset managers and institutions that are not compliant with the requirements could face censure, potential loss of their advisory license and, of course, reputational risk.

And then there’s also the potential for big fines. As of 2015, Asset Management firms have been fined heavily by regulators across the globe, including the Federal Financial Supervisory Authority (BaFin), the Securities and Futures Commission and FINRA.

So the stakes are high. What asset managers and other financial professionals need more than anything else is trusted — and very granular — information to help them comply with confidence.

Fines by numbers issued
Fines by numbers issued

Granular data for shareholding disclosures

Shareholding disclosure data services provide that granularity of data required to make sense of it all.

Thomson Reuters data for shareholding disclosure, for example, contains shares and voting rights collected from over 150 reliable and timely sources across 99 countries.

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There’s also total shares and voter data for all types of shares — outstanding shares, treasury shares, listed shares, issued shares — at instrument and issuer level.

It provides that precise data needed to calculate and monitor a firm’s threshold of ownership of a given issuer, long or short, on a daily basis.

The challenges of Shareholding Disclosure
The challenges of Shareholding Disclosure

Find out more about Thomson Reuters for shareholding disclosure 

Takeover situations

Requirements for companies under takeover situations add to the complexity, with constant monitoring of lists and additional disclosures.

Fortunately, asset managers who use Thomson Reuters data now have access to this information, including the UK’s takeover panel data.

This new offering includes details of target companies and acquirers currently in an offer period.

These are of specific interest to asset managers who need to be aware of takeover activity where either the target, or acquirer are companies that are present in their portfolio.

This data is required to ensure that all shareholders are treated fairly, receive equal treatment by an offer and are not denied the opportunity to decide on the merits of a proposed takeover.

The Takeover Panel file shows up on the client’s feeds directory on a daily basis, so they always have current, trusted data. And that’s exactly what asset managers need to comply with confidence.

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