The U.K. Market Implementation Group, tasked with leading the adoption of corporate actions standards, discussed the barriers to and benefits of adoption of the standards at its first meeting held last month. The standards, set by the European Credit Sector Associations and the European Central Securities Depositories Association, are the result of recommendations made in the 2001 and 2003 reports from The Giovannini Group on barriers to harmonized clearing and settling operations in Europe. Specifically, the differences in national rules on corporate actions, beneficial ownership and custody were listed as the third barrier to harmonization.

Barriers to standardization can be as simple as knowing all of the holders of the security at the time of the record date, or applying appropriate tax withholding rules for each country, said Michael Kempe, director in the business model and harmonization division at Euroclear and a participant in the group. But the benefits of the standards, such as having the same ex-date, record date and payment date in each market and listing them in the same order, could save e1 million per organization, he added.

Currently, only a portion of the necessary standards on corporate actions have been set and each standard has several issues that need to be addressed.

The group set its next meeting for late June or early July. In this time, each organization will determine which portion of each standard it will be responsible for, as well as come up with a preliminary timetable for completion. Kempe said the remaining standards are expected by the end of 2007, after which implementation is expected to continue through 2012 at the latest.