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Rising to the Challenge of SRD II

By Elizabeth Maiellano, VP, Product Management.

Shareholder Rights Directive (SRD) II is now in effect, and many industry firms that trade in European Union (EU) equities are now equipped to meet the new standards despite many challenges, including BREXIT in the UK and a global pandemic.

The very first shareholder meeting to be held under SRD II was announced on September 3, 2020, the same date that the Directive went live. Since then, nearly 400 additional meetings have been announced, and there have been over 100 ISIN level requests for disclosure of shareholder identities.

Broadridge played a key role in helping tier-one custodians, banks and brokers comply with SRD II requirements. Demand for our solutions has been unprecedented, and we are now providing voting and disclosure solutions for clients in the US, Canada and EU.

Our enhanced Global Proxy solution provides same-day event capture and distribution, same-day proxy vote processing and confirmations and advanced multi-channel retail functionality. The new Shareholder Disclosure Hub leverages advanced API- and blockchain-based technologies for timely, secure and compliant response to shareholder disclosure requests.

Managing market complexity

Each member state must translate the SRD II requirements into its laws, in accordance with its own interpretation of the directive. This creates opportunities for diverse interpretations that can impact operating models and make straight-through processing difficult.

Stakeholders are presently at different stages of compliance. Several markets have yet to transpose the directive into law, and some have not changed the definition of shareholder to the end-investor. In fact, there are now different definitions of a shareholder across the EU. Some counterparties are still using ISO 15022 SWIFT messages to process voting instead of the new, machine readable ISO 20022 message set developed for SRD II. Some are using a combination of both standards to meet operational needs.

With inconsistent application, some non-compliance events are bound to occur. However, the successful launch shows that despite considerable friction, intermediaries are cooperating to resolve issues going forward.

Compliant communications for corporate actions

Although proxy voting has been the primary focus for SRD II compliance to date, corporate actions also fall within the scope of the directive. To comply, issuers and intermediaries must be able to notify shareholders “without delay.” Broadridge supports corporate action notifications using industry-leading digital communications capabilities. Choose event sourcing through a simple client-driven notification trigger, or a fully integrated solution for managing the full event lifecycle from sourcing, scrubbing and notification through election and reconciliation.

As a global one-stop shop for compliance, Broadridge is ready to help you achieve SRD II compliance across multiple markets. Contact us for details.

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