Dividend Cancellations Add to Benchmark Data Complexity

One of the economic consequences of the COVID-19 crisis is that many enterprises around the world are being forced to suspend dividend payments in order to improve liquidity and strengthen their financial position. Companies to announce payment freezes include HSBC, ING Group, Royal Dutch Shell and Ford. In the UK alone, it’s reckoned that nine in ten organizations have cancelled or suspended dividend payments.

Dividend payments are widely used in the calculation of financial benchmarks, so these cancellations will impact the entire financial market. For benchmark users, such as asset managers and institutional investors, the trend adds further complexity to the already challenging task of managing benchmark data. This is because data providers are applying different approaches to factor in dividend cancellations depending on their size, technology infrastructure, business set-up, processes and capabilities.

Frederick Miles, Deputy Head of Global Performance at RIMES, explains: “The suspension of dividend payments is having a big impact on benchmark data quality. Data partners are moving fast to take account of what’s happening in the market and we’re seeing a significant increase in data revisions overall, in some cases multiple revisions for the same data. In light of this, we have observed a considerable increase in data errors and mismatches being highlighted and a spike in the volume of our data verification checks.

“In fast moving times like these firms need to know the market data they use is accurate and up-to-date. That’s why we’re working closely with our data partners to rectify any inconsistencies or errors and we have ramped up our data remediation efforts significantly.

“Through the RIMES Managed Data Services we are insulating our clients from the complexity of the current data management landscape. By providing a smooth, continuous and transparent flow of high-quality data we are removing the need for clients to conduct onerous manual data processing and cleansing tasks, therefore freeing them to focus on their core business activities.”

RIMES Managed Data Services is a proven data operating platform that helps firms of all sizes and in all regions align their data consumption closely with business needs. Contact us to learn more.

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