SEC mandate poses notable operational and tax-related challenges for securities brokers

Wolters Kluwer has launched Cap DATA NOW, a solution designed to facilitate straight-through processing of securities trades by automating the complete lifecycle of essential corporate action tax details. The technology is an extension of Wolters Kluwer’s Capital Changes product functionality and is purpose-built to address a new, automation-focused mandate for brokers from the U.S. Securities and Exchange Commission that takes effect May 28, 2024.

Referred to as T+1, the new mandate shortens the standard settlement cycle for most routine securities trades on U.S. securities exchanges from two business days after the trade date of a securities transaction to one day.

T+1 accelerates the need for corporate action resolution and communication across various internal systems because all corporate actions affecting securities need to be processed before any related trades can be settled and includes important tax details.

“Tax accuracy is paramount for our customers,” says Chuck Ross, Vice President and Segment Leader, Investment Compliance, Wolters Kluwer Compliance Solutions. “The move to a shorter settlement turnaround time as reflected in the T+1 rule presents significant challenges to brokers and requires the kind of nimble, robust automation functionality that Cap DATA NOW provides to help market participants comply.”

Exchanges in Canada and Mexico have also adopted this requirement, effective May 27, 2024.

Ross notes that the T+1 settlement cycle requirement will require brokers to automate operations processes in many respects, including corporate actions and their tax details.

Cap DATA NOW provides corporate action taxability information for publicly traded stocks as well as useful early announcement information. Because it is XML structured data, the solution’s output helps brokers process corporate actions tax details quickly in the new T+1 world. Cap DATA NOW reduces brokers’ manual tax processing activities.

Wolters Kluwer Compliance Solutions is a market leader and trusted provider of risk management and regulatory compliance solutions and services to U.S. banks, credit unions, insurers and securities firms. The business sits within Wolters Kluwer’s Financial & Corporate Compliance (FCC) division, helping these financial institutions efficiently manage risk and regulatory compliance obligations.

For more information about Wolters Kluwer, please visit: www.wolterskluwer.com.

About Wolters Kluwer

Wolters Kluwer (EURONEXT: WKL) is a global leader in information, software solutions and services for professionals in healthcare; tax and accounting; financial and corporate compliance; legal and regulatory; corporate performance and ESG. We help our customers make critical decisions every day by providing expert solutions that combine deep domain knowledge with technology and services.

Wolters Kluwer reported 2023 annual revenues of €5.6 billion. The group serves customers in over 180 countries, maintains operations in over 40 countries, and employs approximately 21,400 people worldwide. The company is headquartered in Alphen aan den Rijn, the Netherlands.

For more information, visit www.wolterskluwer.com, follow us on LinkedIn, Facebook, YouTube and Instagram.

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