Investment Operations

Is ChatGPT the Key to Unlocking STP for Corporate Actions?

ChatGPT Artificial Intelligence for Corporate Actions

The corporate actions processing space has long been plagued by inefficiencies, manual interventions, and a lack of standardization, making it a prime candidate for technological disruption. With the advent of advanced AI language models like OpenAI’s ChatGPT, there is growing excitement about the potential for these technologies to streamline corporate actions processing and finally achieve Straight Through Processing (STP). Could ChatGPT actually be the long-sought solution for STP in corporate actions?

Understanding the Challenge of Corporate Actions Processing

Corporate actions, such as dividend announcements, stock splits, and mergers, can have significant implications for investors and financial institutions. Processing these events involves gathering, validating, and disseminating information from various sources, including issuers, data vendors, and custodians. This complex, time-consuming process, especially complicated actions that involve multiple companies and/or multiple investor options and outcomes, often –well, almost always – requires manual interventions, which can lead to errors and delays, impacting investment decisions and increasing operational risk.

Enter ChatGPT: A Potential Game-Changer for STP

ChatGPT, especially the latest version, ChatGPT 4, has shown immense promise in understanding and generating human-like text. Its applications span across various domains, including customer service, content creation, and data extraction. Here are some ways ChatGPT could revolutionize corporate actions processing:

  • Data extraction and validation: ChatGPT’s advanced natural language understanding capabilities can be used to extract relevant data from unstructured sources such as issuer announcements, regulatory filings, and financial news. The AI can then validate the extracted information, cross-referencing it with multiple sources to ensure accuracy, which would reduce manual interventions and improve overall efficiency.
  • Standardization and normalization: One of the key challenges in corporate actions processing is the lack of standardized formats and terminology across different markets and data sources. ChatGPT can help address this issue by normalizing the extracted data into a consistent format, enabling seamless data flow between various systems and stakeholders.
  • Automated communication: Leveraging ChatGPT’s natural language generation capabilities, financial institutions can automate the creation and dissemination of corporate actions notifications to their clients, ensuring timely and accurate information sharing.
  • Enhanced exception handling: ChatGPT can assist in identifying discrepancies or exceptions during the corporate actions processing, providing suggested resolutions or escalating issues to relevant personnel for further investigation, reducing the time spent on manual exception handling.

Cautious Optimism and the Road Ahead

While ChatGPT offers exciting possibilities for the future of corporate actions processing, it is crucial to recognize that implementing such a solution is not without its challenges. Data privacy, model explainability, and regulatory compliance are all factors that must be addressed to ensure a successful deployment.

ChatGPT certainly has the potential to revolutionize corporate actions processing, paving the way for STP and significantly improving efficiency in this critical area. However, it is essential to approach its implementation with cautious optimism, addressing potential challenges and remaining compliant with industry regulations. With the right strategy, ChatGPT could well be the long-sought solution the industry has been waiting for.

Let’s just hope it happens before Skynet becomes self-aware and launches the missiles.