Report Highlights Impact of Corporate Actions on Trading

May 18, 2006 ( - Routine corporate actions such as takeovers, stock splits, spin-offs, rights issues and exchange offers can impact trading prices and volumes, according to a new report.

In a press release, European economic consultant Oxera, which looked at the effects of these five corporate actions, said exchange offers have the most marginal impact on trading prices and volumes.

“It is well known that the announcement of a takeover produces a price and trading impact in the securities market,” said Luis Correia da Silva, Oxera managing director, in the release. “But this study demonstrates that other corporate actions can also have an impact on share prices and trading activity.”

Silva added that most of the effects of corporate actions happen in the period around its announcement, as the market moves to absorb the impact.

According to the release, most of the impacts studied by Oxera were corporate action events relating to US securities, but the rights issue events studied involved securities from the US, Europe and Asia.

The Depository Trust & Clearing Corporation (DTCC) – which offers a corporate actions announcement service – sponsored the research. “I believe the study highlights the need for firms to make sure that their trading desks have access to accurate, timely data on corporate actions in order to execute proper trading strategies,” said James Femia, managing director, DTCC Global Corporate Actions, in the release.

The complete report by Oxera will be available for download at the DTCC Web site at under “Thought Leadership” and “Industry Perspectives” beginning at 10 a.m. EST Monday, May 22.