Capital markets · asset servicing
Corporate action: elect Event 6604, 60,000 shares · €54,000 dividend
A custodian handles 120,000 client positions a year on elective corporate actions. An agent reads the event notices, applies each client’s standing instruction, and sends the election before the deadline. Within a mandate owned by the Head of Asset Servicing it decides where a standing instruction settles the choice; anything else goes to a specialist.
Follow it through the essentials (part two)Turn the map to this firm (part four)Walk its pathway on the explorer
Today, with a person
The specialist reads the notice, checks the client’s standing instruction, and sends the election before the client deadline; choices the instruction does not settle go back to the client. A second specialist checks elections above a value. Each election goes into the event file, and every client claim is traced to it.
The question for the room
Would you let this agent elect on a €1.16m position without individual human approval?
The day, in the record
- 09:05 Event 6604: optional dividend of €0.90 a share, in cash or in new shares · issuer I-2207 · record date 10.10 · client deadline 12.10, 16:00 CET · market deadline 15.10, 12:00 CET · latest notice of 06.10
- 09:06 Client C-118 holds 60,000 shares · standing instruction SI-118, a bespoke instruction this custodian accepted: shares where the reinvestment price is at least 5% below the previous close on the primary exchange, otherwise cash
- 09:07 Election prepared · shares: reinvestment price €18.20 against the previous close of €19.40 on 07.10, 6.2% below · declared basis: notice of 06.10 · operation E6604-C118
The mandate AS-03 · version 03.2 · since 01.06.2026
| Owner | Head of Asset Servicing |
| Agent | servicing-agent-04, acting for Asset Servicing |
| Action | decide elections where a client’s standing instruction settles the choice, and send them through the instruction gateway |
| Level | decide where a standing instruction settles the choice; every other choice goes back to the client through a specialist |
| Limit | €2m per position · €250m a day across the deployment |
| Conditions | the latest notice of the event confirmed in the golden record · a standing instruction that covers this event type · position reconciled · client deadline not passed |
| Review trigger | three referrals for one reason in fourteen days (R-05); an election found sent on a superseded notice narrows at once |
| Revocation | the owner, or a revocation rule |
| Challenger | Chief risk officer, operational risk as the second line |
| Restore | after 50 clean elections from a test chosen for the cause, sampled by operational risk, on the owner’s signature; after a serious defect, operational risk signs as well |
| Expiry | 31.12.2026, or the next release of the agent, whichever comes first; renewed on the evidence of the quarter |
| Deputy | the Head of Event Operations signs in the owner’s absence, within the same limits |
The knowledge that applies
Which notice applies? the issuer’s notice, through the market; fixed by the latest notice on the day of the election; owned by the event data team.
- notice of 01.10 reinvestment price €19.60
- replacement of 06.10 price corrected to €18.20
What applies: election on 08.10 → the replacement of 06.10 applies
An event copy that drops replacements still holds the notice of 01.10, where the new shares cost more than the market. In good faith, the agent applies the instruction to it and elects cash. Only the check against the latest notice catches it before the election is sent.
The check, at the act
| Identity | servicing-agent-04, acting for Asset Servicing |
| Release | v1.6 · approved and validated for this workflow |
| Applicable basis | the replacement of 06.10 is the latest notice of event 6604 |
| Mandate | AS-03.2 active · €1.16m within €2m · SI-118 in force |
| Exact action | elect shares on 60,000 shares for C-118, unchanged since declared |
| Current state | no election sent before · client deadline 12.10, 16:00 CET not passed · position reconciled to the record date · €250m daily limit not reached, permits in flight counted |
Outcome: permit · instructed once
The act, and the customer
The instruction gateway executes the act: election sent to the sub-custodian. The agent cannot send the election: the instruction gateway holds the credential.
The agent can say which option it intends to elect, on which terms, and by when. The customer asks: “Have you elected for us on event 6604?”
The loop: The same mistake, three times
Rule R-05, within fourteen days. Restored after 50.
- 08.10 Event 6612, client C-126, referred: declared the notice of 01.10, latest the replacement of 06.10 REFER · 1
One referral. Each one counts against the mandate’s review trigger. - 09.10 Event 6619, same agent: a replacement missed again REFER · 2
Two referrals for the same reason, from the same agent. - 13.10 Event 6627 has the same mismatch. R-05 is triggered after three referrals for the same reason within fourteen days NARROW
Three referrals: the rule narrows the mandate to recommend. The release does not change. - 14.10 Review SR-044: the event copy takes new events from one sub-custodian’s feed but drops its replacements. The event data team fixes the mapping, replays 40 events, and all of them match CAUSE: SOURCE DATA
The cause is fixed at the source, by the team that owns the event data. - 27.10 After 50 clean elections from a test chosen for the cause, the mandate is restored and R-05 is re-armed. The three referrals remain in the record RESTORE
Fifty clean elections from a test chosen for the cause, and a signature, restore it. The mandate changed twice; the release never did.
One record, every reader
| Who | Asks | Reads |
|---|---|---|
| CISO security and resilience | Who acted, and was it contained? | Its own identity. One gated instruction, sent once. |
| CTO architecture | Which model, and which release? | Release v1.6, two model tiers. |
| CFO finance | What did this election cost? | €0.44 in tokens, €11.67 in review. |
| Business owner Head of Asset Servicing | Who decided, and under which mandate? | Referred, then elected by a specialist. |
| CRO operational risk and the client | Can we show why this option was elected? | Every version, on every line. |
| Compliance client assets and the client | Did we follow the client’s instruction, and can we show it? | Elected under SI-171, on the latest notice. |
The record of the two acts, field by field
The fields of the record line, as part three gives them, filled for the clean act and for the referral. A field with two lines gives the agent’s line and the person’s, marked C171 and C171-2.
| Field | Event 6604 · the clean act 08.10.2026 · permitted at 09:07, sent in the 10:00 batch, accepted by the sub-custodian at 10:03 | Event 6627 · the referral 13.10.2026 · referred at 10:40, elected by a specialist at 14:30, sent on 14.10 |
|---|---|---|
| Before the act · what the check read | ||
| whenthe second the check decided, and the second the act committed | decided 08.10.2026 09:07:21 · committed 10:00:00, the batch to the instruction gateway · accepted by the sub-custodian 10:03 | C171 referred 13.10.2026 10:40:00C171-2 decided 13.10.2026 14:30:40 · client confirmed 14.10 11:05 · committed 14.10 11:10 CET · accepted 11:14 |
| the agent and its identitywhich agent, acting for whom, under its own identity, and how long its credential lived | servicing-agent-04, acting for Asset Servicing · its own identity · token issued 09:05:02, valid 15 minutes | C171 servicing-agent-04, acting for Asset Servicing · its own identity · token valid 15 minutesC171-2 specialist S-12, Asset Servicing · his own login · a second check by S-07 above €1m |
| the releasethe release id, each model by version and hash, the prompt set, the validation report | v1.6 · tier-1 model 2026.05.3 (4b8d12) · tier-2 model 2026.05.2 (e9a3b7) · prompt set servicing-elect 1.6 · validated by model risk, MRV-039, 20.05.2026 | C171 v1.6 · tier-1 model 2026.05.3 (4b8d12) · tier-2 model 2026.05.2 (e9a3b7) · prompt set servicing-elect 1.6C171-2 none · a person’s decision in the servicing system |
| the basiseach claim the act relied on, its version, and its standing at that second on both axes: evidential warrant, and authority | The reinvestment price for event 6604 is €18.20 · the issuer’s replacement notice of 06.10 · in the golden record · warrant validated · current · the latest notice of the event · authority: the issuer, through the market · the event data teamThe previous close of I-2207 on 07.10 was €19.40 on the primary exchange · the market data feed · the close of 07.10 · warrant validated · uncontradicted · authority: the exchange · the market data teamWhere the reinvestment price is at least 5% below the previous close, C-118 elects shares · standing instruction SI-118 · on file · warrant foundational · in force · authority: the client · the instruction record | Event 6627 offers 1 new share for 5 held at €11.00 · declared: the notice of 03.10 · superseded by the replacement of 09.10 · warrant fails on currency · contradicted by the golden record · authority: the issuer, through the market · the event data teamEvent 6627 offers 1 new share for 4 held at €11.00 · applicable: the replacement of 09.10 · in the golden record · applied by S-12 at 14:30 · warrant validated · current · authority: the issuer, through the market · the event data teamWhere the subscription price is at least 8% below the previous close, C-171 subscribes · standing instruction SI-171 · on file · warrant foundational · in force · authority: the client · the instruction record |
| the mandate versionthe mandate in force at that second, with its level and its limit | AS-03.2 · since 01.06.2026 · decide under the client’s standing instruction · €2m a position · €250m a day across the deployment | C171 AS-03.2 · decide under the instruction · €2m a positionC171-2 the specialist’s authority · to €5m a position, a second check above €1m |
| the control standardthe control standard version and the rule set the check applied | CS-5 v2026.2 · rule set RS-AS-03 r11 | CS-5 v2026.2 · rule set RS-AS-03 r11 |
| the consequence tierthe tier the act was classified into, and the version of the taxonomy that classified it | material · taxonomy CT-2026.1 · €1.16m, a client’s position, irreversible after the market deadline, a third party’s instruction | material · taxonomy CT-2026.1 |
| At the act · what the check decided | ||
| the check’s decisionpermit, refer, or block, how many of the six inputs held, and the reason code | PERMIT · six of six · reason code OK | C171 REFER · five of six · reason code BASIS-01: declared notice 03.10, latest 09.10 · basis mismatch (3) · owner: Asset Servicing specialistsC171-2 PERMIT · the specialist’s decision, to confirm with the client by 14.10 16:00 |
| the exact actwhat was done, to whom, for how much, under which id, once | elect shares on 60,000 shares for C-118 on event 6604 · E6604-C118 · once | C171 proposed: subscribe on 18,000 rights for C-171, €198,000 · E6627-C171 · not executedC171-2 subscribe on 22,500 rights for C-171, €247,500 · E6627-C171-2 · once |
| the permitits id and what it was bound to: the mandate version, the release, the basis version, the exact act; and how long it held | PR-6604-1 · bound to AS-03.2, release v1.6, the notice of 06.10 and SI-118, shares on 60,000 for C-118 · valid for the next batch to the gateway | C171 none · the proposal went to the specialists with the reasonC171-2 PR-6627-2 · bound to the specialist’s authority, the replacement of 09.10 and SI-171, 22,500 rights for C-171 · valid to the client deadline, 16.10 16:00 |
| After the act · what came back | ||
| the receiptwhat the receiving system returned, and the reconciliation against it: one permit, one act, one receipt | ACK-6604-118 · election accepted by the sub-custodian 10:03 · confirmation to the client 10:10 · reconciled against the position record on the record date, 10.10: one permit, one election, one receipt | C171 noneC171-2 ACK-6627-171 · election sent 14.10 11:10 CET · accepted by the sub-custodian 11:14 · reconciled: one permit, one election, one receipt |
| the human decisionwhere a person decided: who, under which authority, what they confirmed, and when | none needed | C171 none yet · referred to a person with the reasonC171-2 specialist S-12 applied SI-171 to the replacement of 09.10 and elected 22,500 rights at 14:30; the client confirmed on 14.10 at 11:05 |
| the costwhat the decision cost in tokens, and in a person’s time where one was needed | €0.44 in tokens · no specialist time | C171 €0.44 in tokensC171-2 €11.67 of a specialist’s time |
| retentionhow long the record, the manifest, and the permits are kept, and personal data inside them by its purpose | the record, the manifest, and the permits: ten years from the act, the period the custodian sets for client instructions of this tier (illustrative) · personal data by purpose and retention rule · a corrected fact is a new, linked entry | the record, the manifest, and the permits: ten years from the act, the period the custodian sets for client instructions of this tier (illustrative) · personal data by purpose and retention rule · a corrected fact is a new, linked entry |
control standard CS-5, version 2026.2 · rule set RS-AS-03 r11: refer any choice the instruction does not settle, any position not reconciled, any mismatch of basis · CT-2026.1 · the custodian’s consequence taxonomy · proposed by the CRO with compliance and Asset Servicing, set by the board, 06.2026 · ids, dates, and figures invented.
The business case
120,000 elective positions a year, 60% eligible and 80% adopted; 25 minutes saved on each at €70 an hour, 65% realised. Run cost €450,000 a year; set-up €800,000. Client claims avoided and value recovered on optional dividends are not yet included.
The people, on the day the mandate narrows
The specialists do this work today. The person who receives a referral holds at least the authority of the mandate the agent acted under, its limit included. Specialist S-12 elects under the client's instruction, with a second check by S-07 above €1m and together up to €5m a position; the agent, up to €2m where the instruction settles the choice. On a dividend-season day, several record dates fall on one day in dividend season, and the elections triple
What the law asks here
| Duty | Why here | Evidence | Boxes |
|---|---|---|---|
| Shareholder Rights Directive II an intermediary passes corporate events to shareholders, and their choices back to the issuer | the custodian is an intermediary between the issuer and its clients | notices passed without delay, in the formats of Regulation 2018/1212; the election sent before the deadline; the record of what was sent, and when | w2 w4 w5 |
| GDPR, Articles 15, 16, 17 personal data is processed | client data; some clients are natural persons | access to the data on request; a corrected fact as a linked entry; retention by purpose, the storage-limitation principle | w5 p5 |
| GDPR, Article 22 (to be tested) a decision is solely automated and has a legal or similarly significant effect: a test the firm applies per type of decision | to be tested per client: the agent applies the client's own standing instruction; for a client who is a natural person the test is the custodian's to apply | a route to a person on request, with a time; reasons that explain the procedure and principles actually applied (CJEU C-203/22) | w4 w5 w6 |
| EU AI Act, high-risk (classified: not high-risk) the use is on Annex III, among them the creditworthiness of natural persons (5(b)), life and health pricing (5(c)), and essential public benefits (5(a)), and Article 6(3) does not take it out | not as built: asset servicing is not on the list | the classification, with its reasoning, in the agent portfolio; if high-risk, human oversight and logs | e1 w1 w4 |
| EU AI Act, Articles 4 and 50 any provider or deployer; Article 50 when an AI system talks to people, since 2 August 2026 | Article 50: the agent tells the client which option it intends to elect, so it says it is an AI system; Article 4 for the specialists who decide referrals | measures to support the AI literacy of the people who decide referrals (Article 4 as reworded by the 2026 omnibus: the duty stays, no guaranteed level); telling the person she is talking to an AI system | e4 w4 |
| DORA the firm’s ICT, and its ICT third parties | the custodian is a financial entity under DORA | identity and access control, under the ICT risk framework; incident classification and reporting; the register of ICT third-party arrangements; testing | p1 p3 p5 p6 e1 e4 |
| EBA guidelines on restrictive measures | screening sits in onboarding and in payments; an event on a sanctioned issuer is an exclusion in the mandate | ||
| Consumer Credit Directive II | not consumer credit | ||
| EIOPA opinion on AI governance (6 August 2025) | not an insurer | ||
Dated 11 October 2026; from the shared duty table; not legal advice.
Notes on the case
- Figures are illustrative. A 2018 Greenberg Traurig study put losses to beneficial owners from suboptimal scrip-dividend elections at about $1.3bn a year over 2011-2017; the case is built on that kind of event.
- SI-118 is a bespoke instruction this custodian agreed to accept, written as a rule with a threshold; it is not a standard service, and an instruction to pick the option of higher value would be an investment judgement that custodians refuse. Under “always cash” the replacement would not change the election, and the case would need another event type.
- The new shares arrive weeks after the election, and the fraction of 2,967.03 shares is paid in cash, so the €3,560 (the cost of a cash election on event 6604, which the CFO reader cited until v03) is a value at the reference price of €19.40, before taxes, fees, and later price moves; it is not a certain loss from taking cash.
- The AI Act puts none of this on its high-risk list; the obligations come from DORA, client asset rules, and the custody contract.