Corporate action reconciliation is the set of checks a custodian, broker or asset manager runs to prove that an event has been processed completely and correctly. It is a specialised form of reconciliation carried out at several points in corporate action processing. Before the record date, the firm's own record of holdings is compared with the position shown by the depository or sub-custodian, so that any difference is fixed before entitlements are fixed.
After the event, the cash or securities actually received from the paying agent or depository are compared with the total expected from the corporate action entitlement calculation, and then with the sum credited to client accounts. Breaks commonly arise from unsettled trades, securities on loan, tax rate differences and rounding of fractions. Unsettled trades may give rise to a market claim against the counterparty. Open items are aged, investigated and escalated in the same way as in a custody account reconciliation.