Sue Mayham on How Corporate Actions Has Changed

Our FTF News Chief Editor, Eugene Grygo, recently had the opportunity to sit down with Corporate actions processing veteran Sue Mayham at our recent CAPCon New York conference.  They were able to discuss the changes Sue has seen during her years overseeing corporate actions processing.  Sue also gives us a glimpse into exciting days ahead for the industry.


Did you miss CAPCon New York 2014?  Don’t miss out again and be sure to register for FTF’s SecOps 2015 which is a two-day conference that cover all things securities operations with separate streams covering reconciliations, corporate actions, and buy-side operations, including discussions on industry standards, STP, automation and more. We hope to see you there!

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Kevin McPartland on the G.O.P. Landslide and the Pace of Derivatives Reform

Greenwich Associates’ Kevin McPartland was the chairperson for FTF’s recent DerivOps New York conference.  Our FTF News Chief Editor, Eugene Grygo had the opportunity to sit down with Kevin and discuss the effects of the recent mid-term elections in the U.S. and the state of ongoing derivatives reforms.  Check out the full video intervew below:

FTF is currently planning DerivOps North America which will be held in Chicago, Il on April 21-22, 2015.  Click here to learn more on this two-day, in-depth conference on all things derivatives operations that will combining our annual Chicago and New York event as well as our premier collateral management conference.  DerivOps North America puts all the information you need to know in one place!

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Multiple Prime Utility: the key to transforming the fund manager/prime broker relationship

Sudhanshu (3)Guest Contributor: Sudhanshu Bahadur, Vishal Bakshi and Valcony Sun, Sapient Global Markets

Since the financial crisis, Fund Managers have increasingly moved away from using a single custodian and diversified their risk by splitting the basket under multiple Prime Brokers (PBs). This has provided them with an opportunity to utilize different partners for the different services that they offered, diversifying their asset portfolio mix and market reach.

Fund Managers have now largely switched to this multi-prime business model due to the flexibility it provides and the associated reduction in counterparty exposure it offers. As their investment managers continue to expand into strategies that promise high returns, they look for opportunities that provide access to new securities, geographies, mitigation of risk and competitive pricing.

This model provides the benefits of diversification, access to a wider product range and competitive pricing to Fund Managers. Meanwhile it brings with it a new set of operational challenges for the PBs. These challenges include administration, counterparty risk and monitoring, trade allocation, reconciliation, risk management, portfolio accounting, integration of new fund managers, and reporting.

While the industry’s migration from a single-prime to multi-prime model has benefited Fund Managers, it has also increased complexity in their operations. At the same time, PBs are faced with a much more demanding clientele that can use its diversified base for extracting better financial terms and operational considerations.

An Independent Multi-Prime Utility

In the future, Prime Brokers and Fund Managers will need to create an environment in which they can regain focus on their core competencies. For the fund Managers this means concentrating on generating alpha for their clients, without being burdened by aggregating positions and performing other middle- and back-office functions. On the other hand the PBs will be able to focus on providing value-add services, such as Securities Lending, Margin Financing, Synthetic Lending, Repo Financing, Swaps, etc.

A key element of this environment is a utility that would provide a seamless platform upon which to conduct various business transactions and related operations. It would mitigate the complexity of handling different systems, formats and associated protocols and enable the consolidation of back-office functions that neither PBs nor Fund Managers are well-positioned to perform. An independent utility—hosted either by a collaboration of PBs and Fund Managers, or by a third party—can act as an interface between the PBs and Fund Managers.

This utility will be built upon an independently hosted infrastructure maintained by a third party. It will integrate with multiple PBs and provide a single interface to Fund Managers, enabling simple access to many PBs offering different services and market access. To access a new PB, the Hedge Fund will only need to subscribe to that PB, without having to go through the long onboarding and integration exercise that is required today.

Intermediaries, like Hedge Fund Administrators (HFAs), Third-Party Administrators (TPAs) or even large PBs, might be well suited for the creation of such utilities, which would work on a fee-based model and provide services to both Fund Managers and PBs. This utility could provide a number of benefits, including:

  • Integrating multiple PBs onto a single platform

The utility will integrate with multiple PBs into their custom environment using the PB’s protocols and interfaces, removing the integration burden from the Fund Manager. The complex operational processes currently part of onboarding a new Fund Manager into a Prime Broker, or vice versa, will be undertaken by the utility. When onboarding another PB, the utility will create interfaces to access the transactional, positional and other information from the PB and perform additional analytics on it.

  • Convenient access to multiple Prime Brokers for Fund Managers

The utility model requires one-time integration for the Fund Manager into the utility, after which the Fund Manager will gain access to all the PBs that the utility offers under its umbrella. Both PBs and Fund Managers will be able to avoid the burden of integrating multiple parties—a process that brings no financial benefit to either. PBs will no longer have the burden of integration, while Fund Managers will have a single channel to a broad market of PBs. As this model matures, it will provide Fund Managers ease of portfolio movement from one Prime Broker to another, increasing their accessibility to the market.

  • Independently hosted technology

The multi-prime utility will host its solution on its own infrastructure. The utility will be responsible for maintaining that infrastructure and all operational processes involved, and will have clearly defined SLAs with both PBs and Fund Managers. It will utilize best-of-breed technologies for performing data integration, portfolio accounting, risk management, data management and reporting functions.

  • Consolidated back-office functions across PBs

The utility will perform the back-office functions from PBs and Fund Managers. With the availability of aggregated positions across multiple PBs, the utility will be best positioned to perform risk management, portfolio accounting, reporting, compliance and similar back-office functions. Fund Managers will receive consolidated data and reports, while the PBs will be able to focus on core operations—instead of spending millions on commoditized post-trade services.


The Fund Manager/Prime Broker relationship is continuing to evolve with the changing dynamics of the marketplace. While Fund Managers are looking at diversifying risk and increasing revenue, PBs are focused on improving their service offerings. Meanwhile, both parties are spending considerable resources on integrating with each other and performing back-office functions that neither is well positioned to perform.

Both parties would be better served by investing those dollars to strategically address the new paradigm of a multi-prime marketplace.

A third-party multi-prime utility, offered by a Hedge Fund Administrator, third-party administrator or a large PB, that integrates with multiple PBs and provides single interfaces to Fund Managers, could be the solution to satisfy the evolving requirements of Fund Managers. In the long run, this will improve operational efficiencies, reduce integration expenses and help them regain focus on their core competencies.

Sudhanshu Bahadur leads the technology domain for Sapient Global Markets in Canada, Vishal Bakshi is a Senior Associate of Trading and Risk Management, and Valcony Sun is a Business Consulting Associate, specializing in capital markets, all based in Toronto.



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“What is?” Coding a Compliance Rule Library

Kristi FeinzigGuest Contributor: Kristi Feinzig, Senior Consultant, IMP Consulting

Automated rule libraries have become essential to the trading process, and can have a significant impact on the front office.  Rules that are accurate and precise facilitate a smooth pre-trade and post-trade check, while vague and inaccurate rules can create noise, slow down the trading process, and leave the door open for expensive trading errors.  In recent years, best practices have evolved to improve the quality of the compliance rules library by restricting the ability to write a rule to a few, anointed individuals in an organization.   As regulations have grown more complex, the automated rules have followed suit, and some compliance managers have delegated the task to Technology, leaving it to them to “code” the rules.

Compliance Rule “Coding:” What does it really mean to “code” a compliance rule?  If you have a home-grown system, it may mean that it is written in a SQL-like fashion, and some programming skills are necessary.  If you have a commercial system, however, “coding” the rules is a bit of a misnomer.  It is shorthand for the tasks involved in turning the “plain English” legal definitions in a prospectus, SAI, client agreement, indenture, or regulation, into a logical statement that can be processed by your compliance system.   Most of the market-leading systems have a “plain English” interface that facilitates rule coding by non-programmers.   Why, then, is rule coding so challenging, and why do so many automated rule libraries end up rife with errors spewing “false positives” that slow down the trading process?  The issue is that the commercial interfaces, while helpful, do not alleviate the necessity of crafting precise, logical statements.  In fact, most of the logical thinking about how to translate a compliance mandate should take place before the rules are written. Below is an example of an institutional client mandate:

The fund shall invest a maximum of 5% in the holdings of any single, non-domestic issuer.

  • Shall Invest– Does this rule apply to current holdings or new purchases (or both)?  For example, if an equity holding increases in value, and thus grows to more than 5%, must the fund sell a portion of the holding to bring it back to 5%, or does this rule simply restrict additional investment?
  • A Maximum of 5%— A percentage calculation requires a numerator and a denominator.  Does the rule specify the denominator we should use?  For example, the denominator may be simply the total of all investments or it may also include cash.   For a bond fund, the denominator could be the total net asset value.  For balanced funds, the denominator may be segregated by investment class–i.e. equity only or debt only.  Does the rule specify the numerator—are any securities, asset classes, or issuers excluded from the calculation, such as Treasuries and/or agencies? For structured products and indices, do you look-through to the underlying exposure?
  • In the holdings of any single non-domestic issuer– What counts as a single issuer?  If the security is an equity, do we have the proper parent/child relationships constructed for issuers?  If this is a wholly-owned subsidiary, should we roll the holdings up and count it against the 5% limit on the parent?  How does the rule apply to municipals, i.e. do we have obligors/guarantors identified?
  • Non-domestic issuer:How does the fund define “non-domestic?”  Is it primarily concerned with the country of incorporation, the country in which the firm primarily does business, or perhaps the country of the primary exchange on which the instrument is traded?  Some funds will also exempt certain countries, such as Canada, from the “non-domestic” label.  Some funds or accounts may also be referring to a non-domestic country according to the client, not the investment manager.

Generally, there are specific categories of compliance rules.  Some are easier to code than others.  Exclusion rules simply prohibit something from being traded. Limit rules, like the example given above, can also be straightforward; but keep in mind that there are several ways the source document may read.  Do you want to include or exclude a position that is exactly at 5%?  Do you only want to flag if it is greater than 5% or do you want a warning when it gets close to 5%?  If you are coding compliance rules, you will likely also come across trade rules like no cross trading or restricted brokers.  Finally, you will want to consider what time of day your rule will run.  Is it meant to run in pre-trade, post-trade, in batch compliance at the end of the day?

Clearly defining your compliance rules will help ensure consistency across the organization. It will also ensure that you will know what to expect as the rules are automated, and that the rule “coding” can be done efficiently and consistently.  Lastly, it will ensure that your automated compliance engine will do the job it was intended to do, lowering the risk and improving the efficiency of your trading process.


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The Corporate Actions Golden Copy: Cleansed Data for All


Guest Contributor: Brendan P. Farrell, Jr., executive vice president and general manager, XSP, SunGard

As the volume and complexity of corporate actions events continue to grow, firms need to understand their risks and take action on events that require immediate attention. To achieve this, the process must start with complete, accurate and timely corporate actions data.

However, most organizations are tasked with capturing and cleansing corporate actions data from multiple sources in order to create their own “golden copy,” or single, issuer-approved communication. Industry analysts agree that a streamlined corporate actions lifecycle starts with clean data, which has led to discussions about managed data services to help firms automate the process of creating a golden copy. The demand for Business Process as a Service (BPaaS) data services is growing as firms seek experts to validate their data and automate the process earlier in the lifecycle.

The high-touch world of corporate actions

To create a single corporate actions event, staff must access data from disparate sources such as custodians, brokers, vendors and various publications to compile the necessary information. Without the right data in place, coordinating this communication may be difficult and sources could be missed. In addition, the corporate actions learning curve is steep and the cost of getting it wrong is very high.

The complexity of handling corporate actions requires a number of manual touch points, beginning with the creation of a golden copy as a first step.  In order to overcome risk, firms have resorted to redundancy through multiple data sources backed up by teams of “maker-checker” processors, and the expense can be significant. Corporate actions also require significant domain knowledge and experience. The risk of losing a senior expert on the team is a significant threat, as the industry lacks a sizable pool of skilled people to fill the gap, especially outside of the major traditional financial services centers.

Many firms are now realizing the value of a corporate actions data service to help them reduce the exposure, risk and cost of data management and staffing.

The corporate actions data service

Corporate actions data is universal; thousands of firms process the same information in the same way, every day, making it ideal for a utility environment. The top priority for any firm is getting the data right in a timely manner so it can serve its clients and ensure back-office systems work efficiently.

Firms that obtain corporate actions announcements from their custodians or prime brokers typically still subscribe to other market data feeds to prime the pump, allowing for preliminary notification to their downstream clients.  They often also perform additional scrubbing in order to validate the data and create their own golden copy. In contrast, an independent corporate actions BPaaS would provide one source of consolidated, cleansed and scrubbed corporate actions announcement data from multiple data providers to create a single golden record. Such a service could help firms alleviate staffing challenges, reduce risk and cost, and support entry into new markets.

 Exploring corporate actions data services

When deciding to explore BPaaS options for corporate actions, it is important to understand the provider’s strengths and weaknesses. Specialized expertise in corporate actions is a must. It is also crucial to learn the provider’s data management background and other offerings. The four main attributes of a qualified data service include the following:

  • Managed by a specialized team of corporate actions data experts
  • Quick to deploy and at a low total cost of ownership (TCO)
  • Available to and suited for any size organization
  • Provides bundle and integration options with other corporate actions and post-trade offerings

Technology providers usually offer solutions that help firms automate the corporate actions process from the point at which the customer obtained multiple data sources. With growing demand to reduce risk and cost, specialized BPaaS data services are emerging to give firms the ability to bypass multiple steps, reduce data fees and mitigate risk earlier in the process.

In theory, all firms should reach the same golden copy at the end of their data cleansing and scrubbing process.  An experienced technology and services vendor can manage the crucial data portion of the corporate actions life cycle and use economies of scale to make the process less expensive for everyone.

Hear more from SunGard and learn about corporate actions processing at CAPCon NY on Thursday, October 16th.

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FTF Rings the Opening Bell for Nasdaq

Maureen Lowe, founder, president, and editor-in-chief, FTF

Maureen Lowe, founder, president, and editor-in-chief, FTF

Maureen Lowe provides a first-person, behind-the-scenes account of ringing the opening bell for the Nasdaq trading day. 

As you might have seen in our announcements earlier this week, the Nasdaq invited FTF to ring the opening bell yesterday as we kicked off our annual FTF SMAC NY event focusing on social media and compliance in financial services.

When the call came on Tuesday morning, it was answered by our company prankster, Kenson David, so when he told me about the invite, my first response was, ‘You’re joking.’ But even as he continued to assure me that he wasn’t, I still wasn’t too sure. At the same time, my body became filled with excitement and anticipation and I was hoping with all my might that it was true.

Once he finally had me convinced that this time he was not, in fact, joking, I without hesitation shouted out, ‘OF COURSE, I DO!’ which erupted in laughter and cheering throughout the office, and some jumping up and down on my part.

After a bit of coordination with Nasdaq officials and some of the FTF SMAC speakers, we were confirmed later that day as the official opening bell ringer for Thursday. Then, the more important decisions came about such as: What was I going to wear? What? Wait, I have to talk for 90 seconds. What am I going to say?!?!

I don’t think I can put into words exactly the exhilaration that was in the air at the office for the next 36 hours. Directions and instructions started flying over from Nasdaq and we had a short amount of time to pull it all together but the FTF team rallied and got it done.

More importantly, my outfit was decided and my opening remarks were written and rehearsed about 100 times through a combination of saying them out loud as I group_with_airforce480walked the streets of NYC to practicing in front of a mirror.

Nasdaq officials issued a media alert on Wednesday that was picked up by all the major financial news organizations.

As I was frantically working away at my desk Wednesday afternoon, a LOUD ‘Oh my gosh you are on CNN Money. This is crazy!” came from our same prankster, but again, this time, he was not joking. The excitement in his voice for me, for FTF, for the event was something you don’t often find in employees.

The emails started to come in from peers and colleagues: ‘Saw you on Yahoo! Finance!’ ‘Saw you on MarketWatch!’

We were out there, like really out there, and people were noticing.

The morning of the big day felt for me like what Christmas morning used to feel like when I believed in Santa: there was an inexplicable magic in the air. I was excited for me, my team, my family and friends.

My smartphone was all abuzz with Facebook posts, text messages and phone calls.

When I was all put together, I stood at the mirror outfitted in the most expensive shirt in my closet, a pinstriped suit and red high-heeled pumps and said out loud to myself, ‘You got this. Own it,’ as I walked out the door.

As I made my way to Nasdaq in my red high heeled shoes, there was a spring in my step. I stood taller and walked with confidence but was filled with giddy excitement. I kept telling myself remember every moment, enjoy every second, even these minutes as you walk down 44th Street toward Times Square. From the moment I arrived at the Nasdaq Marketsite, the staff could not have been any nicer, more excited for us or more accommodating.

As I stood at the front door and looked up to see the FTF logo on the big screen, I told the doorman with a gleaming look on my face, ‘That’s my company. We are ringing the bell today (as I made a bell ringing gesture with my hand,).’ He couldn’t help but laugh and opened the door for me.

When the production staff came over to get our group from the lobby and brought us into the studio, it really started to become real. We entered the studio and an exchange segment was going on live. We still had about 30 minutes before the opening bell ceremony started but I was so grateful for the time.

I spoke with the production staff, the host, the camera crew and I became more comfortable in the environment. We did a dry run of what would happen and when. I was told it would be live on CNBC, Bloomberg, Fox News and I felt my eyes widen as they went down the list.

Group Shot 1 480We did a photo shoot with the group and individually which immediately started to rotate up on the giant, Nasdaq screen/tower out in Time Square. We were all elated and were taking pictures of the TVs in the studios showing our photos out in Times Square.

Finally, it was go time.

The host, David Wicks, vice president at NASDAQ OMX, walked up to the podium, gave an amazing introduction about FTF and the FTF SMAC event. Then the moment came when he introduced me and called me up to the podium.

From then on, everything felt like it was happening in slow motion but at the same time it was going so quickly. My heart started pounding a bit more heavily as I walked up to the podium, but I reminded myself, ‘You got this.’

As I stood up there with the FTF logo behind me, my supportive team in front of me, I took a second for myself (but just a split second) to take it all in and then I started speaking. I nailed it.

I remembered everything I wanted to say and I said it with confidence. David came back up on stage and presented me with a crystal plaque which I held up in the air like I had won an Oscar! It was a symbol of achievement for all of us and it deserved to be raised up high.

Then, everyone from our group along with men and women from the U.S. Air Force in attendance to honor the six decades that the Air Force has been serving this country were called up to the stage.

From the FTF team, we had Sarah Hathaway, vice president, Eugene Grygo, chief content editor, and Jett Schilling, sales director. Representing our FTF SMAC speakers were Marla Bergman from Goldman Sachs, Nathan Bricklin from Wells Fargo, Mark Bisard from American Express, and Mitchell Bompey from Morgan Stanley.

At 9:29, we were instructed to cheer as loud as we could for a full minute and we were told the louder we cheered, the better the market did, so we and the Air Force members, screamed and shouted and clapped for a full minute. (For the record, it was a great trading day).

As we came closer to 9:30, we counted down, out loud from 10 seconds. At the one second mark, I was to hit the bell (which is a touch screen), pick up a giant electronic pen, and sign my signature to an i-pad-looking screen which was immediately projected on the giant Nasdaq screen in Times Square.

I practiced this during rehearsal, but this time when I signed my name, I added an exclamation point. A few more seconds of cheering and clapping continued, and then it was done.

As everyone started to get off the stage, one of the senior Air Force representatives stayed behind to shake my hand. He said I had a dynamic that most people don’t have and that I did an amazing job and not many people could do what I just did, the way I did it.

Needless to say, I was stunned and so incredibly appreciative. It was the first feedback I had received. Up until that point, I had no idea what anyone else thought about not only what I said, but about how the whole ceremony was perceived.

I told him how much it meant to me that he took the time to tell me something so kind.

We were then quickly ushered out to Times Square for a second photo shoot.

group_outside 480This time, we were taking shots in front of the large Nasdaq screen which was scrolling the photos of our group taken earlier that morning. We were all having a blast re-living the moment, laughing and exchanging stories about our experiences.

But, little did we know, the camera man was still filming. The reel from these moments is almost more fun to watch than the actual ringing of the bell (I said almost) because it captured the pure excitement and gratification we all felt for what had just happened.

After the photo shoot, we hopped in cars and made our way down to the FTF SMAC event because despite our 15 milliseconds of fame, there was an event to run after all. Needless to say, we were all on a “bell high” for the rest of the day.

During the cocktail reception after the event, our bell ringing group celebrated with a bottle of champagne. We will forever remember this experience and we will forever be connected in a special way because we experienced it together.

The only thing I would have changed about this day would have been for the whole FTF team to be present, but this was not possible with the event happening simultaneously.

When I started FTF eight years ago, I never imagined how much we would have accomplished in such a short amount of time.

But, from the bottom of my heart, I thank you all for helping me to have this opportunity. Thank you for noticing what we are doing and for supporting our growth and success.

But most of all, thank you to the FTF team who work so hard every day to make this company what it is and for believing in what we are working to achieve. And last, but certainly not least, thank you Katie Flanagan, for organizing and producing an amazing FTF SMAC NY event this year.

Next time, you will be up there ringing the bell too for our IPO!

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The 7 Data Extraction Problems That Plague Corporate Actions and the 1 Solution to Them All

Adam Devine_WorkFusion_VP Prod Marketing_WorkFusionGuest Contributor: Adam Devine, VP Product Marketing & Strategic Partnerships, WorkFusion

Whether you provide a corporate actions feed or integrate them at an institution, you know that the gold standards for data accuracy, speed, and efficiency are rising. If you’re a provider, you know that the lake from which you fish relevant news has turned into an ocean that spans continents and languages, and it’s fed by an increasing number of sources and formats that neither headcount nor technology can efficiently keep up with. STP is still a unicorn.

These are the 7 reasons why:

  1. Automation is picky and noisy. There is no one platform that can extract data from any source in any format in any language. That’s a little like pointing out the inexistence of unicorns. Data providers are generally forced to make due with decent automation point solutions for each type of format and muddle through irrelevant extracted data and exceptions.
  1. Traditional scrapers and harvesters break when sources change, and repairing them causes downtime. They’ve become more durable over the last three years, but changes in source formats still throw off even the most “intelligent” scrapers and harvesters. Just as printer companies make their money on ink cartridges, traditional extraction vendors make their money on the IT projects born of broken algorithms.
  1. Off-the-shelf web scrapers and harvesters require IT to configure and IT to repair.

There is never enough IT staff (or budget) to solve all business problems as quickly and efficiently as business teams and customers would like. Web scrapers and harvesters in particular are vital tools for corporate actions teams, but they aren’t set up for plug-and-play business use. Implementing them is an IT engagement, and fixing them when source formats inevitably change, is often an even bigger IT engagement and expense.

  1. Most custom automation is too big of an investment for too little of an ROI. Using machine learning to automate proprietary, in-house workflows has been the dream of the information industry for years, but it’s too expensive and time-consuming to realize it for all but the very biggest and most profitable data products. Stock automation and human exceptions management is the default for the majority of workflows.
  1. Data specialist resources are squandered on extraction and exceptions work. Data specialists, whether they’re in-house or outsourced, are skilled and expensive, and using them for repetitive work that can’t be efficiently automated or for exceptions that automation can’t handle isn’t the best allocation of resources.
  1. Budgets for increasing data specialist headcount are declining. This is making it increasingly difficult to process the growing number of exceptions as fallible automation churns through the growing volume of source data.
  1. Outsourcing is becoming more expensive, which is increasing the cost of human-powered data extraction. Offshore labor rates are rising 10-15% each year. The moderate savings you achieved in the first year or two of your contract will start looking dusty by the third or fourth.

What’s the solution?

A tunnel of problems isn’t all that useful without a light at the end of it. The light is crowd computing, a method of work that pairs crowdsourced workers and data specialists with machine learning to train and maintain extraction algorithms. It can be used for any source in any format in any language, and it works 24/7 without downtime. Crowd computing is an efficient path to automating all but the most analytical of corporate actions data work, and chances are excellent that at least one of your competitors is already using a crowd computing platform for data extraction. If this sounds too good to be true, it’s because the future of corporate actions has only just arrived. It’ll take a little time before it becomes everyone’s present.


Join WorkFusion at FTF‘s upcoming CAPCon New York conference on October 16, 2014.  WorkFusion will be exhibiting and speaking during the day’s interactive sessions!

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