Entitlement Compensation Rules - France

31.03.2015

Bonds

Market compensation basis:Trade Date
Automatic Compensation Managed by Local CSD:Yes
Restriction on custody events/transaction types:Income payment only - no compensation on other entitlements
Additional information:
General rule

In terms of entitlement, the Record Date depends on whether the interest payments are on securities quoted in the market in units or not in units, as follows:
-For securities quoted in units, Record Date is equal to Ex-Date +1 business day.
-For securities not quoted in units (mainly short-term notes), Record Date is equal to Ex-Date +1 business days.
In both cases, the Record Date is always the business day before the Payment Date. The Record Date position is therefore a client’s firm entitlement position at the close of business on PD-1.

In terms of compensation, the following rules apply:
-If Trade Date is before Ex-Date and settlement occurs after Record Date, the trade is settled cum-coupon and an automatic market claim compensation is generated.
-If Trade Date is on/after Ex-Date, the instruction is settled ex-coupon.
-Reverse market claims on bonds are no longer processed by the CSD. Therefore, if Trade Date is on/after Ex-Date and settlement occurs on/before Record Date, an agreement must be made between the two counterparties directly.
Exceptional rules applicable to “Pieds de coupon”:

For debt securities quoted in percentage in the market (called “pieds de coupon”), the following specific rules apply:

When the Ex-Date is between T+0 and SD and SD is no later than T+2:
-The interest is paid to the seller on Ex-Date and may be subject to withholding tax.
-The buyer is not entitled to receive the interest.
When the Ex-Date is between Trade Date and Settlement Date and Settlement Date is after T+2:
-The interest is paid to the buyer on Settlement Date and may be subject to withholding tax.
-The seller is not entitled to receive the interest.
For the other debt securities, the seller is not entitled to the interest even if the ex-date is between T+0 and SD and SD is no later than T+2.
Service offered by CBL:Adjustment is performed based on information received from the depository.

Equities, corporate action

Market compensation basis:Trade Date
Automatic Compensation Managed by Local CSD:Yes
Restriction on custody events/transaction types:No restriction
Additional information:
In France, the Trade Date determines the entitlement to participate in a corporate action. The Record Date is always the business day before the Payment Date. The Record Date position is therefore the client’s firm position at the close of business on Payment Date -1.

When the Ex-Date is between Trade Date and Settlement Date:
-The buyer is entitled to the corporate action.
-The seller is obliged to deliver the entitlement to the buyer on Settlement Date.
This rule is applicable to cash distributions only.
Service offered by CBL:Adjustment is performed based on information received from the depository.

Equities, dividend payment

Market compensation basis:Trade Date
Automatic Compensation Managed by Local CSD:Yes
Restriction on custody events/transaction types:No restriction
Additional information:
In terms of entitlement, the Record Date is equal to Ex-Date +1 business days and is always the day before the Payment Date. The Record Date position is therefore a client’s firm position at the close of business on Payment Date -1.

In terms of compensation, the following rules apply:

Market claims
-If the Trade Date is before the Ex-Date and settlement happens after the Record Date, the trade is settled cum-dividend and an automatic market claim compensation is generated.
-If the Trade Date is on/after the Ex-Date, the instruction is settled ex-dividend.
Reverse market claims
-If the Trade Date is on/after the Ex-Date and settlement occurs on/before the Record Date, the compensation is granted in favour of the seller.
Note: Free of payment (FOP) trades without matching are no longer subject to automatic market claim processing by Euroclear France. This applies for all securities traded on the Euronext market for which Euroclear France acts as primary CSD.
Service offered by CBL:Adjustment is performed based on information received from the depository.