Netherlands: Short positions in rights – Compensation penalty

12.03.2013

Clearstream Banking1 reminds its customers that short positions are not allowed in the Dutch market. Covering negative holdings remains the responsibility of customers. In the unlikely event that you are left with an uncovered short position on rights distributed according to the record date rule, such short positions will therefore be subject to compensation and to a penalty fee with

immediate effect.

Background

Further to the implementation of the Record Date (RD) in the Dutch market, there is an increased risk of short positions in rights in the case of reverse market claims. Stock-lending entries or inter-account realignments booked with intraday settlement cycles between Ex-Date (XD) and RD may generate reverse market claims inducing potential short positions in rights as of Pay Date (PD).

Impact on customers

In order to avoid the reverse claim impact for mandatory stock distribution events, we strongly recommend customers to cover short positions in shares by instructing these entries cum rights with TD before XD. Customers are also required to cover their short positions on rights as quickly as possible and at the latest by 06:00 one business day before the corporate action market deadline.

Compensation

Should customers remain short in rights at the market deadline of a voluntary event following a mandatory stock distribution, we will compensate the short rights position in their account and apply a management and reconciliation penalty fee.

Short positions in your account will either be compensated in cash or new securities at our discretion. The compensation will reflect all indemnities or penalty fees as charged to us by the centralising agent. If the compensation takes place in cash, we will adjust on the basis of 100% of the gross dividend payment.

Penalty fee

We will apply a penalty fee for short rights positions left on your account by 06:00 CET one business day before the corporate action market deadline of the event. The penalty fee will be calculated as follows:

  • In case of an optional dividend, 1% of the gross dividend payment
  • In case of a subscription offer, 1% of the cash indemnification price

A minimum penalty fee of EUR 1 000 per short position per account will be applied. The penalty fee will be debited from your cash account on the PD of the voluntary corporate event.

Further information

In case of further questions, please contact Customer Service Domestic via:

Customer Service Domestic
Email:csdomestic@clearstream.com
Telephone:+49-(0) 69-2 11-1 11 77
Fax:+49-(0) 69-2 11-61 11 77

1. This Announcement is published by Clearstream Banking AG (CBF), registered office at Mergenthaleralle 61, 65760 Eschborn, Germany, registered with the Commercial Register of the District Court in Frankfurt am Main, Germany, under number HRB 7500.