Entitlement Compensation Rules - Ireland

26.04.2021

Bonds in Euroclear Bank

Market compensation basis:

Contractual settlement date

Automatic Compensation Managed by Local CSD:

Yes

Restriction on custody events/transaction types:

No restriction

• ‘Cum distribution’ if the contractual settlement date is before or on the record date

• ‘Ex distribution’ if the contractual settlement date is after the record date

Market claims will be processed gross of withholding tax, except if the corporate bond is not exempt from withholding tax, in which case market claims will be generated net of withholding tax

Service offered by CBL:

Adjustment is performed based on information received from the depository.

Equities in Euroclear Bank

Market claims


Automatic Compensation Managed by local CSD:

Yes, subject to limitations explained below

Detection basis:

Trade date

Applicable trade status:

Matched

Detection period:

20 business days after Record Date of the distribution corporate action, provided the underlying instruction is matched.

Compensation rule:

‘Cum distribution’ if the trade date is before the ex-date

‘Ex distribution’ if the trade date is on or after the ex-date

Restriction on custody events/transaction types:

Market are detected and generated for against payment and free of payment transactions in Irish corporate securities related to:

- income payments (interest payments, currency elections, cash dividends, dividend reinvestments, dividends with options, capital gains)

    • bonus issues and rights distributions

Service offered by CBL:

Adjustment is performed based on information received from the depository.

Additional Information:

Market claims will be credited net of the maximum withholding tax to the buyer (or to the seller in case of reverse market claim), i.e. regardless of its tax status.

Market claims will generally be debited from the seller (or buyer in case of reverse market claim), net of the maximum withholding tax, that is regardless of its tax status.

As an exception to the previous paragraph, the market claim will be debited gross of withholding tax from the seller (or buyer in case of reverse market claim) and the withholding tax amount will be returned by us to the Revenue Commissioners, if the following conditions are cumulatively met:

1. the seller (or buyer) account is set-up as a segregated account exclusively holding its proprietary assets

2. the seller (or buyer) is a qualifying non-resident person or an excluded Irish person

3. the market claim amount being debited represents a dividend amount received by the seller (or buyer) gross of withholding tax based on its record date position


Transformations

Automatic Compensation Managed by local CSD:

Yes, subject to limitations explained below

Detection basis:

Trade date

Applicable trade status:

Unmatched and matched

Detection period:

20 business days after Record Date of the distribution corporate action, provided the underlying instruction is matched.

Restriction on custody events/transaction types:

Transformations are processed only on mandatory reorganisations in securities without options with a ratio that is a whole integer.

Euroclear Bank cancels pending instructions and replace them with new instructions in the new security proceeds.

For mandatory reorganisations with a more complex ratio, Euroclear Bank only cancels pending instructions. Customers need to agree with their counterparties to input new instructions in the new security outturn.

There are no transformations on a mandatory reorganisation in securities with option and no transformation on a mandatory reorganisation in cash

There are no transformations on voluntary events.

Service offered by CBL:

Adjustment is performed based on information received from the depository.

Additional Information:

Euroclear Bank generates the replacement instruction with the same stamp duty transaction fields as the original cancelled instruction.

Equities in Euroclear UK & Ireland

Please refer to Entitlement compensation rules – UK which are also applicable to Irish equities eligible in the CREST system.