Corporate actions: Consideration of the trade date in the event of a reorganisation
Clearstream Banking AG, Frankfurt1 informs customers about a new rule in the corporate actions processing via KADI2 in the event of reorganisations that will be effective with the upcoming CBF Release on
Monday, 18 November 2019
Background
During the transformation period3, newly entered securities transactions are checked for relevant corporate actions and, if necessary, the system for corporate actions processing (KADI) creates the relevant securities instructions based on the conditions for the event.
When identifying the transactions to be considered for reorganisations, currently the trade date specified in the instruction is not considered for the transformation.
Description of the functional changes
With the implementation of the CBF Release in November 2019, the existing check for the transformation of a transaction in the case of a reorganisation will be enhanced by trade date. This extension concerns events that lead to a transformation in cash or securities. The following event types (“Terminarten”) are affected:
- Transformations in cash
120: Dividend payments in the event of dividend options;
122: Warrant exercise;
123: Squeeze out;
124: Pay-off / buy back of shares;
130: Redemption;
131: Redemption of participation rights;
133: Liquidation;
134: Cash compensation for redemption in securities;
140: Partial call4;
222: Write-off worthless securities. - Transformations in securities
231: Redemption in securities
232: Conversion, merger, reverse stock split, decrease of capital, reclassification, Pari Passu;
235: Redenomination
The extended rule regarding the trade date is:
- The transformation for entitled Domestic OTC instructions (instruction type AA01) or Stock Exchange trades (LION, instruction type AA10) is performed if the specified trade date is before or equal to the record date. If no trade date is specified in the instruction and the instruction provided via:
- the CASCADE Online functionality (HOST / PC), the date of the check is used as the trade date.
- an automated connectivity channel (SWIFT, MQ or File Transfer (FT)), the date of receipt of the instruction is used as the trade date.
- Pending transactions ("matched instructions") with a trade date that is greater than the record date are not taken into account by KADI. This means that they must be bilaterally cancelled by the customer and its counterparty.
The current rule on the trade date for instructions submitted by Eurex Clearing AG (CCP instructions) remains unaffected by this enhancement.
Contact
Please contact our Client Services teams for questions regarding the functionality. Questions related to the technical connection can be addressed to our Connectivity Support teams. Particular questions related to the corporate actions processing will be routed to the experts of the Asset Services team.
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1. This Announcement is published by Clearstream Banking AG (CBF), registered office at Mergenthalerallee 61, 65760 Eschborn, Germany, registered with the Commercial Register of the District Court in Frankfurt am Main, Germany, under number HRB 7500.
2. KADI is the CBF application for processing of custody events.
3. The transformation period equals 20 business day after the record date for pending instructions with the status “Match” . More details regarding the transformation rules are described in the Compensation Handbook.
4. For event type “140”, no payment of the transaction price is processed; instead a transformation of the pending transaction is performed.