FAQs ‒ Corporate Actions
How does Clearstream advise a customer of a corporate action event?
Notifications are released by Clearstream on a continuous basis during the day. Clearstream releases notifications when confirmed information is available.
Clearstream will, at its own discretion, decide whether and when unconfirmed information is to be forwarded to customers and will flag such information as "unconfirmed", if provided.
Clearstream will send a Corporate Action Notification for all events affecting positions held on a customer’s account. These notifications are issued via Swift as MT564s and MT568s and are also available via Xact Web Portal in the Asset Servicing module. For certifications under the U.S. Tax Equity and Fiscal Responsibility Act (TEFRA D), Clearstream will additionally send notifications on pending receipt instructions.
Clearstream informs customers about all upcoming corporate actions applying to securities held on their accounts, where information about the event has been provided by an authorised and authenticated party and where the initiator of the event is recognised as authorised to do so. This excludes non-official offers and/or offers handled outside the clearing system. Clearstream sends individual notifications, via the connectivity channels, for each holding in the security. To ensure highest quality, Clearstream applies ISO 15022 standards (use of ISO Corporate Action Event Indicators, use of structured fields etc.) and indicates whether the message is a new message, a cancellation, a replacement, a withdrawal or a reminder.
How can I identify the type of event/notification?
Clearstream will differentiate between voluntary and mandatory events as well as mandatory events with choices.
A "For Your Information" (FYI) notification will be sent for mandatory events (in Swift, this will be expressed with the qualifier MAND). This will be used for events where no action from the customer is necessary, that is, split, mergers etc.
Voluntary events and mandatory events with choices will be created as "Your Instruction Requested" (in Swift, the qualifier VOLU for voluntary events and CHOS for mandatory events with choices will then be used). The events concerned are those requiring a decision or action from the holder of the securities, for example, exercise of rights, purchase offer, merger with choices etc.
Corporate actions can be divided into two broad types of events:
- Predictable events: Events foreseen in the security’s documentation (for example, terms and conditions), including wording on the event timing and deadlines. Security documentation collected by Clearstream is made available to customers through Xact Web Portal. Examples of predictable events: conversion option, put option, warrant exercise.
- Unpredictable events: Events not foreseen in the security’s documentation (for example, terms and conditions). They are announced and described in additional documents by the issuing company’s management. Examples of unpredictable events: purchase offer, stock split.
Both predictable and unpredictable events can be subdivided into three main categories based on whether the holder of the securities has to take action on the event or not:
- Mandatory events: Participation and consequences are compulsory and apply to the whole outstanding amount held with Clearstream. No instruction from the security holder is required. Examples of mandatory events: stock split, rights distribution, merger.
- Mandatory events with choice: Participation and consequences are compulsory and apply to the whole outstanding amount held with Clearstream; however, a choice or option is available to the security holder. An instruction is only required if the security holder does not want the default option to be applied. Example of a mandatory event with choice: merger with choice, bonus non-automatic.
- Voluntary events: Participation and consequences are at the holder’s discretion. An instruction is required if the security holder wishes to participate. The issuer will usually inform all holders of the event that is about to take place; sometimes this notice is provided in the original offering documentation for the security. If no action is taken by the holder, the default action as stated in the notification will be applied. Examples of voluntary events: purchase offer, conversion option, subscription offer. Some complex corporate actions may involve mandatory events with subsequent voluntary events (two-leg events), for example, mandatory rights distribution followed by a subsequent voluntary subscription offer. Clearstream supports all types of corporate action events defined by the CASG standards:
- Cash distributions: A cash distribution is a distribution where the proceeds consist of cash only (for example, cash dividend, interest payment). Three key dates are used for mandatory cash distributions: ex date; record date; payment date.
- Securities distributions: A securities distribution is a distribution where the proceeds consist of securities only (for example, stock dividend, bonus issue). The key dates and the order of dates used for securities distributions are the same as for cash distributions.
- Distributions with options: As a general rule, the distribution with options is handled via two events: (a) a distribution of interim securities (please also see the section on “securities distribution” above) followed by (b) a mandatory reorganisation with options (please also see the section on “mandatory reorganisations” below), for example, optional dividend. The key dates and the order of dates are the same as for cash distributions for the first event and the same as mandatory reorganisations with options for the second event.
- Mandatory reorganisations: A mandatory reorganisation is a reorganisation that affects the underlying security in a compulsory manner (for example, stock split, redemption). Three dates are used for mandatory reorganisations: last trading date; record date; payment date.
- Mandatory reorganisations with options: A mandatory reorganisation with options is a mandatory reorganisation including a choice of proceeds (for example, merger with election). The following dates are used for reorganisations with options: start of election period; end of election period; guaranteed participation date; buyer protection deadline; response deadline; market deadline; payment date.
- Voluntary reorganisations: A voluntary reorganisation is a reorganisation in which participation is optional for the holder of the underlying security (for example, tender offer). The key dates and the order of dates used for voluntary reorganisations are the same as for mandatory reorganisations with options.
Do I need to instruct for all corporate action events?
An instruction is needed for the "Your Instruction Requested" notifications as well as some Certification Requests.
An instruction is only required if the security holder does not want the default option to be applied.
What instruction type should I use for corporate action events?
Customers may instruct on voluntary and mandatory with choice events using the following media:
- Xact Web Portal;
- Xact File Transfer;
- Swift MT565 message.
Instructions received from customers are validated by Clearstream and forwarded to the depository or the agent either one by one or bulked on deadline date. If a corporate action instruction does not include an execution date, the instruction will be considered as if received for processing on the next possible execution date. The service will differentiate between following instructions statuses:
- Correctly formatted instructions will benefit from a more competitive Clearstream deadline.
- Free format messages and unsolicited instructions will have a standard deadline and will be subject to an additional fee.
- Incorrectly formatted instructions will have a standard deadline.
Xact Web Portal users can easily instruct by opening the original notification message under Asset Servicing and clicking on the respond button.
What will Clearstream do when it receives a corporate action instruction?
Solicited events fall under a predefined exercise period punctuated by a deadline, as reported on the corporate action notification. Customers should always send instructions before the Clearstream deadline. Instructions are processed according to deadline priorities.
Unsolicited events fall under an open exercise period and can be instructed anytime. As a standard rule, valid customer instructions are processed on a continuous basis throughout the day.
Holdings will be blocked, unblocked or debited for delivery, if appropriate, based on the instruction as well as the corporate action type and terms when a valid instruction is received from the customer. For a corporate action instruction received before an exercise period, Clearstream will not perform any preliminary blocking of securities. For record date based events, usually the instructed position will not be blocked on the customer’s account.
Note: Clearstream will only be responsible for processing a corporate action instruction received via the usual channels and in relation to a position on its books. Clearstream cannot be held liable for any damage incurred in relation to a corporate action instruction that would be directly sent by a customer to the agent in relation to a position held with Clearstream. This practice is not supported by Clearstream.
What happens if I instruct late or forget to send my instruction?
Instructions received after the Clearstream deadline are handled on a best efforts basis and are transmitted to the depositories/agents; however, execution cannot be guaranteed. If the instruction received after the Clearstream deadline cannot be executed, Clearstream will apply the default action stated in the notification (default indicator).
When an instruction comes in after the deadline, customers receive an acknowledgement (MT567), advising the customer that the instruction is after deadline and will be processed on a best efforts basis. After feedback from the depositories/agents a revised processing advice is sent to customers.
Formatted customer instructions received during suspension periods or before exercise periods will be automatically rejected. However, if the suspension period end date or the exercise period start date is within five business days of receipt of the instruction, the instruction will be held in suspense until such dates are reached.
Clearstream cannot be held liable for the non-execution of late, incorrect or incomplete instructions.
How can I cancel a corporate action instruction?
If instructions have already been processed and forwarded to the local market, the agent or the depository, Clearstream will forward the cancellation request accordingly but cannot guarantee its execution.
Corporate action instructions can be cancelled by sending a formatted MT565 Cancellation message and by linking the cancellation to the previous instruction.
In Xact Web Portal a customer can directly click on “Request Cancellation” in the Asset Servicing module.
To replace an instruction that has already been sent, customers must send a cancellation message before re-instructing.
Please note that all cancellation requests will be handled on a case-by-case basis, given that the instructions may or may not be revocable or irrevocable as per event conditions, and cancellation confirmation has been received by the depository.
Can I send an instruction when I have not yet received a notification?
Unsolicited instructions (Swift MT565, Xact Web Portal or Xact File Transfer) where the Corporate Action Reference ID is missing and for which the customer has received the respective ID previously in the related MT564 Corporate Action Notification before sending the instruction can be sent to Clearstream.
Free format messages and unsolicited instructions will have a standard deadline and will be subject to an additional fee.
How can I be sure that Clearstream has received my instruction?
Customers instructing MT565s by using Xact via Swift, or Xact Web Portal will receive a status and processing advice message for each corporate action instruction sent to Clearstream.
In order to receive acknowledgements via Swift, a valid Swift address is required. In addition, the check boxes for “Acknowledgement of MT565 messages” and “Include all media channels” must be checked in the Scheduled Reports details.
Customers using Xact Web Portal can check the status of their corporate action instructions directly in Xact Web Portal and schedule the receipt of an MT567 via Swift. If the corporate action instruction was sent using a free-format message, customers will not receive a status or processing advice and are responsible for monitoring the instruction execution.
How can I identify any uninstructed events?
Reminder notifications will be sent to customers automatically for any uninstructed position.
Clearstream sends the Reminder Notification messages (MT564 RMDR) “Your Instruction Required – Reminder” where the eligible position is either not instructed at all or partially not instructed. This message includes two additional balances, which are:
- INBA: Instructed balance;
- UNBA: Uninstructed balance.
The Urgent Uninstructed Balances report, available through Xact Web Portal, gives an overview of uninstructed balances for corporate actions and assists customers in monitoring voluntary corporate actions. If no instruction is sent, Clearstream will apply the default action stated in the notification (default indicator).
What should I do if my instruction has been rejected?
Instructions that cannot be processed due to insufficient holdings will not be executed, but held in suspense either for a period of five consecutive business days starting on the date of receipt of the instruction or until the relevant Clearstream deadline, whichever occurs first.
Clearstream will inform the customer if an instruction is incomplete, if cash provision is insufficient for the execution of the instruction, if required documentation or certification are missing or if other requirements are not satisfied (for example, the customer does not provide details for delivery outside of Clearstream if security proceeds are not eligible for Clearstream).
Incorrectly formatted instructions provided via Swift MT565 or Xact Web Portal that are automatically rejected will immediately trigger a Swift MT567 Status and Processing Advice indicating the reason for rejection.
Note: Clearstream cannot be held responsible for any loss or damage caused by a delay in the execution of an instruction or cancellation of an instruction that did not fulfil one or more of the above conditions.
How can I see if an asset is blocked due to a corporate action?
The blocked asset will be detailed in the security balance.
The Security Balance is available in Xact Web Portal as a query called "Securities Balances". It is also provided in the MT535 Statement of Holdings report:
:93B::BLOK// blocked balance (used for particular custody events such as meeting, consent)
:93B::BLCA// blocked pending corporate actions
How can I verify whether the corporate action proceeds have been applied?
Clearstream generates MT566 Corporate Action Confirmations as soon as cash and/or securities have been credited/debited.
An Xact Web Portal query is available in the Asset Servicing module allowing users to search for confirmations.
Furthermore, Xact Web Portal provides a link for cash and securities proceeds in the Corporate Action Notification.
Can I buy or sell rights through Clearstream? If so, how?
Clearstream offers a trading service for subscription rights.
Instructions to sell or purchase rights are executed in relation to the securities held in custody with Clearstream in its capacity as securities settlement system, in accordance with the rules applicable in the domestic market covering a given event.
Given the continuing development of markets and deadlines, the full details of this service are described in the document Sale and Purchase of Rights.
Where can I find information regarding transaction management?
Transaction management refers to corporate actions "on flow" (pending instructions). It includes market claims (reverse market claims), transformations and buyer protection.
The rules described in this section are standard procedures which may vary in some instances. Specific rules are detailed in the Market Link Guides.
Clearstream automatically processes detection of market claims and reverse market claims for internal, Bridge, external and cross-border trades. No detection occurs on external instructions in markets where no market claim or reverse market claim process is in place.
Who should I contact if I have any questions relating to a notification?
If you have any further questions, please call your Client Services Officer.
If you are unsure who your Client Services Officer is, please consult the Contacts & Client Services area of this website where you will find the contact details for our Client Services departments worldwide. Please note that you must be logged in as a Premium User to view all contacts.
Why does Clearstream send Certification of Beneficial Ownership (U.S.A.)?
Securities under TEFRA D regulations are subject to investment restrictions and cannot be held on behalf of a U.S. resident (as a final beneficiary) for a period of time (usually for 40 days after issue date).
For these securities Clearstream must obtain a certification for any position held on behalf of non-U.S. resident or qualified investor. Failure to receive the requested certification before the deadline will imply the blocking of the uninstructed position.
Clearstream will send an MT564 Corporate Action Notification with an event type Certification Request (Swift qualifier will be SMPG/CERT), requesting that the customer should inform Clearstream if there are any unqualified beneficial owners.
Customers are able to view notifications of beneficial ownership in Xact Web Portal and to respond via the appropriate instructions.
How can I see the details of a corporate action event if I do not have a holding?
Customers without a holding in a particular security can access the corporate action information, either using a query in Xact Web Portal or by subscribing to the dedicated “Corporate Actions Notifications without Holdings Report” in Xact File Transfer or Xact Web Portal.
How can I obtain a copy of the prospectus or Terms and Conditions?
Customers can download Terms and Conditions from Xact Web Portal by querying first on the financial instrument via the Reference Data module. If the documents are available in the Clearstream database, they will be immediately available for download in Xact File Transfer via Internet. When requested to be sent through Xact File Transfer, the documents requested by the customers will be sent to a dedicated “Terms and Conditions” folder in the Xact File Transfer FileStore.
Published documents are electronic copies of the latest versions of prospectuses, other definitive documents for stand-alone securities or pricing supplements for program-linked securities.
The download of the prospectus is subject to fees as stipulated in the Fee Schedule.