Thư viện tri thức trực tuyến
Kho tài liệu với 50,000+ tài liệu học thuật
© 2023 Siêu thị PDF - Kho tài liệu học thuật hàng đầu Việt Nam
Corporate Actions A Guide to Securities Event Management
Nội dung xem thử
Mô tả chi tiết
JWBK059-FM JWBK059-Simmons December 20, 2005 8:21 Char Count= 0
Corporate Actions
A Guide to Securities Event Management
Michael Simmons and Elaine Dalgleish
iii
JWBK059-FM JWBK059-Simmons December 20, 2005 8:21 Char Count= 0
JWBK059-FM JWBK059-Simmons December 20, 2005 8:21 Char Count= 0
Corporate Actions
i
JWBK059-FM JWBK059-Simmons December 20, 2005 8:21 Char Count= 0
For other titles in the Wiley Finance Series
please see www.wiley.com/finance
ii
JWBK059-FM JWBK059-Simmons December 20, 2005 8:21 Char Count= 0
Corporate Actions
A Guide to Securities Event Management
Michael Simmons and Elaine Dalgleish
iii
JWBK059-FM JWBK059-Simmons December 20, 2005 8:21 Char Count= 0
Copyright C 2006 John Wiley & Sons Ltd, The Atrium, Southern Gate, Chichester,
West Sussex PO19 8SQ, England
Telephone (+44) 1243 779777
Email (for orders and customer service enquiries): [email protected]
Visit our Home Page on www.wiley.com
All Rights Reserved. No part of this publication may be reproduced, stored in a retrieval system
or transmitted in any form or by any means, electronic, mechanical, photocopying, recording,
scanning or otherwise, except under the terms of the Copyright, Designs and Patents Act 1988
or under the terms of a licence issued by the Copyright Licensing Agency Ltd, 90 Tottenham
Court Road, London W1T 4LP, UK, without the permission in writing of the Publisher.
Requests to the Publisher should be addressed to the Permissions Department, John Wiley &
Sons Ltd, The Atrium, Southern Gate, Chichester, West Sussex PO19 8SQ, England, or emailed
to [email protected], or faxed to (+44) 1243 770620.
Designations used by companies to distinguish their products are often claimed as trademarks. All brand
names and product names used in this book are trade names, service marks, trademarks or registered
trademarks of their respective owners. The Publisher is not associated with any product or vendor
mentioned in this book.
This publication is designed to provide accurate and authoritative information in regard to
the subject matter covered. It is sold on the understanding that the Publisher is not engaged
in rendering professional services. If professional advice or other expert assistance is
required, the services of a competent professional should be sought.
Michael Simmons and Elaine Dalgleish have asserted their rights under the Copyright, Designs and Patents Act, 1988,
to be identified as the authors of this work
Other Wiley Editorial Offices
John Wiley & Sons Inc., 111 River Street, Hoboken, NJ 07030, USA
Jossey-Bass, 989 Market Street, San Francisco, CA 94103-1741, USA
Wiley-VCH Verlag GmbH, Boschstr. 12, D-69469 Weinheim, Germany
John Wiley & Sons Australia Ltd, 42 McDougall Street, Milton, Queensland 4064, Australia
John Wiley & Sons (Asia) Pte Ltd, 2 Clementi Loop #02-01, Jin Xing Distripark, Singapore 129809
John Wiley & Sons Canada Ltd, 22 Worcester Road, Etobicoke, Ontario, Canada M9W 1L1
Wiley also publishes its books in a variety of electronic formats. Some content that appears
in print may not be available in electronic books.
Library of Congress Cataloging-in-Publication Data
Simmons, Michael, 1951–
Corporate actions : a guide to securities event management /
Michael Simmons & Elaine Dalgleish.
p. cm.
ISBN 13 978-0-470-87066-2
ISBN 10 0-470-87066-4
1. Securities industry. 2. Corporations—Finance—Management. I.
Dalgleish, Elaine. II. Title.
HG4521.S573 2006
658.15
224—dc22
2005027085
British Library Cataloguing in Publication Data
A catalogue record for this book is available from the British Library
ISBN 13 978-0-470-87066-2 (HB)
ISBN 10 0-470-87066-4 (HB)
Typeset in 10/12pt Times by TechBooks, New Delhi, India
Printed and bound in Great Britain by Antony Rowe Ltd, Chippenham, Wiltshire
This book is printed on acid-free paper responsibly manufactured from sustainable forestry
in which at least two trees are planted for each one used for paper production.
iv
JWBK059-FM JWBK059-Simmons December 20, 2005 8:21 Char Count= 0
Contents
Introduction xvii
Acknowledgements xxi
About the Authors xxiii
PART I INTRODUCTORY ELEMENTS 1
1 Basic Corporate Action Concepts 3
1.1 Introduction 3
1.2 Definition of Corporate Actions 3
1.3 Purpose of Corporate Actions 3
1.4 Impact of Corporate Actions 5
1.4.1 Impact from the Position Holder’s Perspective 5
1.4.2 Impact on the Price of the Underlying Security 6
1.5 The Lifecycle of a Corporate Action 6
1.5.1 Mandatory (Generic) Lifecycle 7
1.5.2 Mandatory with Options Lifecycle 7
1.5.3 Voluntary Lifecycle 7
1.5.4 Multi-Stage Lifecycle 7
1.5.5 Issuer Notices Lifecycle 7
1.6 Summary 8
2 Event Description and Classification 9
2.1 Introduction 9
2.2 Event Descriptions 9
2.2.1 Payment of Interest Due 10
2.2.2 Payment of Income Earned 10
2.2.3 Distribution of Capital Reserves 11
2.2.4 Equity Restructure 12
2.2.5 Debt Restructure against Equity (Issued Capital) 14
2.2.6 Debt Redemption 15
2.2.7 Raising of Capital 15
v
JWBK059-FM JWBK059-Simmons December 20, 2005 8:21 Char Count= 0
vi Contents
2.2.8 Re-organization of Company Structure 17
2.2.9 Issuer Notices 19
2.3 Event Classification 19
2.3.1 Impact 20
2.3.2 Lifecycle 20
2.4 Event Combinations 20
2.5 Event Variations and Terminology 22
2.6 Summary 22
3 The Securities (and Corporate Actions) Market Place 23
3.1 Introduction 23
3.2 The Securities Market Place – Overview 23
3.2.1 The Trading Environment 23
3.2.2 Issuers 25
3.2.3 Securities 25
3.2.4 Investors 27
3.2.5 Agents for Investors 28
3.2.6 Securities Trading Organizations (STOs) 28
3.2.7 CSDs, ICSDs and Custodians 30
3.3 Participants – The Corporate Actions Perspective 31
3.3.1 Issuers 32
3.3.2 CSDs and ICSDs 32
3.3.3 Custodians 33
3.3.4 Position Holders 33
3.3.5 Individuals 34
3.3.6 Institutional Investors 34
3.3.7 Securities Trading Organizations (STOs) 34
3.4 Summary 36
4 Static Data 37
4.1 Introduction 37
4.2 Securities Static Data 37
4.2.1 Common Attributes of Securities Static Data 37
4.2.2 Detailed Attributes of Securities Static Data 38
4.2.3 Changeable Detailed Attributes of Securities Static Data 40
4.2.4 Additional Corporate Actions Securities Static Data 41
4.3 Participant Static Data 41
4.3.1 Common Attributes of Participant Static Data 42
4.3.2 Detailed Attributes of Participant Static Data 43
4.3.3 Changeable Detailed Attributes of Participant Static Data 44
4.3.4 Additional Corporate Actions Participant Static Data 45
4.4 Sources and Maintenance of Static Data 45
4.4.1 Securities 45
4.4.2 Participants 46
4.5 Summary 47
5 Securities Position Management 49
5.1 Introduction 49
JWBK059-FM JWBK059-Simmons December 20, 2005 8:21 Char Count= 0
Contents vii
5.2 The STO’S Risk 49
5.3 Fundamentals of Securities Position Management 50
5.4 Generic Securities Accounting Principles 52
5.5 Extended Securities Position Management 53
5.6 Disparate Trade and Position Records 54
5.7 Reconciliation 54
5.8 Summary 55
PART II MANDATORY EVENTS 57
6 Overview of the Generic Corporate Action Lifecycle 59
6.1 Introduction 59
6.2 Issuer Communicates Event Data 60
6.3 Event Terms Capture and Cleansing 60
6.4 Determining Entitlement 60
6.5 Communication of Event Information 60
6.6 Calculation of Resultant Entitlements 60
6.7 Passing of Internal Entries 61
6.8 Collection and Disbursement of Resultant Entitlements 61
6.9 Updating of Internal Entries 61
7 Straight Through Processing 63
7.1 Introduction 63
7.2 STP and Corporate Actions 64
8 Event Terms Capture and Cleansing 67
8.1 Introduction 67
8.2 Event Terms 68
8.2.1 Underlying Security 68
8.2.2 Event Dates 68
8.2.3 Entitlement Security and/or Currency 69
8.2.4 Ratios and Rates 69
8.2.5 Treatment of Fractions 70
8.2.6 Exchange Rates 71
8.2.7 Options Available 71
8.2.8 Additional Event Conditions and Information 71
8.3 Sources of Event Terms 72
8.4 Availability of Event Terms 73
8.4.1 Upon Issue of the Security 73
8.4.2 During the Life of the Security 73
8.5 Cleansing of Event Terms 74
8.5.1 The Importance of ‘Clean’ Event Terms 74
8.5.2 Approaches to ‘Clean’ Event Terms 75
8.5.3 Timing of Event Terms Cleansing 76
8.6 When to Apply Event Terms 76
8.7 Managing Changes to Event Terms Throughout the Lifecycle 76
8.8 Summary 77
JWBK059-FM JWBK059-Simmons December 20, 2005 8:21 Char Count= 0
viii Contents
9 Determining Entitlement 79
9.1 Introduction 79
9.2 The STO’s Risk 80
9.3 Types of Entitled Positions (Including Unsettled Trades) 80
9.3.1 Ownership Positions 81
9.3.2 Location 81
9.4 Links Between Ownership Positions and Location Positions 84
9.5 Equity Event Entitlement Business Principles 84
9.5.1 Entitlement Date 85
9.5.2 Record Date 86
9.5.3 Normal Cum and Normal Ex Trading 86
9.5.4 Special-Cum and Special-Ex Trading 87
9.5.5 Special Value Date 88
9.5.6 Depot Adjustment Date/Compensation Date 91
9.6 Equity Event – Itemized Trading and Settlement Scenarios 92
9.7 Bonds Event Entitlement Business Principles 94
9.7.1 Determining Entitlement 94
9.7.2 Record Date 96
9.8 Applying the Business Principles in Practice 97
9.8.1 When to Determine Entitlement 98
9.8.2 Identification of Ownership Positions 100
9.8.3 Identification of Settled Custodian Positions 103
9.8.4 Identification of Potential Claims 104
9.9 Balancing of Positions and Unsettled Trades 105
9.10 Reconciliation of Positions and Unsettled Trades 109
9.10.1 Reconciliation of Ownership Positions 109
9.10.2 Reconciliation of Settled Custodian Positions 109
9.10.3 Reconciliation of Unsettled Trades 110
9.11 Summary 111
10 Communication of Event Information 113
10.1 Introduction 113
10.2 The STO’s Risk 114
10.3 Communicating with Position Holders 114
10.3.1 Characteristics of Communication Types 114
10.3.2 Generic Communication Types 115
10.3.3 Communication Features 117
10.3.4 Preferences of the Position Holder 119
10.4 Communicating with Interested Parties 120
10.5 Summary 121
11 Calculation of Resultant Entitlements 123
11.1 Introduction 123
11.2 The STO’s Risk 124
11.3 Calculation of Resultant Cash Entitlements 125
11.3.1 Cash Rates Per Share 125
11.3.2 Percentage Relevant to Face Value 125
JWBK059-FM JWBK059-Simmons December 20, 2005 8:21 Char Count= 0
Contents ix
11.4 Calculation of Resultant Securities Entitlements 126
11.4.1 The Securities Ratio 126
11.4.2 The Treatment of Fractions 127
11.4.3 Securities Ratio Calculation Sequence 128
11.4.4 Calculation of Removal of Underlying Securities Holdings 129
11.4.5 Calculation of Cash Payable to the Issuer 129
11.5 Calculation of Resultant Entitlements Against Ownership Positions 130
11.5.1 Benefit Events 130
11.5.2 Re-organization Events 130
11.6 Balancing Resultant Entitlements 132
11.7 Reconciliation of Resultant Entitlements 134
11.7.1 Reconciliation of Location Resultant Entitlements 134
11.7.2 Reconciliation of Ownership Resultant Entitlements 135
11.7.3 Reconciliation of Claims 135
11.8 Determination of Collectible and Disbursable Accounts 136
11.9 Summary 136
12 Passing of Internal Entries 139
12.1 Introduction 139
12.2 The STO’s Risk 139
12.3 Mechanisms for Passing Internal Entries 140
12.4 Types of Internal Entries 141
12.4.1 Entitlement Date Entries 142
12.4.2 Record Date Entries 146
12.5 Review of Required Internal Entries 149
12.6 Summary 150
13 Collection/Disbursement of Resultant Entitlements 151
13.1 Introduction 151
13.2 The STO’s Risk 152
13.3 Collection of Resultant Entitlements from the Custodian 153
13.3.1 Physical Collection 153
13.3.2 Electronic Collection 154
13.4 Disbursement of Resultant Entitlements to Position Holders 154
13.4.1 Contractual Settlement 155
13.4.2 Actual Settlement 156
13.5 Settlement of Claims 157
13.5.1 Individual Settlement 157
13.5.2 Compensation 158
13.5.3 Transformation 158
13.6 Write-Offs 160
13.7 Summary 160
14 Updating of Internal Entries 161
14.1 Introduction 161
14.2 The STO’s Risk 161
JWBK059-FM JWBK059-Simmons December 20, 2005 8:21 Char Count= 0
x Contents
14.3 Mechanisms for Passing Internal Entries 162
14.4 Settlement Date Entries 162
14.4.1 ‘Contractual’ Settlement of Custody Client On
Payment Date 163
14.4.2 Settlement of Custodian Position on Payment Date 164
14.4.3 ‘Actual’ Settlement of Custody Client as a Result of
Custodian Settlement (incl. late claim settlement) 164
14.5 Settlement of Claims and Transformations 166
14.6 Summary 166
15 Examples of Mandatory Events 167
15.1 Introduction 167
15.2 Bonus Issue 167
15.2.1 Purpose of Example 167
15.2.2 Event Terms 167
15.2.3 Determining Entitlement 167
15.2.4 Communication of Event Information
(Event Terms Announcement) 169
15.2.5 Calculation of Resultant Entitlements 170
15.2.6 Entitlement Date Entries 170
15.2.7 Record Date Entries 171
15.2.8 Communication of Event Information (Final
Claim Notice) 171
15.2.9 Settlement Details 172
15.2.10 Settlement Date Entries 173
15.3 Share Split 174
15.3.1 Purpose of Example 174
15.3.2 Event Terms 174
15.3.3 Determining Entitlement 174
15.3.4 Communication of Event Information
(Event Terms Announcement) 175
15.3.5 Calculation of Resultant Entitlements 175
15.3.6 Entitlement Date Entries 176
15.3.7 Record Date Entries 176
15.3.8 Settlement Details 177
15.3.9 Settlement Date Entries 178
15.4 Bond Maturity 179
15.4.1 Purpose of Example 179
15.4.2 Event Terms 179
15.4.3 Determining Entitlement 179
15.4.4 Communication of Event Information
(Event Terms Announcement) 180
15.4.5 Calculation of Resultant Entitlements 180
15.4.6 Entitlement Date Entries 181
15.4.7 Record Date Entries 181
15.4.8 Settlement Details 182
15.4.9 Settlement Date Entries 182
JWBK059-FM JWBK059-Simmons December 20, 2005 8:21 Char Count= 0
Contents xi
PART III EVENTS WITH ELECTIONS 185
16 Concepts of Events with Elections 187
16.1 Introduction 187
16.2 The STO’s Risk 188
16.3 Impact of Events with Elections 188
16.3.1 Impact from the Issuer’s Perspective 189
16.3.2 Impact from the Position Holder’s Perspective 189
16.3.3 Impact on the Price of the Underlying Security 189
16.4 Events with Elections Lifecycle 190
16.5 Summary 191
17 Management of Mandatory with Options Events 193
17.1 Introduction 193
17.2 Mandatory with Options Event Terms 194
17.2.1 Options Available 194
17.2.2 Election Decision Deadlines 195
17.3 Determining Entitlement to Mandatory with Options Events 196
17.4 Communication of Mandatory with Options Event Information 196
17.5 Receipt of Election Decisions 198
17.5.1 Position Holder Election Decisions 198
17.5.2 Claiming Counterparty Election Decisions 200
17.6 Recording and Validating Received Election Decisions 200
17.6.1 Recording Election Decision Quantities 201
17.6.2 Validating Received Election Decisions 202
17.7 Managing Overdue Election Decisions 202
17.8 Issue of Election Decisions 203
17.8.1 Calculating Election Decisions to be Issued 204
17.8.2 Identifying the Location Component 205
17.8.3 Balancing Election Decisions 207
17.8.4 Communication of Election Decisions 208
17.9 Over-Elections 209
17.10 Calculation of Resultant Entitlements 211
17.10.1 Calculations Based upon a Re-investment Price 213
17.11 Passing of Internal Entries 214
17.11.1 Mandatory with Options Benefit Events 214
17.11.2 Mandatory with Options Re-organization Events 216
17.12 Collection and Disbursement of Resultant Entitlements 217
17.13 Updating of Internal Entries 217
17.14 Summary 217
18 Management of Voluntary Events 219
18.1 Introduction 219
18.2 Voluntary Event Terms 220
18.2.1 Options Available 220
18.2.2 Election Decision Deadlines 221
18.2.3 Shareholder Eligibility 221
JWBK059-FM JWBK059-Simmons December 20, 2005 8:21 Char Count= 0
xii Contents
18.3 Determining Entitlement to Voluntary Events 221
18.4 Communication of Voluntary Event Information 222
18.5 Receipt of Election Decisions 222
18.6 Recording and Validating Received Election Decisions 223
18.7 Managing Overdue Election Decisions 224
18.8 Issue of Election Decisions 225
18.9 Over-elections 225
18.10 Calculation of Resultant Entitlements 225
18.11 Passing of Internal Entries 227
18.11.1 Election Decision Date Entries 227
18.11.2 Record Date Entries 228
18.11.3 Over-Election Adjustment Entries 229
18.12 Collection and Disbursement of Resultant Entitlements 231
18.13 Updating of Internal Entries 231
18.14 Summary 231
PART IV MULTI-STAGE EVENTS 233
19 Concepts of Multi-Stage Events 235
19.1 Introduction 235
19.2 The Life of a Multi-stage Event 235
19.2.1 The Life of a Rights Issue 236
19.2.2 Comparison of Multi-stage Events 238
19.3 The STO’s Risk 239
19.4 Impact of Multi-stage Events 239
19.4.1 Impact from the Issuer’s Perspective 239
19.4.2 Impact from the Position Holder’s Perspective 240
19.4.3 Impact on the Price of the Underlying Security 240
19.5 Lifecycle Elements of the Multi-stage Event 241
19.5.1 Multi-Stage Event Terms 241
19.5.2 Determining Entitlement at Each Stage 242
19.5.3 Communication of Event Information 243
19.5.4 Receipt and Issue of Election Decisions 244
19.5.5 Calculation of Resultant Entitlements 244
19.5.6 Passing of Internal Entries 245
19.5.7 Collection/Disbursement of Resultant Entitlements 246
19.5.8 Updating of Internal Entries 246
19.6 Summary 246
20 Management of a Rights Issue 247
20.1 Introduction 247
20.2 The Operational Life of a Rights Issue 247
20.3 Rights Issue Event Terms 248
20.4 Nil Paid Rights Distribution 250
20.4.1 Determination of Entitled Holdings 250
20.4.2 Communication of Event Information 251