EIG+ - a new version of the DvE spreadsheet combined with ...



SMPG Corporate Actions

SR2010 SMPG Market Practice Changes

Status: Final

Prep date: February 2010

Update: version 1.0

Author: SMPG

SR2010 SMPG Market Practice changes

This document provides an overview of the main SR2010 CA SMPG Market Practices changes.

1. EIG+ - a new version of the DvE spreadsheet combined with a new version of the EIG

The new Event Interpretation Grid integrates now the indication of the global and country specific support for dates, period, prices and rates for each event.

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2. Different tax rates to be applied to the same dividend payment

No STP alternative exist. Instead, the following practical approach was agreed: 1 DVCA event will be created with 2 notifications. The second notification to be sent only to those holders who can benefit from this tax regime. In practice, one MT564 will be sent for the standard tax regime (i.e. the vast majority of clients) and an MT568 (linked to the MT564) will be sent to those clients who can benefit from the other tax regime. The same CORP is used in the MT564 and MT568.

3. Placement of Cash Rates / Prices at Cash Movement Sequence

Until rates are available at the cash movement level, market practice is to report one rate at option level and the other rate in the narrative.

4. Tax rate and taxable quantity for Stock Dividend events

For markets/events where the tax authority requires a tax to be paid in securities, rather than cash, the SMPG recommendation is to use two SECMOVE sequences, one with credit and one with debit, and the tax details in narrative.

5. Use of Unknown code with Fraction Dispositions (DISF)

Fraction disposition is not critical information, and hence there is no requirement to report DISF with the value UKWN. However, if there is a market rule for DISF, or if the issuer has announced the disposition, it should be reported.

6. Class Action in the US (MAND or VOLU)

The key principles are:

• CLSA is not considered as a VOLU at the time it is filed but as a GENL.

• Once the court has approved it (sometimes several years later), then a CHOS CLSA is created with the possibility for the Account Servicer to indicate what options are supported if any.

There is no requirement to keep the same CORP as it is perceived as difficult to manage when the CAMV changes for the same event.

7. Account servicer cancellation process – CAEV & CAMV

The CAEV and CAMV are crucial to the processing of an event; if one or both of them changes the old event is to be cancelled by the account servicer and a new one started.

8. CORP/COAF relationship

The Market Practice is to have one COAF per event, and not to have the same COAF for all events that are linked together (or that the issuer considers as one event)

9. Use of Effective Date

• Effective Date is to be used in events where there is no concept of entitlement, for instance Name Change (CHAN) or Place of Incorporation (PLAC), and

• Effective Date is to be used in events where there is a sense of eligibility but with a legal obligation, for instance Merger (MRGR).

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