Corporate Actions · 2017-07-25 · CORPORATE ACTIONS 4 of 15 2. Overview A Corporate Action refers to an event with respect to a security, generally by the issuer, which results

Corporate Actions User Guide 10

28 December 2016

Version 1.5

CORPORATE ACTIONS 2 of 15

CONTENTS

1. Introduction .......................................................................................................................... 3

1.1 Document Purpose ........................................................................................................ 3

1.2 Intended Audience ......................................................................................................... 3

1.3 Document History ........................................................................................................... 3

2. Overview ............................................................................................................................. 4

3. Query Events ....................................................................................................................... 5

3.1 Event Details .................................................................................................................. 5

3.2 Event Dates ................................................................................................................... 6

3.3 Event Options ................................................................................................................ 7

3.4 Eligible Accounts ............................................................................................................ 9

4. Investor Options .................................................................................................................. 10

4.1 Instruct Option Selection .............................................................................................. 10

4.1.1 Product ................................................................................................................. 10

4.1.2 Cash Payment ...................................................................................................... 10

4.2 Query Option Selection ................................................................................................ 11

4.3 Withdraw Instructions ................................................................................................... 12

5. Query Entitlements .............................................................................................................. 14

DISCLAIMER:

THE INFORMATION CONTAINED IN THIS DOCUMENT IS A GUIDE ONLY. ALL PARTICIPANTS ON ANY NZX MARKET MUST COMPLY WITH THE RELEVANT RULES, AND THIS DOCUMENT IS NOT A SUBSTITUTE FOR THOSE RULES. NZX CLEARING WILL DETERMINE, IN ITS SOLE DISCRETION, WHETHER ANY PARTICIPANT OR POTENTIAL PARTICIPANT MEETS THE REQUISITE CRITERIA TO BECOME AND REMAIN A PARTICIPANT. THOSE WISHING EITHER TO TRADE IN ANY PRODUCTS AVAILABLE AT NZX OR TO OFFER AND SELL THEM TO OTHERS SHOULD CONSIDER BOTH THEIR LEGAL AND REGULATORY POSITION, INCLUDING THE RELEVANT RULES, AND THE RISKS ASSOCIATED WITH SUCH PRODUCTS BEFORE DOING SO. NO PART OF THIS PUBLICATION MAY BE REDISTRIBUTED OR REPRODUCED IN ANY FORM OR BY ANY MEANS OR USED TO MAKE ANY DERIVATIVE WORK WITHOUT WRITTEN PERMISSION FROM NZX CLEARING. NZX CLEARING (INCLUDING ITS PARENT COMPANY DIRECTORS, OFFICERS, EMPLOYEES AND CONTRACTORS) SHALL NOT BE LIABLE (EXCEPT TO THE EXTENT REQUIRED BY LAW) FOR THE USE OF THE INFORMATION CONTAINED HEREIN HOWEVER ARISING IN ANY CIRCUMSTANCES CONNECTED WITH ACTUAL TRADING OR OTHERWISE. NZX CLEARING IS NOT RESPONSIBLE FOR ANY ERRORS OR OMISSIONS CONTAINED IN THIS PUBLICATION. THIS PUBLICATION IS FOR INFORMATION ONLY AND DOES NOT CONSTITUTE AN OFFER, SOLICITATION OR RECOMMENDATION TO ACQUIRE OR DISPOSE OF ANY INVESTMENT OR TO ENGAGE IN ANY OTHER TRANSACTION. ALL INFORMATION, DESCRIPTIONS, EXAMPLES AND CALCULATIONS CONTAINED IN THIS PUBLICATION ARE FOR GUIDANCE PURPOSES ONLY, AND SHOULD NOT BE TREATED AS DEFINITIVE.


1. Introduction

1.1 Document Purpose

The purpose of this document is to provide participants with information on how to use the Corporate Actions functionality in the TCS BaNCS system.

1.2 Intended Audience

This document is intended for use by Clearing & Settlement Participants.

1.3 Document History

Version Date Nature of Amendment

1.0 31-Dec-2007 Initial draft

1.1 05-Jun-2009 Updated with new screen shots and revised text

1.2 10-Jul-2009 Changed screen shots for EXT2 region. Various other wording additions

1.3 N/A Version 1.3 omitted to enable version number alignment

1.4 18-Dec-2009 Revised screenshots. Minor text changes

1.5 28-Dec-2016 Updates for BaNCS V7


2. Overview A Corporate Action refers to an event with respect to a security, generally by the issuer, which results in cash and/or security benefits to the holders of the security or a change in the status of the security. At a high level Corporate Actions can be categorised as follows:

Mandatory Actions – which are applicable to all holders of the security

Voluntary Actions – where the choice to participate in the event remains with the holders of the securities

At a lower level Corporate Actions can be categorised into different combinations of benefits i.e. paying or receiving cash, stock or cash and stock. The following table shows the benefits applicable to each corporate action event type that will be handled by BaNCS:

Benefits Description Corporate Actions

Cash Credit Cash benefit to Depository Participants holding the associated products

Cash Dividend Interest distribution (Fixed/Variable)

Products Credit Products benefit to Depository Participants holding the associated products

Bonus Issue Stock Dividend Rights Distribution

Cash Credit + Products Debit

Cash benefit along with products being debited to Depository Participants holding the associated products

Capital Decrease

Cash Credit + Products Debit + Products Credit

Cash benefit along with products benefit along with products debited to Depository Participants holding the associated products

Capital Decrease

Cash Debit + Product Debit + Product Credit

Products benefit along with products debits and cash debits to Depository Participants holding the associated products

Rights Subscription Conversion (Voluntary)

Products Debit + Products Credit

Products benefit along with products debit to Depository Participants holding the associated products

Pari-Passu Conversion (Mandatory)

Corporate Action events are set up in the system by NZX Clearing. Some Corporate Actions (i.e. Interest payments and redemption) can be anticipated from the details of the instrument which are set up when creating the Instrument. All other events are set up through the Depository module.

Users can query event details, make options selections and query their entitlements through the Depository module.


3. Query Events

3.1 Event Details

Users can query the details of each Corporate Action in the Query Events screen in the Depository module as soon as the event has been entered and confirmed by NZX Clearing. Events are queried as follows:

1) Select Depository from the Main Menu bar

2) Select Corporate Actions from the Menu Bar

3) Select Event Basic Details from the Menu Bar

4) Select the Query -> Events option from the Menu Bar to bring up the Query Events screen

Users can then choose and populate one or more parameters in the query screen then click on

the Search to view all events within the chosen parameters.

Events screen

Users can view details of each event by selecting one of the rows displayed, then right clicking and selecting ‘Display’. From this screen, further details of the Corporate Action including details of Event Dates, Event Options and Eligible Accounts can be viewed.


Events Additional Details screen

3.2 Event Dates

Event dates are specific to each event and depict when each stage of the event will

occur. Dates differ for each event type, and also depending on whether the event is a

mandatory event or a voluntary event. Possible Corporate Action Event dates are as follows:

Dates Description

Announcement Date The date that the event was announced by the Issuer.

Ex Date Date on or after which any trade entered into in the product undergoing the Corporate Action is not eligible for Corporate Action entitlement

Last Traded Date Last trading Date of the Base Instrument of the Event

Record Date The date on which the registered is examined and any product holder who has a holding at that date will receive the Corporate Action on the holding

Response Start Date The date from which option selections are available for a voluntary Corporate Action

Market Deadline Date The last date for option selections and the date that cash is debited to participants for those option selections, for a voluntary Corporate Action

Effective Date Date/time at which an event is officially effective from the issuer's perspective

Withdrawal Start Date The first date for withdrawing already placed option selections for voluntary Corporate Actions


Withdrawal End Date The last date for withdrawing already placed option selections for voluntary Corporate Actions

Interest Start Date Start date for the interest period to which the related coupon payment applies

Interest End Date End date for the interest period to which the related coupon payment applies

Payment Date The date on which the Registry/Paying Agent distributes Corporate Actions benefits

Dates are displayed on Corporate Action Events as follows:


3.3 Event Options

Event Options contain the details that are used as the basis of the benefit calculation. An event will either have a cash option, a security option, or both, depending on the Corporate Action type. An event can have more than one option and options can be for receiving, paying/submitting or a combination of both.

Options are displayed on Corporate Action Events as follows:


Further details can be viewed by highlighting the option and clicking on either the Cash or

Security option as required to view the details of the option.


The cash options screen will display the details relating to a cash component of a Corporate Action event (if applicable). The key details are as follows:

i. Base Quantity – Fixed number of shares for which the amount is disbursed to the shareholder

ii. Submit / Receive – Whether the shareholder will be receiving or paying cash

iii. Realization Basis – Method of specifying the cash basis (amount or percentage)

iv. Basis amount / %age – Actual amount or percentage to be disbursed to shareholders in relation to the base quantity

v. Basis Currency – Currency of the cash disbursement

Cash Basis details screen

The security options screen will display the details relating to a security component of a Corporate Action event (if applicable). The key details are as follows:

i. Base Quantity – Fixed number of shares for which the amount is disbursed to the shareholder

ii. Submit / Receive – Whether the shareholder will be receiving or submitting securities

iii. Realization Basis – Method of specifying the security basis (amount or percentage)

iv. Disbursed Instrument ID – The security to be disbursed. This may differ to the base instrument

v. Basis amount / %age – Actual amount or percentage to be disbursed to shareholders in relation to the base quantity

Security Basis details screen


3.4 Eligible Accounts

Account eligibility can be set up by NZX Clearing at the Event, Corporate Action Type or

Account level. This determines which holdings of participants will be considered for Corporate

Action entitlement calculation.

Eligible accounts can be queried by selecting Eligible Accounts at the bottom of the Events

Additional Details screen.

Event Eligible Accounts screen


4. Investor Options

4.1 Instruct Option Selection

For voluntary Corporate Actions (i.e. Rights subscription, voluntary conversion) Depository

Participants can perform option selections at any time between Response Start Date and 2pm

on Market Deadline Date. Options selections can be made directly into the system.

Option selection is a two-step ‘Maker/authoriser’ process.

4.1.1 Product

If the event option involves submitting product, E.g. Rights issue subscription, the instructed

quantity will be validated against the Depository Participant’s current day holding. On successful

validation, the instructed quantity will be transferred from Normal to Tendered balance in the

Depository Participant’s account.

4.1.2 Cash Payment

If cash is required to exercise the event, cash will be debited from the Depository Participant’s

money account at 2pm on the Market Deadline Date for the value of instructed quantity

multiplied by the amount per unit, as announced by the Issuer.

To create an option selection:



3) Select Option Selection from the Menu Bar

4) Select the Instruct -> Option Selection from the Menu Bar to bring up the Option Selection screen

Option Selection screen

Users can then choose and populate one or more parameters in the query screen then click on the Search to view all events within the chosen parameters.

5) Select the event for which an option instruction is to be created, then right click and ‘Display’, for create option screen

6) Enter BPID, A/c No, Instructed quantity, and Execution Date, then click on ‘Create’ button, to create option instruction in ‘Created’ status.


The Investor Option must them be confirmed by a second user, to be completed successfully

7) Second user must go to Query Investor Options (see below), and locate relevant instruction in ‘Created’ status.

8) Select the instruction, right click and select ‘Confirm’.

9) Refresh search to check instruction status has changed to ‘Confirmed’.

4.2 Query Investor Options

Participants can query/confirm their instructions as follows:




4) Select the Query -> Investor Options from the Menu Bar to bring up the Investor Options screen

Users can then choose and populate one or more parameters in the query screen then click on the Search to view all events within the chosen parameters.

Investor Options screen

Further details on the specific instruction can be viewed by selecting the instruction and clicking

on Display.


Investor Options detail screen

4.3 Withdraw Instructions

Depository Participants can create a withdrawal to withdraw a previously elected selection for a

voluntary event through the query instructions screen. Participants must select the instruction

and enter quantity for withdrawal for that instruction. The withdrawal instruction quantity must be

equal to the quantity previously instructed. Partial withdrawals are not allowed.

Withdrawals will be allowed only between Withdrawal Start Date and Withdrawal End Date. On

successful validation, the instructed quantity will be transferred back from Tendered to Normal

balance in the Depository Participant’s account.

To create a withdrawal:




4) Select the Query -> Investor Options from the Menu Bar to bring up the Investor Options screen

5) Refine the search using the parameters provided

6) Select the required event, right click and select Modify

7) Enter the amount for withdrawal into the Withdrawal Requested Qty field

8) Click on Release to process the withdrawal


Investor Options detail screen


5. Query Entitlements Entitlements are the shareholder cash and/or security benefits that are calculated by the system

based on the end of day balances in the Depository Participant’s accounts on the Record

Date/Market Deadline date. The query will show the cash and/or security benefits, either

receivable or payable at a Business Partner / Account level, as well as the quantity of holdings

that were eligible for the calculation in that account.

Users can query their entitlements as follows:



3) Select Entitlements from the Menu Bar

4) Select the Query -> Entitlements from the Menu Bar to bring up the Entitlements screen

Entitlements screen

Documents

Corporate Actions · 2017-07-25 · CORPORATE ACTIONS 4 of 15 2. Overview A Corporate Action refers to an event with respect to a security, generally by the issuer, which results