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Actions During the Timeline of an Event - Mandatory Corporate Action

Actions During the Timeline of an Event - Mandatory Corporate Action

Actions to take during timeline of the event

Description

During the timeline of a mandatory corporate action event the following actions should be taken.

Best Practice

On Ex-1, CA teams at both counterparties should notify collateral teams of the event to ensure price adjustments in the market do not prompt incorrect returns of collateral. Restrictions may be placed on the asset from ex date to pay date depending on the event type.

Both counterparties should record the new entitlements within their systems on pay date without delay (in line with SFTR best practice ]). Depending on the event, original (parent) loans may be required to be bilaterally closed.

If pay date is after books closed date; new entitlement shares should remain as a pending settlement on record date +1 until pay date. The beneficial owner will send the recipient counterparty a notification when the new entitlements have been settled.

Both counterparties should notify their collateral teams when closing and creating new positions from the corporate action.

Contract Compare should be checked on pay date +1 to ensure new loan positions are booked and match. Any differences need to be escalated to borrowers in order to match. (COAC-110)

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