Mandatory Reorganisation With Options

Merger (MRGR)

Status: Best Practice Finalised, Last Updated: 24/05/2021

SFTR Report - ETRM / NEWT | Corporate Action Cluster - Return and New Trade | Cash Move - Y

Description:
Exchange of outstanding securities, initiated by the issuer which may include options, as the result of two or more companies combining assets, i.e. an external third-d party company. Cash payment may accompany equity exchange. Mandatory Reorganisation without Options

Best Practice:
When booking a Merger the original contract of the loan should be terminated, and a new contract posted. (COAC-65)

Warrant Exercise (EXWA)

Status: Best Practice Finalised, Last Updated: 24/05/2021

SFTR Report - ETRM / NEWT | Corporate Action Cluster - Return and New Trade | Cash Move - Y

Description:
Option offered to holders to buy (call warrant) or to sell (put warrant) a specific amount of stock, cash, or commodity, at a predetermined price, during a predetermined period of time (which usually corresponds to the life of the issue).

Best Practice:
When booking a Warrant Exercise the original contract of the loan should be terminated, and a new contract posted. (COAC-64)

Call On Intermediate Securities (EXRI)

Status: Best Practice Finalised, Last Updated: 24/05/2021

SFTR Report - ETRM / NEWT | Corporate Action Cluster - Return and New Trade | Cash Move - Y

Description:
Call or exercise on nil paid securities or intermediate securities resulting from an intermediate securities distribution (RHDI). This code is used for the second event, when an intermediate securities' issue (rights/coupons) is composed of two events, the first event being the distribution of intermediate securities.

Best Practice:
When booking a Call On Intermediate Securities the original contract of the loan should be terminated, and a new contract posted. (COAC-63)

Dividend Option (DVOP1)

Status: Best Practice Finalised, Last Updated: 24/05/2021

SFTR Report - NONE | Corporate Action Cluster - Economic outside SFT | Cash Move - Y

Description:
Distribution of a dividend to shareholders with a choice of benefit to receive. Shareholders may choose to receive shares or cash. To be distinguished from DRIP as the company creates new share capital in exchange for the dividend rather than investing the dividend in the market.

Best Practice:
For cash payments which do not affect the open SFT, the beneficial counterparty is contractually due payment in full on pay date. If payment is not received, counterparties should raise a query on pay date + 1.

A claim needs to submitted via email as soon as possible after announcement date in order for a payment to be made, the minimum field list for claims can be found https://www.islaemea.org/isla-best-practice-handbook/subsection/COAC-141/ " target="_blank">here.

If payments are not made on pay date the recipient counterparty should provide a valid reason for non-payment.

In addition to reviewing Contract Compare prior to and on pay date, Contract Compare should be checked on pay date+1 to ensure newly created positions are reconciled. Any differences need to be escalated to counterparties immediately. (COAC-62)

Scrip Dividend (DVSC)

Status: Best Practice Finalised, Last Updated: 24/05/2021

SFTR Report - NEWT | Corporate Action Cluster - Addition Sec on Loan | Cash Move - N

Description:
Dividend or interest paid in the form of scrip - the company creates new share capital in exchange for the dividend.

Best Practice:
When booking a Scrip Dividend, a loan contract should be booked in addition to the current contract with your counterparty on the pay date of the event. (COAC-61)

Dividend Option (DVOP2)

Status: Best Practice Finalised, Last Updated: 24/05/2021

SFTR Report - NEWT | Corporate Action Cluster - Addition Sec on Loan | Cash Move - Y

Description:
Distribution of a dividend to shareholders with a choice of benefit to receive. Shareholders may choose to receive shares or cash. To be distinguished from DRIP as the company creates new share capital in exchange for the dividend rather than investing the dividend in the market.

Best Practice:
When booking a Dividend Option (DVOP2), a loan contract should be booked in addition to the current contract with your counterparty on the pay date of the event. (COAC-60)

Dividend Reinvestment (DRIP)

Status: Best Practice Finalised, Last Updated: 24/05/2021

SFTR Report - NEWT | Corporate Action Cluster - Addition Sec on Loan | Cash Move - Y

Description:
Dividend payment where holders can keep cash or have the cash reinvested in the market by the issuer into additional shares in the issuing company. To be distinguished from DVOP as the company invests the dividend in the market rather than creating new share capital in exchange for the dividend.

Best Practice:
When booking a Dividend Reinvestment, a loan contract should be booked in addition to the current contract with your counterparty on the pay date of the event. (COAC-59)