Final Maturity (REDM)

SFTR Report - ETRM | Corporate Action Cluster - Full Return | Cash Move - Y>

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

SFTR Report - ETRM | Corporate Action Cluster - Full Return | Cash Move - Y

Description:
Final maturity of a security. The redemption of an entire issue outstanding of securities, for example, bonds, preferred equity, funds, by the issuer or its agent, for example, asset manager, at final maturity.

Best Practice:
Prior to a redemption event on a position both counterparties should seek, where possible, to return and close out or swap the position to avoid having the asset out on loan over the redemption date.

If a position is outstanding on the redemption date and confirmation from the agent of the redemption, proceeds of this should be agreed between counterparties and paid on the pay date of the event. In the event of a redemption payment being made after pay date, the lender should continue to collateralise the loan until the redemption payment is made.

Where applicable, and if agreed between both counterparties, the redemption proceeds can be netted with any cash collateral that has been exchanged on the position previously. As with redemptions, coupon payments upon confirmation of the event should be paid on pay date of the event. (COAC-50)