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Coupon Interest is an interest rate paid on an instrument, for example, a bond or structured product, and will be distributed to account holders.
In this article, we explain how to apply coupon interest amount per share to BFS accounts.
In BFS a coupon interest can be applied from two different menus, from the menu Product Management > Corporate Actions OR from the action menu at the Instrument. Either way, the result will be the same.
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A pop-up ticket will appear on the screen. First choose an instrument.
Next choose the type of corporate action, in this example: Coupon interest
This will open a creation dialogue where you can define the following properties.
Property | Description |
|---|---|
Name | Is pre-filled, but can be changed. For example: typeofcorporateaction_ISIN_date / CouponInterestCash_SE1234565555_20170117 |
Trade Date | This is the date that should be used as the TradeDate on the created transactions. |
Value Date | This is the date that should be used as the ValueDate on the created transactions. |
Settlement Date | This is the date that should be used as the SettlementDate on the created transactions. |
Capitalization Date | The Capitalization Date is the date when the accrued interest was capitalized. |
Total Amount | The total amount of the coupon interest. |
Amount Per Share | Coupon interest amount per share (currency of the instrument) that will be applied to account holders that had a position in the instrument in the settlement dimension the same day as Capitalization Date. |
Custody Account (Cash) | The deposit of the total coupon amount that will be booked into the selected custody account. |
Exception Account | If the amount does not match the difference has to be booked into a exeption account. |
Click Create to create the coupon interest.
The coupon has now been Created. Click on the button Prepare to view which transactions that will be made for each account.
The coupon interest now has status Prepared which means that the back office adminstrators administrators gets a preview of all transactions that will be made. As long as the coupon have has the status Prepare the back office administrators can change the parameters.
House summary shows each house account and the amount that will be entered there. If there is a large amount in the exeption exception account there could be trades that are not settled yet.
Resulting Client Transactions shows all transactions that will be made for each customer, dividend and tax transactions. If the customer has an ISK-account there will be no tax transaction.
When the batch is in the "Prepared" state it is still possible to change the parameters of the batch and run the "Prepare" function of the batch again. For example, change the total amount. Click Save to save the changes and Prepare the batch again to view the changes.
It´s important to make all changes before choosing to Execute, it is not possible to change the coupon when it is executed.
When we are satisfied click on the button Execute or choose Execute in the action menu and click Confirm to Excute the batch.
The coupon interest batch is now executed and transactions are now created for the house account and the client accounts.
In the customer Clien’s view, the customer has received a coupon interest and has a tax transaction.
If you need to correct the corporate action please read this article: Correct batch transactions