Dividend instrument
- Lena Birath
Dividend Instrument
In this article, we explain how to apply dividend instruments per share or fund unit to BFS accounts.
The example below explains making a dividend in a stock with currency SEK and tax country Sweden.
In BFS a dividend can be done from two different menus, from the menu Instrument Management > Corporate Actions OR from the action menu at the Instrument. Either way, the result will be the same.
A pop-up ticket will appear on the screen. First, select an instrument and next choose a type of corporate action, in this example: Dividend Instrument.
This will open a ticket where you can define the following properties.
Property | Description |
|---|---|
Name | Is pre-filled, but can be changed. For example: typeofcorporateaction_ISIN_date / DividendInstrument_SE1234565555_20180910 |
| Trade Date | This is the date that should be used as the TradeDate on the created transactions. |
| Dividend record date | When a company decides to declare a dividend, its board of directors establishes a record date. This is the date when a person must be on the company’s record as a shareholder to receive the dividend payment. This is used to determine which position holders should receive the dividend with regards to the settlement dimension. |
| Dividend payout date | This date should be used as the SettleDate and ValueDate on the created transactions |
| Total number of units | The total number of units of the dividend. |
| Units per owned unit. | Dividend 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 on the day of the DividendRecordDate. |
| Custody Account (Cash) | The deposit of the total dividend amount will be booked into the selected custody account. |
| Exception Account | If the amount does not match the difference has to be booked into an exception account. |
The dividend now has the status Prepared which means that the back office administrators get a preview of all transactions that will be made. As long as the dividend has the status Prepare the back office administrators can change the parameters. 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.
House summary shows each house account and the amount that will be entered there. There could be trades that are not settled yet If there is a big amount in the exception account.
Resulting Client Transactions shows all transactions that will be made for each customer.
It´s important to make all changes before choosing to execute, for it is not possible to change the dividend when it is executed.
When we are satisfied, click on the button Execute or choose to Execute in the action menu.
The dividend is now executed and transactions are now created for the house account and the client accounts.
In the customer view, the customer has received a dividend share transaction.
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