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Template:Record amount paid amount ex amount: Difference between revisions
Template:Record amount paid amount ex amount (view source)
Revision as of 22:46, 23 January 2020
, 23 January 2020→Hang on a minute. “Paid”? Is that, like, different to “declared”? On purpose?
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On one hand, on a natural reading it seems so: {{eqderivprov|Record Amount}} and {{eqderivprov|Ex Amount}} specify an amount by reference to the amount “declared by the {{eqderivprov|Issuer}} to [[holder of record|holders of record]] of a {{eqderivprov|Share}}”, whereas {{eqderivprov|Paid Amount}} references the amount “''paid'' by the {{eqderivprov|Issuer}} during the relevant {{eqderivprov|Dividend Period}} to [[holder of record|holders of record]]”. On the other hand there’s no sensible reason for supposing an {{eqderivprov|Equity Amount Payer}} would want to keep the risk of solvency of an {{isdaprov|Issuer}} if it pays early<ref>or ever, really: that defeats the purpose of an equity derivative</ref> but ''not'' have it if it pays on the payment date. Examination of the world wide web seems to offer little help. | On one hand, on a natural reading it seems so: {{eqderivprov|Record Amount}} and {{eqderivprov|Ex Amount}} specify an amount by reference to the amount “declared by the {{eqderivprov|Issuer}} to [[holder of record|holders of record]] of a {{eqderivprov|Share}}”, whereas {{eqderivprov|Paid Amount}} references the amount “''paid'' by the {{eqderivprov|Issuer}} during the relevant {{eqderivprov|Dividend Period}} to [[holder of record|holders of record]]”. On the other hand there’s no sensible reason for supposing an {{eqderivprov|Equity Amount Payer}} would want to keep the risk of solvency of an {{isdaprov|Issuer}} if it pays early<ref>or ever, really: that defeats the purpose of an equity derivative</ref> but ''not'' have it if it pays on the payment date. Examination of the world wide web seems to offer little help. | ||
But here’s a common-sense explanation | But here’s a common-sense explanation. Remember the timing of the dividend process: first it is declared, then, a short [[settlement cycle]] before the [[Record date|record date]] the share trades “ex-div” (this is the [“[ex date]]”), and only then, two or three weeks ''after'' the [[record date]], is the actual {{eqderivprov|Dividend Payment Date}}. And remember this whole farrago is to determine ''in which {{eqderivprov|Dividend Period} the {{eqderivprov|Dividend Amount}} gets paid''. | ||
Now, if you chose {{eqderivprov|Ex Amount}}, your {{eqderivprov|Cash Settlement Payment Date}} may well fall ''before'' the actual {{eqderivprov|Dividend Payment Date}}, in which case ''it doesn’t make sense to talk about the dividend paid by the issuer, because it won’t have been paid yet''. If you selected {{eqderivprov|Paid Amount}}, the {{eqderivprov|Cash Settlement Payment Date}} necessarily will fall after the {{eqderivprov|Dividend Payment Date}}, so you needn't fret about it, however appealing that prospect may be. | |||
But as for the very good questionwhy would ''any'' [[equity derivative]] purport to pay out a {{eqderivprov|Dividend Amount}} ''before'' the actual real-world payment date for the Dividend it is synthetically replicating? This is a question only {{icds}} would be placed to answer, and they’re not talking. | |||
===[[Dividend clawback]]: if the {{eqderivprov|Issuer}} doesn’t actually pay a declared dividend=== | ===[[Dividend clawback]]: if the {{eqderivprov|Issuer}} doesn’t actually pay a declared dividend=== | ||