Template:Capsule equity derivative dividend payments: Difference between revisions
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===[[Manufacturing]] dividends under an [[equity swap]]=== | ===[[Manufacturing]] dividends under an [[equity swap]]=== | ||
You will quickly come to realise that the equity derivatives definitions regarding payment of dividends might as well have come from a dungeon deep in the brain of MC Esher. {{icds}}, with its yen for infinite particularity and optionality, has formulated alternate mechanisms to [[manufacturing|manufacture]] dividends by reference to three key stages in the dividend distribution process in an underlying [[security]]: the | You will quickly come to realise that the equity derivatives definitions regarding payment of dividends might as well have come from a dungeon deep in the brain of MC Esher. {{icds}}, with its yen for infinite particularity and optionality, has formulated alternate mechanisms to [[manufacturing|manufacture]] dividends by reference to three key stages in the dividend distribution process in an underlying [[security]]: the ''[[record date]]'' (being the date on which a [[holder of record]] becomes entitled to a dividend payment), the '''[[ex date]]''' (being the date on which the underlying shares trade clean of the dividend payment in the market, which will be one [[settlement cycle]] ''before'' the [[record date]]), and the ''{{eqderivprov|Dividend Payment Date}}'' itself (being the date on which the underlying dividend distributions actually hit holders’ bank accounts). None of them, in the [[JC]]’s view, works. | ||
The only one you should ever need is the {{eqderivprov|Paid Amount}}, which references the date of actual payment, but even that misses the significance to its payability of the earlier [[record date]]. Much of the fear, loathing and confusion in these definitions arises from sloppy drafting in relation to the other two options, which don’t make sense anyway. | The only one you should ever need is the {{eqderivprov|Paid Amount}}, which references the date of actual payment, but even that misses the significance to its payability of the earlier [[record date]]. Much of the fear, loathing and confusion in these definitions arises from sloppy drafting in relation to the other two options, which don’t make sense anyway. |