Dividend Amount - Equity Derivatives Provision: Difference between revisions
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{{eqderivanat|10.1}} | {{eqderivanat|10.1}} | ||
{{2002 ISDA Equity Derivatives Definitions Section 10.1 TOC}} | {{2002 ISDA Equity Derivatives Definitions Section 10.1 TOC}} | ||
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tThe difference betwixt? All to do with ''when'' a {{eqderivprov|Dividend}} is deemed to occur, and therefore which {{eqderivprov|Dividend Period}} it falls in. There are four crucial dates: The '''[[ex-dividend]] date''', the '''[[record date]]''', the '''declared date''', and the '''paid date'''. | |||
*'''''Paid'' versus ''declared''''': Firstly, there is “'''paid'''” (which features in {{eqderivprov|Paid Amount}}) versus “'''declared'''” (which features in {{eqderivprov|Ex Amount}} and {{eqderivprov|Declared Amount}}). One ''pays'' a dividend days or weeks after one ''declares'' it: hence the [[arbitrage]] opportunities between those taking cash and those taking scrip. So a {{eqderivprov|Declared Amount}} may fall in the {{eqderivprov|Dividend Period}} before a {{eqderivprov|Paid Amount}}. You have to choose which you want. | |||
*'''Date ''declared'' versus date ''traded [[ex-dividend]]''''': A couple of days before a [[record date]] has been declared the {{eqderivprov|Share}} to which it relates will start trading “[[ex-dividend]]” on exchange (meaning a buyer will not get the dividend payment attaching to the share. Why a time ''before'' the record date? Because of the settlement time for an equity sale. The holder of record is the one holding the share — since it takes a couple of days to leave the seller’s account and hit yours, trading date on which that economic effect takes place has to anticipate the record date. | |||
{{sa}} | |||
* {{eqderivprov|Dividend Payment Date}}. | * {{eqderivprov|Dividend Payment Date}}. | ||
Revision as of 12:10, 18 September 2019
Template:Eqderivanat
Section 10.1. Dividend Amount
tThe difference betwixt? All to do with when a Dividend is deemed to occur, and therefore which Dividend Period it falls in. There are four crucial dates: The ex-dividend date, the record date, the declared date, and the paid date.
- Paid versus declared: Firstly, there is “paid” (which features in Paid Amount) versus “declared” (which features in Ex Amount and Declared Amount). One pays a dividend days or weeks after one declares it: hence the arbitrage opportunities between those taking cash and those taking scrip. So a Declared Amount may fall in the Dividend Period before a Paid Amount. You have to choose which you want.
- Date declared versus date traded ex-dividend: A couple of days before a record date has been declared the Share to which it relates will start trading “ex-dividend” on exchange (meaning a buyer will not get the dividend payment attaching to the share. Why a time before the record date? Because of the settlement time for an equity sale. The holder of record is the one holding the share — since it takes a couple of days to leave the seller’s account and hit yours, trading date on which that economic effect takes place has to anticipate the record date.