83,022
edits
Amwelladmin (talk | contribs) No edit summary |
Amwelladmin (talk | contribs) No edit summary |
||
Line 1: | Line 1: | ||
===[[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]]: | 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 '''[[dividend payment date]]'''<ref>Not to be confused with the {{eqderivprov|Dividend Payment Date}} in the {{eqdefs}}, being the date for the manufactured payment, not the payment of the underlying dividend itself.</ref> 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. |