Diary Adjustments Overview

Table of Contents


Diary Adjustments

In the majority of cases where a buyer has purchased securities on a CUM basis, settlement occurs on or before record date, thus the cum entitlement transaction is registered and eligible to receive the entitlement. At record date, the issuer takes a snapshot of its register to determine entitlements. If a cum entitlement buyer is not registered by end of day on record date, they would need to claim their entitlement from the seller, who despite no longer being entitled, remains the registered owner of the securities as at cut-off time on the record date. Should a transaction fail to settle by end of day on record date, a process is applied to adjust outstanding settlement instructions. This process is referred to as a Diary Adjustment.  

In applying automatic adjustments, CHESS calculates the entitlement (cash and/or securities) due on the outstanding cum transaction to the buyer or the additional cash obligation due from the buyer.

To facilitate the claims process, the CSP supports Automatic Diary Adjustments, for eligible transactions.

Automatic Diary Adjustments

Automatic diary adjustments are triggered in CSP at end of processing on Record Date and may come in four classes: 

  • Value Adjustments - which adjust the value of a settlement transaction and may alter the security code (e.g. dividends, fixed interest payments, capital returns, calls and application money). 
  • Restructure Adjustments - which adjust the securities of a settlement transaction (e.g. split and consolidation/warrant rollover)
  • Accrual Adjustments - which create a new accrued transaction (e.g. bonus, entitlement, rights) ; and
  • Security Code Changes - which gives effect to a separate code change which is not associated with some other adjustment (e.g. application money adjustment or reconstruction).

Depending on the diary adjustment being performed, the CSP will notify of the diary adjustment by sending an Adjusted Settlement Instruction (sett_139) or Accrual Settlement Instruction (sett_140) with the Diary Adjustment Type:

Diary Adjustment Type
Corporate Action 
Class
Description
CCDACode Change Diary AdjustmentSecurity Code Changes

Changes the Security Code and ISIN against settlement instructions, typically for a class merger where a deferred trading code is merged with the parent code.

BNDABonus Diary AdjustmentAccrual Adjustments

On failure to deliver cum units subject to a bonus issue by end of day on Record date, the CSP creates a free of payment accrual obligation per the ratio of bonus securities to outstanding units.

CODAConsolidation Diary AdjustmentRestructure Adjustments

All outstanding instructions are adjusted at end of day on Record Date for the Reconstruction/warrant rollover to account for the new formula, and modified to a deferred security code.

DVDADividend Diary AdjustmentValue AdjustmentsOn failure to deliver cum units subject to a dividend by end of day on Record Date, the CSP adjusts the settlement amount by the gross dividend amount per outstanding unit.
INDAInterest Diary AdjustmentValue Adjustments

On failure to deliver cum units subject to an interest payment by end of day on Record Date, the CSP adjusts the settlement amount by the interest payment amount per outstanding unit.

AMDAApplication Money Diary AdjustmentValue Adjustment

On failure to deliver rights securities by end of day on Applications Close Date, the CSP adjusts the settlement amount to account for the application monies to be paid by the seller.

NRDANon-Renounceable Rights Diary AdjustmentAccrual Adjustments

On failure to deliver cum units subject to a rights issue by end of day on Record Date, the CSP creates an accrual obligation to deliver the security of the entitlement.

In the case of an attaching option, an additional accrual obligation for the option security is created by the CSP for all outstanding accrued obligations at end of day on Applications Close.

This type of Diary Adjustment may be used to adjust for Attaching Option Diary Adjustments. 

RRDARenounceable Rights Diary AdjustmentAccrual Adjustments

On failure to deliver cum units subject to a rights issue by end of day on Record Date, the CSP creates an accrual obligation to deliver the rights security.

In the case of an attaching option, on failure to deliver the rights security by end of day on Applications Close, the CSP creates an accrual obligation for the option security.

This type of Diary Adjustment may be used to adjust for Attaching Option Diary Adjustments. 

SSDASplit Diary AdjustmentRestructure Adjustments

All outstanding instructions are adjusted at end of day on Record Date for the Reconstruction to account for the new formula, and modified to a deferred security code.

CRDACapital Return Diary AdjustmentValue Adjustments

On failure to deliver cum units subject to a capital return by end of day on Record Date, the CSP adjusts the settlement amount by the capital return amount per outstanding unit.

CLDACall Diary AdjustmentValue Adjustments

On failure to deliver partly paid securities by end of day on the record date, the CSP adjusts transactions to account for the monies to be paid by the seller and modifies to security code to the call paid security.





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