Investment Operations

Corporate Actions Fundamentals

Categories Introductory, Operations

Course Instructor

Course Level

Intermediate

Certification

Certificate

Delivery

Via Zoom

Hours (EST)

9:00am - 1:00pm

Description

*This course can also be offered upon request and can be customized to fit your team’s needs.

Date: TBD

Throughout the Corporate Actions Fundamentals virtual course, the participants will gain a deep understanding of the fundamentals of Corporate Actions and the differences between various Corporate Actions Group types such as Mandatory, Voluntary & Mandatory with Elections. We will go over the full lifecycle of a corporate action event from the announcement date to the final settlement of cash and securities. By the end of the course, you will become proficient at analyzing the terms of a Corporate Action announcement using real-world company announcements and understand the importance of some key critical dates such as Ex-Date, Effective Date, Record Date and Payable Date. You will learn how entitlements (Cash & Securities) are calculated and how the timing of your trading activity affects your participation and entitlement in an event. Understand why companies undertake various Corporate Actions (Financial Engineering) and demonstrate how the markets typically react. Obtain an overview of market participants – Custodians, Depositories, Transfer Agents, Asset Managers, and Retail Investors as well as a review of Corporate Actions solution providers. Prerequisite: None

Who Should Attend

  1. Fund Accountants, Business Systems Analysts, Broker/Dealers, Investment Bankers, Settlement & Reconciliation staff
  2. Junior-level entrants to the securities industry who wish to accelerate their understanding of Corporate Actions
  3. Traders, investors and anyone who has a general interest in learning more about Corporate Actions

Agenda

Introduction to Corporate Actions

  1. Corporate Actions definition and examples: Mandatory, Voluntary & Mandatory with Choice event types
  2. Current Corporate Actions Landscape. Where is the industry today and where is it going?
  3. The role of standardized messaging (ISO15022 & ISO 20022)
  4. The role of notable associations such as the Securities Market Practice Group (SMPG), market practice working groups within ISITC in addition to SWIFT
  5. Main participants in this space: Custodians, Depositories (DTCC & CREST), Transfer Agents, Asset Managers, Retail Investors
  6. Corporate Actions solution providers: XSP

First things first – essential basics before we continue

  1. Security Types Concepts – an overview of some of the more well-known security types: Common Stocks, Bonds, Rights, Warrants, and Convertible Bonds.
  2. Security Identifier Types concepts – an overview of the different security identifier types by geographical regions such as CUSIP, ISIN, and SEDOL.
  3. Forms of securities ownership/registration: Beneficial Owner, Street Name etc
  4. The importance of Critical Dates (Ex-date, Record Date) when determining entitlements
  5. Explore the role of market data vendors, how information related to corporate action events is distributed and “scrubbed” into a “Golden Record Copy” of an event
  6. The Trade Life-cycle – how it impacts Corporate Actions. We will be coming back to this lifecycle throughout the class when discussing entitlements

Mandatory Event Types

  1. Introduction to a number of well-known mandatory event types; events’ individual characteristics, the motivations behind why companies use them (Financial Engineering), and the business conditions that trigger them
  2. Discussion of event terms; critical dates (Ex-date, Record Date etc), and the Trade Lifecycle to run through a set of “what if” scenarios in order to demonstrate how entitlements are calculated
  3. Cash Dividends (Starbucks & Coca-Cola).
  4. Reverse Stock Splits (General Electric)
  5. Spin-offs (Novartis & Alcon)
  6. Stock Splits (Apple, Netflix & Tesla)
  7. Bond Redemptions/Maturities
  8. Interest Payments

Mandatory Event Types with Choice In this module, you will be introduced to a number of mandatory event types with options. We discuss and examine each event in the same way as we did with mandatory events.

  1. Optional Dividends.
  2. Cash Dividends with Currency Options

Voluntary Event Types In this module, you will be introduced to a number of voluntary event types. We discuss and examine each event in the same way as we did with other event types.

  1. Tender Offers (Western Asset Corp)
  2. Callable Bonds
  3. Election Mergers
  4. Warrant Exercises

Multi-Stage Event Types

  1. Multi-Stage Event Types: review the different stages that occur within these events’ lifecycles
  2. Rights Distributions & Rights Subscription Offers (Great Elm Capital Corp)

Reconciliations, Risks & Mitigation

  1. Importance of reconciliations in the corporate actions lifecycle
  2. Risks associated with corporate actions processing and how to mitigate these risks
  3. Operations must ensure that all expected cash flows and receives/delivers of securities have in fact occurred
  4. Comparison of internal records with a depository, custodian, and bank statements
  5. Current risks and how to mitigate them e.g. missing a corporate action
  6. Badly sourced/scrubbed events
  7. Lost opportunity costs – why and how some beneficial owners are losing out because their advisors/asset managers are not actively choosing the best option

Taxation

  1. General taxation rules
  2. Manufactured dividends
  3. Tax reclaim processing

Corporate Actions & Derivative Products 

In this section, you will learn how participant roles can sometimes be reversed due to the nature of how derivative products are processed.

  1. SWAP’s – what are they? (Tri-Party & Bi-lateral)
  2. Who notifies who in a SWAP situation
  3. Who instructs (beneficial owner or agent) and how are they processed

Summary & Questions

In-House Training

Custom Training can help you achieve your corporate training goals while staying on budget and focusing the content on the needs of your group. Email your questions regarding corporate training to training@investmentoperations.net.

2023 Training Calendar

Training Catalogue

Course Instructor

Course Level

Intermediate

Certification

Certificate

Delivery

Via Zoom

Hours (EST)

9:00am - 1:00pm

Description

*This course can also be offered upon request and can be customized to fit your team’s needs.

Date: TBD

Throughout the Corporate Actions Fundamentals virtual course, the participants will gain a deep understanding of the fundamentals of Corporate Actions and the differences between various Corporate Actions Group types such as Mandatory, Voluntary & Mandatory with Elections. We will go over the full lifecycle of a corporate action event from the announcement date to the final settlement of cash and securities. By the end of the course, you will become proficient at analyzing the terms of a Corporate Action announcement using real-world company announcements and understand the importance of some key critical dates such as Ex-Date, Effective Date, Record Date and Payable Date. You will learn how entitlements (Cash & Securities) are calculated and how the timing of your trading activity affects your participation and entitlement in an event. Understand why companies undertake various Corporate Actions (Financial Engineering) and demonstrate how the markets typically react. Obtain an overview of market participants – Custodians, Depositories, Transfer Agents, Asset Managers, and Retail Investors as well as a review of Corporate Actions solution providers. Prerequisite: None

Who Should Attend

  1. Fund Accountants, Business Systems Analysts, Broker/Dealers, Investment Bankers, Settlement & Reconciliation staff
  2. Junior-level entrants to the securities industry who wish to accelerate their understanding of Corporate Actions
  3. Traders, investors and anyone who has a general interest in learning more about Corporate Actions

Agenda

Introduction to Corporate Actions

  1. Corporate Actions definition and examples: Mandatory, Voluntary & Mandatory with Choice event types
  2. Current Corporate Actions Landscape. Where is the industry today and where is it going?
  3. The role of standardized messaging (ISO15022 & ISO 20022)
  4. The role of notable associations such as the Securities Market Practice Group (SMPG), market practice working groups within ISITC in addition to SWIFT
  5. Main participants in this space: Custodians, Depositories (DTCC & CREST), Transfer Agents, Asset Managers, Retail Investors
  6. Corporate Actions solution providers: XSP

First things first – essential basics before we continue

  1. Security Types Concepts – an overview of some of the more well-known security types: Common Stocks, Bonds, Rights, Warrants, and Convertible Bonds.
  2. Security Identifier Types concepts – an overview of the different security identifier types by geographical regions such as CUSIP, ISIN, and SEDOL.
  3. Forms of securities ownership/registration: Beneficial Owner, Street Name etc
  4. The importance of Critical Dates (Ex-date, Record Date) when determining entitlements
  5. Explore the role of market data vendors, how information related to corporate action events is distributed and “scrubbed” into a “Golden Record Copy” of an event
  6. The Trade Life-cycle – how it impacts Corporate Actions. We will be coming back to this lifecycle throughout the class when discussing entitlements

Mandatory Event Types

  1. Introduction to a number of well-known mandatory event types; events’ individual characteristics, the motivations behind why companies use them (Financial Engineering), and the business conditions that trigger them
  2. Discussion of event terms; critical dates (Ex-date, Record Date etc), and the Trade Lifecycle to run through a set of “what if” scenarios in order to demonstrate how entitlements are calculated
  3. Cash Dividends (Starbucks & Coca-Cola).
  4. Reverse Stock Splits (General Electric)
  5. Spin-offs (Novartis & Alcon)
  6. Stock Splits (Apple, Netflix & Tesla)
  7. Bond Redemptions/Maturities
  8. Interest Payments

Mandatory Event Types with Choice In this module, you will be introduced to a number of mandatory event types with options. We discuss and examine each event in the same way as we did with mandatory events.

  1. Optional Dividends.
  2. Cash Dividends with Currency Options

Voluntary Event Types In this module, you will be introduced to a number of voluntary event types. We discuss and examine each event in the same way as we did with other event types.

  1. Tender Offers (Western Asset Corp)
  2. Callable Bonds
  3. Election Mergers
  4. Warrant Exercises

Multi-Stage Event Types

  1. Multi-Stage Event Types: review the different stages that occur within these events’ lifecycles
  2. Rights Distributions & Rights Subscription Offers (Great Elm Capital Corp)

Reconciliations, Risks & Mitigation

  1. Importance of reconciliations in the corporate actions lifecycle
  2. Risks associated with corporate actions processing and how to mitigate these risks
  3. Operations must ensure that all expected cash flows and receives/delivers of securities have in fact occurred
  4. Comparison of internal records with a depository, custodian, and bank statements
  5. Current risks and how to mitigate them e.g. missing a corporate action
  6. Badly sourced/scrubbed events
  7. Lost opportunity costs – why and how some beneficial owners are losing out because their advisors/asset managers are not actively choosing the best option

Taxation

  1. General taxation rules
  2. Manufactured dividends
  3. Tax reclaim processing

Corporate Actions & Derivative Products 

In this section, you will learn how participant roles can sometimes be reversed due to the nature of how derivative products are processed.

  1. SWAP’s – what are they? (Tri-Party & Bi-lateral)
  2. Who notifies who in a SWAP situation
  3. Who instructs (beneficial owner or agent) and how are they processed

Summary & Questions

In-House Training

Custom Training can help you achieve your corporate training goals while staying on budget and focusing the content on the needs of your group. Email your questions regarding corporate training to training@investmentoperations.net.

2023 Training Calendar

Training Catalogue

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