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FINANCIAL CHRONICLE™ » CORPORATE CHRONICLE™ » Who will be the Owner of Dividend after DVP?

Who will be the Owner of Dividend after DVP?

+3
Real_Investor
niru
jaya
7 posters

Go down  Message [Page 1 of 1]

jaya


Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics

After DVP - Who are the real owner of Dividend (Mr.E or Mr.D) - 

Mr.D

1. Stock name ABC dividend XD is 21st of January year 0000.
2. If Mr.D purchase shares of ABC on 20th of January 0000.
3. Payment will be made by Mr. D on 23rd of January in according to T+3 and until that time shares will not be transferred to his account.
4. does Mr. D will get the Dividend for ABC.???

Mr.E

5. Mr. E sold ABC 20th January year 0000, and Mr.E will receive the payment on 23rd January in accordance with T+3 rule.

6. Until Mr,E  receive the payment on 23rd  ABC Shares are belong to Mr.E therefore Does he entitle for Dividend?

Who are the real owner of Dividend Mr.E or Mr.D

niru


Manager - Equity Analytics
Manager - Equity Analytics

Mr.D will get the dividend provided that he settle the bought contract value on 23rd.

jaya


Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics

niru wrote:Mr.D will get the dividend provided that he settle the bought contract value on 23rd.
No, Mr. E 
because until the payment are made  it will not be transferred?????
need to clarify by CSE/SEC

niru


Manager - Equity Analytics
Manager - Equity Analytics

Since Mr. E sold before Ex date, he will not get the dividend.
In case Mr. D did not settle on 23rd, that trade got defaulted. Then Mr. E will get the dividend.

niru


Manager - Equity Analytics
Manager - Equity Analytics

Please understand that there is no change in EX Date concept.
You are entitle for corporate benefit if you are bought before the Ex Date.
Obviously you need to settle the buy then only you will get the benefit.

Real_Investor


Senior Equity Analytic
Senior Equity Analytic

It seems This is not a big deal. As I see Nothing will happen. No different. If you buy shares at 10.30am you will get shares at 10.30am and you can see shares in your portfolio. If you want you can sell it at 10.35am. No different. You will not see any different. But back end if you avoid paying then shares will be transfer to previous owner. It's like temporary block 100% ownership until you pay. But front end it's same like before. 🤔 Correct me if I'm wrong.

CHRONICLE™ likes this post

chandike73

chandike73
Manager - Equity Analytics
Manager - Equity Analytics

Yes. Thats true. No effect for even day traders.

jaya


Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics

Real_Investor wrote:It seems This is not a big deal. As I see Nothing will happen. No different. If you buy shares at 10.30am you will get shares at 10.30am and you can see shares in your portfolio. If you want you can sell it at 10.35am. No different. You will not see any different. But back end if you avoid paying then shares will be transfer to previous owner. It's like temporary block 100% ownership until you pay. But front end it's same like before. 🤔 Correct me if I'm wrong.
At 1st sight there are legal argument
How could be D entitled for Dividend until shares book in the company register,
 as said by CSE transferred would take place after the payment being done +T3

xhunter

xhunter
Moderator
Moderator

niru wrote:Since Mr. E sold before Ex date, he will not get the dividend.
In case Mr. D did not settle on 23rd, that trade got defaulted. Then Mr. E will get the dividend.
is it that simple?
i have more than 10 scenarios i can not understand what would happen until CSE give us a clear explanation.

i will give you one scenario:
in this case assume that Mr D bought 1000 shares , price is 100/= per share.
same day price movement was negative, it fall to 88/= and Mr D sold all 1000 shares, but unfortunately order filled with 10 splits (there are 10 persons who bought that share from Mr D).

still Mr D has to pay 12x1000 , if Mr D did not settle , how the trade got defaulted?
who will get the dividend (those 10 persons or Mr E)?
(in this case assume that all 10 persons settled the payment).

anyway i believe DVP is very simple. what we need is "good explanation" from CSE/SEC considering even corner cases.

Mr. X likes this post

Real_Investor


Senior Equity Analytic
Senior Equity Analytic

A per sec person explained that never happened this case in the history. Only once and that trade was cancelled. We can't buy without money or buying power. If we don't pay broker will sell shares and settle 🤔

niru


Manager - Equity Analytics
Manager - Equity Analytics

xhunter wrote:
niru wrote:Since Mr. E sold before Ex date, he will not get the dividend.
In case Mr. D did not settle on 23rd, that trade got defaulted. Then Mr. E will get the dividend.
is it that simple?
i have more than 10 scenarios i can not understand what would happen until CSE give us a clear explanation.

i will give you one scenario:
in this case assume that Mr D bought 1000 shares , price is 100/= per share.
same day price movement was negative, it fall to 88/= and Mr D sold all 1000 shares, but unfortunately order filled with 10 splits (there are 10 persons who bought that share from Mr D).

still Mr D has to pay 12x1000 , if Mr D did not settle , how the trade got defaulted?
who will get the dividend (those 10 persons or Mr E)?
(in this case assume that all 10 persons settled the payment).

anyway i believe DVP is very simple. what we need is "good explanation" from CSE/SEC considering even corner cases.

Since D’s net position is zero, trade will not
Considered as defaulted. He needs settled the different in contracts value.

Since 10 persons bought before EX Date they will get the dividend if they pay on settlement date.

Nandun


Manager - Equity Analytics
Manager - Equity Analytics

If  E sell for 100 and D buy it. after 1 or 2 days it will down to 80. Can D refuse to pay and reduce loss and will it create a loss to E? Can DVP use as an opportunity to reduce risk of loss? scratch

can anyone Explain ?

xhunter likes this post

xhunter

xhunter
Moderator
Moderator

niru wrote:
xhunter wrote:
niru wrote:Since Mr. E sold before Ex date, he will not get the dividend.
In case Mr. D did not settle on 23rd, that trade got defaulted. Then Mr. E will get the dividend.
is it that simple?
i have more than 10 scenarios i can not understand what would happen until CSE give us a clear explanation.

i will give you one scenario:
in this case assume that Mr D bought 1000 shares , price is 100/= per share.
same day price movement was negative, it fall to 88/= and Mr D sold all 1000 shares, but unfortunately order filled with 10 splits (there are 10 persons who bought that share from Mr D).

still Mr D has to pay 12x1000 , if Mr D did not settle , how the trade got defaulted?
who will get the dividend (those 10 persons or Mr E)?
(in this case assume that all 10 persons settled the payment).

anyway i believe DVP is very simple. what we need is "good explanation" from CSE/SEC considering even corner cases.

Since D’s net position is zero, trade will not
Considered as defaulted. He needs settled the different in contracts value.

Since 10 persons bought before EX Date they will get the dividend if they pay on settlement date.
Thanks for the reply.

in this video ( https://www.youtube.com/watch?v=t6HUAgEl8-c )
at 2:15 she says, portfolio will be updated after settlement (on T+3)

at 2:40 she says , if our portfolio has those shares at the beginning of the XD (practically by 10:59:59  on XD date ) , then we are eligible for the dividend.

these two statements make some ambiguities.

technically , shares will be added to the portfolio at the same time that transaction done (T). 


so far with all readings I did, I also think your are right.

jaya


Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics

xhunter wrote:
niru wrote:Since Mr. E sold before Ex date, he will not get the dividend.
In case Mr. D did not settle on 23rd, that trade got defaulted. Then Mr. E will get the dividend.
is it that simple?
i have more than 10 scenarios i can not understand what would happen until CSE give us a clear explanation.

i will give you one scenario:
in this case assume that Mr D bought 1000 shares , price is 100/= per share.
same day price movement was negative, it fall to 88/= and Mr D sold all 1000 shares, but unfortunately order filled with 10 splits (there are 10 persons who bought that share from Mr D).

still Mr D has to pay 12x1000 , if Mr D did not settle , how the trade got defaulted?
who will get the dividend (those 10 persons or Mr E)?
(in this case assume that all 10 persons settled the payment).

anyway i believe DVP is very simple. what we need is "good explanation" from CSE/SEC considering even corner cases.
 Scenario type 2,
When bear starting  Mr. D identified and sold Shares of  XXXX  at price of 100.00, end of the day closed to 90.00, 
2nd day  same closed 70.00
3rd day closed 55.00 (It was experiences very often )

Mr.E intentionally declined which he brought XXXX at 100.00 from Mr.D 3 days before as inow it is 55.00. 

 Will it be returned to Mr. D??

CSE has to clarify all this, but doubted their caliber to do that.

Mr. X

Mr. X
Senior Manager - Equity Analytics
Senior Manager - Equity Analytics

My view point... correct the mistakes...

We have deposited to the broker account and broker has to do the settlement with other brokers for our purchases and sales. So T+3 is applicable to us or to the brokers ????
Since we paid the broker in cash and why we have to wait T+3 to get the ownership ???


I feel as investors, nothing to worry from our side



If your trading with the broker credit facility, we have to settle the broker T+3. not to the other investor who sold the shares. the liability of settling the amount is with the broker.. if a investor don't settle, broker has to charge interest or sell the portfolio of that investor and collect the money.

I really don't think a situation will arise of reversing the ownership of shares in any circumstances. unless a broker goes out with cash.

https://www.youtube.com/watch?v=2GAuqv_1OWk

According to this video explanation, there won't be any major changes except the wordings in your porfolio such as pending buy and pending sell..

other than that operations going to be same.... Div and Right issue no impact if settlement happens T+3. if the other party can not settle, the loss will be compensated..

Nandun likes this post

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