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Guidelines for the treatment of dividends for derivative contracts

Release date: 22 May 2020 | Eurex Exchange

035/2020 Guidelines for the treatment of dividends for derivative contracts

Eurex Circular 035/20

1.  Introduction

The European Corporate Actions Committee (ECAC) has defined guidelines for the treatment of corporate actions for derivatives when dividend payments are postponed or cancelled due to the COVID-19 crisis. The exchanges that are part of the ECAC are: Borsa Italiana, Eurex Deutschland, Euronext, ICE Futures Europe, MEFF (BME Group) and Nasdaq Stockholm. 

This circular contains information regarding the dividend treatments for derivatives products at Eurex Deutschland.

2.  Required action

No action is required.

3.  Details

Given the current market conditions, clarity is crucial with regards to whether derivative contracts will be adjusted for the payment of dividends that are postponed or cancelled due to the COVID-19 crisis.

Eurex Deutschland is pleased to inform market participants that the European Corporate Actions Committee (ECAC) has defined guidelines to assist in determining whether the announcement of dividends will result in an adjustment on derivative contracts in the current circumstances:

  • Should the issuer provide a clear reference in its published material that the dividends to be distributed are those in relation to the appropriation of profit for 2019, or in lieu of 2019: these dividends will be considered ordinary, irrespective of whether the issuer designates these dividends as extraordinary.
  • Should the issuer not provide a clear reference to the appropriation of profit for 2019 in the published material and designates a dividend as extraordinary; these instances will be reviewed on a case-by-case basis by ECAC Members.
  • Should the issuer provide a clear reference that the dividend is additional with respect to dividends deriving from the distribution of the normal profits for the year or with respect to the current dividend policy: this dividend will be considered as special. 

The guidelines set out herein are provided for information purposes only and do not create or change the rights or obligations an exchange participant or counterparty may have under the terms of a contract or under applicable law. The rules of Eurex Deutschland alone shall be binding and decisive for the treatment of any dividends for a certain contract.


Further information

Recipients: All Trading Participants of Eurex Deutschland and Vendors
Target groups: Front Office/Trading, Middle + Backoffice, IT/System Administration, Auditing/Security Coordination
Contact: client.services@eurexchange.com
Web: www.eurexchange.com
Authorised by: Michael Peters
 

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