Flexibility on cash instrument interest/distributions

Background

A. When a distribution has been marked as a Cash distribution, the expectation is that cash will be received and matched.  There is a system setting to ensure the distribution is matched before allocating.  To activate this functionality go to System>- Configuration> under the Defaults section, Select “Should match distributions before allocating?”

To determine where the cash should be matched and allocated, the system determines:

1. if the dealer of the instrument on which the distribution is declared deals through a trading account. If yes, the distribution cash will be matched and allocated on the supplier instrument account of the trading account

2. if the instrument dealer does not deal through a trading account, the transacting account on the custodian of the Supplier instrument account where the distribution is declared will be used to match and allocate the distribution.

B. When a distribution has been marked as a Units Reinvested distribution, the expectation is that cash will not be received and matched and the distribution is then allocated to the supplier instrument account where the distribution has been declared.

Cash Instrument distributions

Distributions on cash instruments has been made more flexible by adding the option to declare a Units Reinvested distribution on cash instruments. The same logic as provided in the background above will be followed. The only difference is, in the case of a distribution on a cash instrument, cash will be received and matched regardless of whether the distribution is marked as a cash or unit distribution.

It is therefore possible to select a cash distribution on a cash instrument which will be matched and allocated to the transacting account on the custodian or to do a unit distribution that will be matched and allocated to the cash instrument itself.

Last Updated on 2 months ago by Debra Hart