Corporate Actions

Rules on adjustments of transactions novated by the CCP are stablished by the CCP itself, but IBERCLEAR will generate adjustments in CCP instructions along with those carried out for failed transactions on Record Date (day on which the issuer determines which positions are to be taken into account for the calculation of the corporate event), that were not novated. The adjustments carried out by IBERCLEAR will be between the failed seller and the affected buyer.

It means, if a corporate action occurs and there are unsettled balances on Record Date, it is necessary to ensure that the benefit of the corporate event reaches the buyer of a failed transaction.

IBERCLEAR will manage corporate events over the instructions sent for settlement by the CCP and which are pending settlement on Record Date.

The corporate event types, according to how they affect to the characteristics of the underlying security, are:

• Distribution: In these corporate actions, the characteristics of the underlying security is not modified. Cash or securities are distributed according to the position in the registry at the close of the Record Date. For example: payment of a dividend.
• Reorganization: In this type of corporate events the underlying security is modified. For example, reverse splits or capital increases.

Buyer Protection

The Buyer Protection functionality is a process whereby a buyer who has yet to receive the underlying securities of an Elective Corporate Action, to instructs the seller (CCP) in order to receive the outturn of his choice.

The Buyer Protection will be a manual mechanism by means of which the buyer can send a request to transform the instruction as per the option chosen. This occurs when, on the last day the security that is entitled can be settled, there are instructions that remain unsettled. This application must be delivered by the buyer’s Settlement Participant to BME Clearing before the Buyer Protection Deadline, a date determined in the Corporate Action as the last moment for receiving Buyer Protection instructions.