FAQs

Cash+ is the option for a shareholder to elect for Euroclear’s Cash + service. The Cash+ option is offered together with the standard cash / stock election options provided in a scrip dividend.

When a shareholder elects for Cash+, the shareholder requests Euroclear to action the Cash+ standing instruction included in Euroclear’s Terms and Conditions. Under the standing instruction, the shareholder instructs Euroclear to determine if the net cash value to the shareholder upon the sale of the shares that would be received on the stock election, exceeds the net value of the cash dividend. If that is the case, under the standing instruction the client will have elected for stock followed by the immediate sale by Euroclear to a broker on the shareholder’s behalf using a trade that settles on the date on which cash dividends are due to be paid out (a “Long Dated Trade”).

The client will only ever receive cash, with the cash dividend amount guaranteed as the minimum amount of cash the shareholder will receive. The Cash+ dividend will be received at the same time and in the same way as the normal cash dividend.

Yes, the cash amount received under the Cash+ election is a real dividend. It is not a dividend substitution or manufactured dividend. If the optimal dividend is cash, the shareholder receives the normal cash dividend. If the optimal dividend is shares, the shares will be sold on behalf of the shareholder (using a Lond-Dated Trade) at the same time as the stock election is made. As such, the shareholder will only ever receive the immediate value of the stock dividend.

The custodian simply notifies their clients of the three available options, Cash, Stock, Cash +. After receiving the client’s election, it will pass that election on to Euroclear in the normal course of business.

Yes. Best execution is provided by the broker that acts as the counterparty to the Long-Dated Trade Regulation.

No. The mandate given to Euroclear does not involve the exercise of investment discretion that would result in it carrying on this activity. In relation to any scrip dividend, Euroclear operates under a standing instruction to generate transactions to sell shares for the shareholder if the technology algorithm calculates that a better outcome can be obtained for the shareholder than the shareholder would otherwise obtain from electing cash. The standing instruction to calculate the optimal election and generate the relevant transactions does not constitute portfolio management.

As the custodian is not receiving an order from their clients to dispose of the shares received (the standing instruction is in the Euroclear terms and conditions) and it is not transmitting the details of such order to Euroclear or anybody else (the details are generated by the Scorpeo system for Euroclear), the custodian is not transmitting an order and therefore there are no MIFID transaction reporting requirements for the custodian.

However, even if the custodian were to conclude that they are transmitting an order, they still don’t have any reporting obligations as the transaction would be exempt from reporting based on article 2(5)(d) of RTS22 (as it is part of their normal custody business).

Yes, the sale of UK/EU-listed shares will fall within the scope of the MiFIR post trade transparency requirements and to the extent that such trades are carried out OTC (i.e. not on a UK/EU regulated market or an MTF). Details of sale of shares in UK/EU-listed shares that are carried out as part of the Cash + election, will be made public by the broker that acts as the counter party to the Long-Dated Trade within one minute of the transaction being executed (subject to an ability to defer publication for trades that are large in size).