DTC Dividends Service User Guide
Page
27
of
46
Due Bill Fail Tracking System
About the Produc
t
The
Due Bill Fail Tracking
system relieves you of the time
-
consuming process of issuing and
redeeming due bills by facilitating the settlement of due bills on failed deliver orders (DOs).
A failed DO is one which was originally scheduled to settle on or
before the record date, but instead
settled after the record date. Fails sometimes result in buyers not receiving a dividend or interest
payment to which they are entitled. Previously such deliveries were made with a due bill attached,
usually in the form
of a post
-
dated check or IOU. A due bill is an agreement that the seller will pay
the dividend or interest to the bearer (the buyer) upon presentation.
How the Product Works
Due Bill Fail Tracking
:
•
Monitors all DO activity, comparing the trade settlement d
ate of the DO with the actual
settlement date
•
For failed DOs, reviews DTC's Dividend Announcement database
•
Automatically generates cash and stock dividend adjustments for any failed DO requiring a
due bill except for REPO, stock loan, Continuous Net Sett
lement (CNS), Free and
Interdepository deliveries.
On the payable date, or on the day following the settlement of the trade at DTC (whichever is later),
the seller receives a debit for the income due and the buyer receives a credit.
Important Notes
The fo
llowing notes apply to DTC's
Due Bill Fail Tracking
process:
•
If you are a delivering participant, you can elect to remove a delivery from
Due Bill Fail
Tracking
by entering an
N
in the
Due Bill
field on the DO.
•
Due Bill Fail Tracking
does not monitor stoc
k splits, rights offerings, or optional dividend
payments.
•
Receiving participants have the ability to delete a pending adjustment, or change the post
date of a pending adjustment, until 1:00 p.m. eastern time on the post date.
Monitoring Period
The monit
oring period for failed transactions is:
•
18 months from the payable date for corporate and municipal debt issues
•
30 days from the payable date for equity issues.
Fail monitoring begins on:
•
The day following the record date for all announcements that are
not subject to interim
accounting
•
The day following the end of the interim period for announcements with interim accounting.
