Trade Settlement and Corporate Actions: Rapid Fire
Chapters in this video
- 0:00 When trades finalize: settlement and ownership
- 1:12 Regular way versus cash settlement and the T+1 rule
- 2:46 Street name, DRS, and the beneficial owner trap
- 3:40 Mandatory versus voluntary corporate actions
- 4:24 Forward and reverse split math made simple
- 5:07 Tender offers, rights offerings, and the stock buyback trap
- 6:26 Proxies, routine equals ratification, and broker non-votes
- 7:37 Top SIE exam traps: T+2 distractor and OCC option adjustments
- 8:55 Rapid-fire one-breath recap
What this video covers
- The difference between trade date and settlement date, and why legal ownership changes only at T+1 regular way settlement (not T+2)
- When cash settlement applies (T+0, special agreement only) and the one exception for new-issue Treasury bills at auction
- Street name versus the Direct Registration System (DRS): who is on the issuer's books, and why the customer remains the beneficial owner either way
- How to classify corporate actions as mandatory (stock splits, reverse splits) or voluntary (tender offers, exchange offers, rights offerings)
- Forward and reverse split math: why total position value and total cost basis never change, and why splits are not taxable events
- The 20 business day minimum for tender offers and the 30-60 day typical window for rights offerings
- Proxy voting limits: what routine equals ratification really means, which matters a broker may vote without instructions, and that a broker non-vote counts toward quorum but not as for or against
Read the full lesson, free
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