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Regulatory Notice 6.5—Compensation for corporate action entitlements

1. Rule 6.5.4 provides that, subject to Rule 6.5.5,
(a) a Clearing Member that is due to, but does not, deliver securities in respect of Novated Contracts is liable to compensate CDP for corporate action entitlements that accrue on those securities and that a recipient of those securities would have been entitled to receive but for the delivery failure; and
(b) a Clearing Member that is due to, but does not receive securities in respect of Novated Contracts is entitled to be compensated by CDP for corporate action entitlements that accrue on those securities and that a recipient of those securities would have been entitled to receive but for the delivery failure.
2. Rule 6.5.5 states that Rule 6.5.4 applies only to such types of corporate action entitlements that CDP shall from time to time notify.
3. Rule 6.5.6 states that any compensation under Rule 6.5.4 shall be made in such form and value, and be due by such time, as CDP shall specify. Where CDP requires any action by a Clearing Member to effect such compensation, the Clearing Member shall do so, and shall obtain all necessary authorisation from its Customer to enable it to do so, by such time as CDP shall specify.
4. Appendix A to this Regulatory Notice sets out:
(a) the types of corporate action entitlements to which Rule 6.5.4 applies. CDP may additionally prescribe, as it shall from time to time notify, further types of corporate action entitlements to which Rule 6.5.4 applies; and
(b) the form and value of the compensation to be made, the date on which such compensation is due to be made between the Clearing Member and CDP, and the action required by a Clearing Member to effect such compensation. CDP may replace, vary, supplement or additionally specify, as it shall from time to time notify, the form or value of any compensation to be made under Rule 6.5.4, the due date of such compensation, and the action required by Clearing Member to effect such compensation.

Added on 10 December 201810 December 2018.