On Oct. 1, DTC issued memo on cash principal payment methods.
DTC issued Memo B# 20767-24 on its cash principal payment methods in order to clarify the types of cash-only principal and interest payments DTC can facilitate.
Payment Methods
In Pro-Rata Pass-Through Distribution of Principal payment method, entitlement is determined via position captured at close of business on corresponding record date.
Holders are paid at an equal rate proportionate to their holdings at close of business on record date, and no bonds are redeemed and the total position is not reduced.
Accrued interest is due for entire position, not solely interest accrued on principal paid.
In order to pay interest on principal only, CUSIP set up to pay via lottery redemption.
For Lottery Redemption cash principal payment methods, payment is made on the condition that client position is presented or surrendered, no record need is included.
Entitlement determined via random lottery using the Publication date, and those selected in the lottery are paid the redemption proceeds and called position removed.
Holders not selected in the lottery do not receive redemption proceeds and position is unchanged, if off-cycle, accompanying accrued interest due for redeemed position.
Effectiveness
Effective Mar. 31, 2025, agents must use BMA/BMA Lite to notify DTC of pro-rata pass through events, use RedCal/RedCal Lite to notify DTC of lottery redemption events.
