Dividend Conditions. Conditions governing the payment of dividends to the receiver of the equity forward.
Issues and Challenges
FpML has a set of terms for Dividend Conditions which are usable across a range of derivatives, including Forward. Many of the definitions of individual terms refer specifically to equity return (swaps) and it is not clear whether each such term also applies to Equity forwards (i.e. the definition is more specific than it should be), or if these are terms unique to Equity Return Swaps, among which are terms applicable to Equity forwards. REVIEW: 19 May: If you have a forward contract with a dividend before you settle there must be some terms to determine how the dividend is resolved. Similar question would apply with Bond Interst? No becaues this is a known amount so it is taken into account in the price that's been agreed (discount premium). Whether it's cum or ex coupon therefore doesn't affect pricing; with Dividend this is not the case, there afore there are contractual trerms about how that is to be resolved. FpML: A type describing the conditions governing the payment of dividends to the receiver of the equity return. With the exception of the dividend payout ratio, which is defined for each of the underlying components.
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