1.1.5 Redemption Allocation

This topic provides the information about redemption allocation.

Select the option Redemption in the Transaction Type of Allocation Detail screen to trigger the allocation of unallotted or partially allotted redemption transactions on a business day.

• Select this option for funds in which the check writing facility has been allowed, and to allocate any redemption transactions in respect of redemption checks issued using the check writing facility availed by a unit holder in the fund.
• Select this option if the fund is part of a portfolio of a product to trigger the allocation of withdrawal (both partial and complete) IRA transactions into the fund.

While allocating redemption transactions, the system will pick the exchange rate defined by you in the Exchange Rate Maintenance Detail screen for the FX Deal Date and FX Value Date combination. If this combination is unavailable, the allocation will fall through. However, for allocation projection, the system will use the FX Spot Rate.

Refer Workflow of Allocation Process for executing the allocation process.

For more information on Redemption allocation, refer to the field description table.

Table 1-4 Redemption Allocation

Redemption Allocation	Description
Certificate details	If the fund is scrip based or if the unit holder redeems out of issued balance in certificate optional funds, then Certificate Numbers and DNR numbers are also affected by the redemption transaction. The amount of the certificates entered should be greater or equal to the units that have to be redeemed. In case the units are greater only one of the certificates can be redeemed partially.
Amended redemption transactions	If an amended redemption is allocated then the following changes are reflected after the allocation - first, the changes affected by the original redemption are reversed and the current amended redemption is reallocated.
Reflection of allocated units in the system database	If the redemption transaction is successfully allocated through this menu item, the changes are reflected in the following data stores in the database: The unit holder’s balance in the fund The unit holder counter updating for redemption transactions for the fund The fund transaction counter updating for redemption transactions The outstanding units for the fund Loads (fee/incentive) between the various entities (fund manager - broker, unit agent, etc.) are logged Fund certificate details updating, if the transaction is scrip based If any of these counter limits is exceeded or if any of the fund rules set up at the Fund Manager are violated then an error is logged against the redemption transaction. If the redeemable units for the transaction is greater than the unit holder balance in the fund then the transaction is rejected by the allocation process. Confirmation of the redemption transaction is made after the allocation is successfully completed. Note: While validating the amount involved in a redemption transaction, the system checks to ensure that the amount of the redemption does not exceed the free amount of holdings held by the investor across funds. The free amount holdings is that portion of the holdings that is not blocked across funds, by way of amount block or multiple amount block transactions.
Allocation of check writing transactions	When a check redemption transaction is allocated, the system validates the following: Availability of sufficient balance in the investor’s holdings in the fund. If the balance is insufficient, the check is not processed, and the allocation fails. The period for which the original purchase (which is being redeemed through the check) has been held. If the holding period is less than the holding period defined in the fund rules for check redemptions, then the check is not processed, and the allocation fails. If the allocation fails due to failure of either validation mentioned above, or due to any other error, the check is marked with the status Allocation Failed. The details of the failure of the allocation are recorded in the system database. You can set up a report through the Interface Definition, to view or print the details. In the event of failure of allocation of any check redemption transactions during the course of a business day, the system displays a message indicating the same, and prompting you to obtain a report, during the pre-end of day checks.
Allocation of amended check writing transactions	If a check redemption transaction is amended before allocation, the validations made during allocation of such transactions, which are mentioned in the previous section, are performed by the system as usual. If amended after allocation, the status of the check is marked as Processed, and the validations during allocation are performed, as usual. If the amount of the transaction is amended to a zero or null value, the status of the check is marked as Invalid Amt, during allocation.

Note:

Only reversal is allowed for certificate based redemption transaction.