2.9 Process Income Distribution Setup Detail

This topic provides the systematic instructions to capture the pattern for any entity in the Oracle® FLEXCUBE Investor Servicing system.

The different entities involved in transactions in funds of the AMC avail of earnings resulting from their involvement. For instance, an intermediary (such as a broker) derives commission earnings from the transactions in the funds of the AMC.

Each of the entities could opt for any of the following ways of using earnings from transactions:
  • Receive the entire earnings, dividend or commission, as payment, either entirely through checks or account transfer.
  • Not receive the earnings by way of payment, but invest the earnings back into the funds of the AMC. This is known as reinvestment. Also, the reinvestment could be made into a designated unit holder account too.
  • Receive a portion of the earnings by way of payment, and reinvest the remaining portion.

The pattern chosen by the entity to use earnings is known as the Income Distribution Setup pattern or the IDS pattern for the entity.

  1. On Home screen, type UTDBRIDS in the field at the top right corner and click Next.
    The Income Distribution Setup Detail screen is displayed.

    Figure 2-19 Income Distribution Setup Detail


    Description of Figure 2-19 follows
    Description of "Figure 2-19 Income Distribution Setup Detail"

  2. On Income Distribution Setup Detail screen, click New to enter the details.
  3. Specify the type of entity in the Entity Type field for which the IDS options are being maintained.
  4. Indicate the entity for which the option is being set up, by specifying the Entity ID.
  5. Specify the fund for which the option is applicable, in the Fund ID field. You can also specify the ISIN Code for the fund.
    The option you will set up will be applied only for dividend earnings on the fund you select here. If you wish to set up income distribution options to be applicable for all funds, you can do so by setting the Rule Applicable for All Funds option.

    Note:

    This option is available for all entity types except brokers and unit holders
  6. Specify the mode of distribution, in the Distribution Mode field. For brokers, distribution by payment or reinvestment, or both, can be set. For all other entities, only distribution by payment can be set.
  7. For brokers, specify the percentages that represent the portions of dividend earnings to be paid and reinvested, as desired by the broker, in the Payment Percentage and Reinvestment Percentage fields.
  8. For brokers, specify the payment details for the paid portion, in the Payment Details section, and the reinvestment details, for the reinvestment portion, in the Reinvestment Details section.
  9. For entities other than brokers, specify the payment details for commission payments, in the Payment Details section.
  10. Click Save to save your changes.
  11. On Income Distribution Setup Detail screen, specify the fields.
    For more information on fields, refer to the field description table.

    Table 2-14 Income Distribution Setup Detail - Field Description

    Field Description
    Contact Information

    In this section, select the code of the broker for whom you are creating an income distribution setup record.
    Entity Type

    Alphanumeric; 1 Character; Mandatory

    Select the type of entity for which you are setting up Income Distribution options from the option list. You can select any of the following entity types, as applicable:
    • Accounting and Valuation Agent
    • Agent
    • Agency Branch
    • AMC
    • Broker
    • Bulk Client
    • Registrar
    • Trustee
    • Check Vendor
    • Underwriter
    • Custodian
    • Clearing Agent
    • Independent Financial Advisors (IFA)
    • Product Administrator

    For entities other than brokers, the IDS options that you set up in this screen are applicable for commission payments only, and only the Payment distribution mode can be set.

    Entity Name

    Display

    Based on your selection for Entity ID, the system displays the corresponding Entity Name.
    Entity ID

    Alphanumeric; 12 Characters; Mandatory

    Specify the ID of the entity for whom you are creating the income distribution options in this screen. The name of the entity that you select is displayed alongside the field.
    Description

    Display

    The system displays description of the specified entity here based on the details maintained at Single Entity Maintenance level.

    Details

    In this section, you can indicate the fund, the income earnings from which will be distributed according to the IDS options you are creating for the selected entity. You can also indicate the manner in which the income must be distributed.

    For all entity types other than brokers and unit holders, you can define IDS options to be applicable for all funds. Specific IDS options for individual funds can still be defined for the entity even if IDS options have been defined to be applicable for all funds, and these specific options will supersede the option defined for all funds.
    Fund ID

    Alphanumeric; 6 Characters; Mandatory

    Select the ID of the fund from which the selected entity derives income, which will be distributed according to the IDS options you are creating in this screen.

    If the selected entity receives income from many funds, then you must create the IDS options for the income from each fund in this screen as applicable, if so requested by the entity.

    When you specify the ID of the fund, the ISIN Code of the fund is displayed in the ISIN Code field.

    Note: The ALL option is defaulted in this field and cannot be changed if the Rule Applicable for All Funds option has been chosen. In such a case, the IDS options being defined would be applicable for income earned by the selected entity from all funds. Also, if specific options need to be defined for an individual fund, they can be defined separately. Such specific options, if defined for an individual fund, would take precedence (only for income earnings from the fund for which they are defined) over options defined for ALL funds.

    ISIN Code

    Display

    The system displays the ISIN Code for the selected fund.

    Note: The ALL option is defaulted in this field and cannot be changed if the Rule Applicable for All Funds option has been chosen. In such a case, the IDS options being defined would be applicable for income earned by the selected entity from all funds. Also, if specific options need to be defined for an individual fund, they can be defined separately. Such specific options, if defined for an individual fund, would take precedence (only for income earnings from the fund for which they are defined) over options defined for ALL funds.

    Fund Name

    Display

    The system displays name of the specified fund ID based on the details maintained at Fund Maintenance level.

    Currency Name Alphanumeric; 3 Characters; Optional

    The system displays name of the specified payment currency based on the details maintained at Currency Maintenance level.

    Distribution Mode

    Mandatory

    From the list, indicate the manner in which the selected entity prefers to avail of income earned in the selected fund. The list displays the following values:

    • Full Payment: Choose this option to indicate that the entity prefers to receive the entire income derived from an income distribution cycle in the selected fund as a payment.

      Note: For commission payments for entities other than brokers, the distribution mode is considered to be Full Payment by default. This option is selected and cannot be changed.

    • Further, the entity can choose to avail of payment either in the form of a check, or an account transfer.
    • Full Reinvestment: Choose this option to indicate that the entity prefers to reinvest the entire income derived from an income distribution cycle in the AMC back into the funds of the AMC. This option is available only for brokers and not for other entity types.
    • Further, the entity can choose to have the income reinvested either in the entity’s own default unit holder account or the account of another unit holder. In the latter case, the unit holder in whose account the reinvestment is proposed must belong to the same AMC as the source entity.
    • Both: Choose this option to indicate that the entity prefers to have the income derived from an entire income distribution cycle in the selected fund divided into two portions, receive one portion as payment, and reinvest the remaining portion. This option is available only for brokers and not for other entity types.

      Note: In some funds in which reinvestment is not allowed, according to the Corporate Actions profile for the fund and corporate action type, the entity cannot choose to have income earnings reinvested. In such cases, this field is locked with the Full Payment option displayed as a non-editable default option. Also, the Payment Percentage field is locked with a default, non-editable value of one hundred percent displayed, and the Reinvestment Percentage field is locked with a default, non-editable value of zero percent displayed.

      If you have chosen the distribution mode in this field as Full Reinvestment or Both, and the reinvestment fund has a restriction on the nationality of the entity as maintained in the Fund Residency Restriction list, then reinvestment is not allowed at all.

    Payment Percentage Numeric; 5 Characters; Optional (Mandatory if distribution mode is either Both or Full Payment

    Specify the percentage of income earned that the entity prefers to receive by way of payment.

    • If the distribution mode chosen is Both, specify a percentage that is below one hundred percent.
    • If the distribution mode chosen is Full Payment, this field contains one hundred percent as a default value. If so, you cannot specify any other value.
    • If the distribution mode chosen is Full Reinvestment, and the reinvestment is disallowed for the selected fund, this field contains one hundred percent as a default value. If so, you cannot change it.
    Payment Currency

    Alphanumeric; 3 Characters; Mandatory

    Specify the currency of income earned that the entity prefers to receive by way of payment.
    Reinvestment Percentage Numeric; 22 Characters; Optional (Mandatory if distribution mode is either Both or Full Reinvestment)
    Specify the percentage of income earned that the entity prefers to reinvest back into the funds of the AMC.
    • If the distribution mode chosen is Both, specify a percentage that is below one hundred percent.
    • If the distribution mode chosen is Full Reinvestment, this field contains one hundred percent as a default value. If so, you cannot specify any other value.
    • If the distribution mode chosen is Full Reinvestment, and the reinvestment is disallowed for the selected fund, this field contains zero as a default value. If so, you cannot change it.
    Rule Applicable for All Funds

    Optional

    The system displays the description of the selected country of incorporation code.
    Fund Structure Applicable Optional
    You can use this field to indicate that the IDS options being defined are applicable for income earned by the entity from all funds. If this option is chosen:
    • This cannot be changed through either the edit or amend operations.
    • The ALL option is displayed in the Fund ID and ISIN Code fields and cannot be changed.
    • The specific IDS options can still be separately defined for individual funds, which would mean that the selected entity might have IDS options defined for all funds, as well as specifically for individual funds. In such a case, the specific IDS setup for an individual fund (if any) would take precedence over the IDS options defined for all funds.

    Note: This option is available for all entity types except unit holders and brokers.

  • Payment Details Tab
    This topic explains the payment details tab of Income Distribution Setup Detail.
  • Reinvestment Details Tab
    This topic explains the reinvestment details tab of Income Distribution Setup Detail.
  • Routing Details Tab
    This topic explains the routing details tab of Income Distribution Setup Detail.

Parent topic: Maintain Reference Information