Alright, yesterday was total chaos, although not really unexpected. The fact that most german brokers had the dividend shares booked before people on Computershare received their stock was a sign for things to come. So, what happened?
In the days before the 21st, several brokers and banks notified customers about an upcoming split, not a dividend, not a split via dividend. On thursday after market close, many german brokers showed the changed positions right away; some took only a few minutes, some a few hours, but it was unexpectedly fast. It shouldn’t have been possible, as the shares are distribute by Computershare and would need to make their way to the DTCC, (from there to Clearstream, if you bought GS2C in the german market) and then to the brokers.
Possible explanation: german brokers expected everything to go as it is supposed to, in which case there really is not much of a difference between a regular split and a split by dividend; they booked placeholders (in case of the DKB, one of the more trustworthy ones, with a trading lock until the scheduled delivery of the dividend) so customers’ portfolios wouldn’t sit at -75% until the shares arrive. Some seemingly booked in fully functional shares, expecting a delivery according to the rules.
Now since the delivery date came and went, the brokers realised they had mis-booked shares; the Consors Bank removed all additional shares and re-booked them in the afternoon properly labeled as dividend, as did the neobroker TradeRepublic. The DKB removed the placeholders (possibly automatic), but the actual shares haven’t arrived yet. Since this happened to pretty much all german brokers, this seems less like a bank issue and more like a problem of the clearing house. What does it mean?
It means, things are going as epxected. We are entitled to a dividend, which the DTCC (and its intermediary, Clearstream) can’t reliably deliver to german banks. By german law, we are the actual owners of the shares, not just a beneficiary of a bank’s position, therefore the bank is fucked if they don’t make us whole. The fact that they’re removing and re-booking shares means, that they are according to german law and not just taking our money. It means, the DTCC not having enough shares to go around is actually becoming visible and Ryan Cohen has reason to demand a share audit and move all shares to an alternative system.
I smell MOASS coming.
Addendum for everyone saying “You should have DRSed, your own fault, you’ll leave empty handed, etc.” under the posts concerning these events: don’t gloat, don’t mock, don’t be smug. Yes, DRS is the guaranteed way to own your shares and receive the dividend. Yes, it is possible to DRS via IBKR. Yes, there will be fuckery, as expected. But saying everyone who didn’t DRS will not be part of MOASS is akin to saying “there won’t be a MOASS”.
MOASS depends on shares in brokerages. Shares in Computershare represent actual part of the company. Shares in brokerages represent the hedgies short position. If those shares could be poofed out of existence or sold off against the will of us apes, the short position of hedgies would be gone. In that case they wouldn’t need to buy DRSed shares either. So don’t be smug, don’t gloat, don’t mock apes in brokerages.