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0 pointstomatocracy6y ago0 comments

The ex date is the first day when the security trades without rights to the dividend (or rights, or coupon etc). It's not the day when holders are entitled to the dividend because if you trade on a particular day, you don't own the securities until settlement occurs which is on a later day (different markets have different conventions here for how much later). The company/issuer will have a record date for administrative purposes when they take a snapshot of the ownership register so the ex date is the first date on which settlement will take place after that record date. The payment date may even be some weeks after this but is set by the company but this isn't really relevant to when the ex date is.

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frankc6y ago

I think we are in agreement?

thaumasiotes6y ago

As I read your comments:

>> [The ex-date] is the day after holders of the security are entitled to the dividend.

> It's not the day when holders are entitled to the dividend because if you trade on a particular day, you don't own the securities until settlement occurs

Imagine that the ex-date for a security is 2017-05-19. You sell one such security on 2017-05-18. Settlement clears on 2017-05-22. Because of the delay in settlement, you held the security on the ex-date (and on the day before the ex-date), but you're not entitled to the dividend because you sold the security before the ex-date.

That's my reading of the two comments. I take no position on this. The point I'm making is different, that in the phrase "ex-dividend date", the "ex" and the "dividend" are not related to each other. They both relate to "date"; "ex-dividend" is not a logical unit within the phrase. However, the phrase "ex-dividend date" (good Latin usage) was clipped to "ex-dividend", and then people started assuming "ex" meant "without", because an "ex-dividend security" (no longer good Latin usage) was one that traded without rights to the dividend.

Stated another way --

A "dividend date" is a kind of date, a date related to the concept "dividend". "Ex-dividend date" is (originally) a prepositional phrase meaning "after the dividend date". It's not a kind of date related to the concept "ex-dividend"; "ex-dividend" is not a concept.

But then, English-speaking traders who didn't know Latin reanalyzed the phrase "ex-dividend date" as a noun phrase referring to a kind of date, which required a further reanalysis of what exactly "ex" meant. That new meaning, "without", is original to English.

In tree form, we have an original phrase (ex-(dividend date)) being reanalyzed as ((ex-dividend) date).

tomatocracyOP6y ago

> Imagine that the ex-date for a security is 2017-05-19. You sell one such security on 2017-05-18. Settlement clears on 2017-05-22. Because of the delay in settlement, you held the security on the ex-date (and on the day before the ex-date), but you're not entitled to the dividend because you sold the security before the ex-date.

That's right. The ex date is relevant to the day you trade (which in practice means entering into a contract to buy and sell securities at a certain price, not actually delivering those securities/money), whereas the record date is the equivalent for the day of ownership. The ex date will be X-1 business days before the record date with X and the definition of business day depending on the market settlement convention. In some markets X=1 hence the confusion between the two, I think.

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