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Scope
An instructing party, eg, an investment manager or its authorised representative, sends the RedemptionOrder message to the executing party, eg, a transfer agent, to instruct the redemption of one or more financial instruments for one investment fund account.
Usage
The RedemptionOrder message is used to instruct single redemption orders, ie, a message containing one order for one financial instrument and related to one investment account. The RedemptionOrder message may also be used for multiple orders, ie, a message containing several orders related to the same investment account for different financial instruments. For a single redemption order, the RedemptionOrder message, not the RedemptionBulkOrder message, must be used. If there are redemption orders for the same financial instrument but for different accounts, then the RedemptionBulkOrder message must be used.
Main characteristics
The RedemptionOrder message has the following main characteristics:
Multiple Order Details
An order is composed of one or several individual orders. These individual orders have common characteristics such as the same investment account, the same cancellation right and the same place of trade. However, each individual order may specify a different financial instrument, quantity of financial instruments, commission levels, etc.
Redemption in GrossAmount or NetAmount or UnitsNumber or HoldingsRedemptionRate
The redemption quantity must be expressed in one of the following ways:
- GrossAmount: the monetary GROSS value of the financial instrument to be redeemed to, eg, the redemption of EUR 1,500 of financial instrument ISIN LU0123456789, or
- NetAmount: the monetary NET value of the financial instrument to be redeemed to, eg, the redemption of EUR 1,000 of financial instrument ISIN LU0123456789, or
- UnitNumber: the number of units of financial instrument to be redeemed to, eg, the redemption of 10 units of financial instrument ISIN LU0123456789.
- HoldingsRedemptionRate: the part of the portfolio to be redeemed, eg, the redemption of 10% of the holdings in financial instrument ISIN LU1234567890.
Cash Settlement
The cash settlement of a multiple order may be specified either as a single bulk payment, or as individual settlements for each order. Since the valuation and settlement cycle of all the investment funds in the multiple order may be different, there is no guarantee that a single bulk cash settlement can take place for all of the individual orders inside the multiple order. When a bulk cash settlement is not possible, specific cash settlement details may be included for each individual order inside a multiple order. If no standing instruction has been set up at the account level, then cash settlement information must be present in the message. If there is a standing instruction, but cash settlement information is also present in the message, then the cash settlement information in the message overrides the standing instruction.
Charge and Commission
Generally speaking, a charge is directly paid by the investor whereas a commission is paid by the fund to the intermediary. This rule might not apply to some specific markets.
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