Support for Corporate Actions (Spin-Off, Stock Dividend, Bonus Issue, …)

[buchen]

PP currently lacks dedicated transaction types for corporate actions. Users work around this by (mis)using dividends or manual deliveries, which leads to incorrect performance calculations and confusing reporting.

Background

Discussion in #3610 surfaced the need for a broader approach. Rather than adding one-off types, we should consider the full landscape of corporate actions:

Corporate Action
 ├─ Cash Distribution
 │   └─ Dividend (already exists)
 └─ Securities Distribution
     ├─ Stock Dividend
     ├─ Spin-Off
     ├─ Bonus Issue
     └─ Rights Distribution

Related: #5453 discusses bond/percentage-quoted instruments, which bring their own set of corporate actions (coupon payments, redemptions, calls, conversions, etc.).

Fixed Income Corporate Action
 ├─ Income
 │   ├─ Coupon Payment
 │   ├─ PIK Interest
 │   └─ Defaulted Interest
 ├─ Redemption
 │   ├─ Maturity
 │   ├─ Partial Redemption
 │   ├─ Call
 │   └─ Put
 └─ Structural / Credit
     ├─ Conversion
     ├─ Exchange
     ├─ Restructuring
     └─ Default

Key Design Considerations

• Single type vs. multiple types: One generic "Corporate Action" type with subtype-specific data, or dedicated types per action?
• Two-instrument transactions: A spin-off touches both a source and a target security. This is similar to how purchases/sales/transfers use an Entry that manages two transactions. This pattern could apply here to keep FIFO and other per-instrument lookups efficient.
• Cash flow: Some corporate actions (e.g. rights issues) involve a cash component and therefore also touch an account.
• Reporting columns: Rather than a column per action type, the proposal is:
  • Keep "Sum of Dividends" for cash dividends only
  • Add "Securities Distribution" for non-cash corporate actions
  • Add "Total Distribution" combining both
• Performance calculation: ClientIndex, ClientFilter, and related classes will need updates.

Related

• #3610 — Original spin-off PR and discussion
• #5453 — Bond support / percentage-quoted instruments

[Sn1kk3r5]

@buchen

Probably one mitigation step I discovered while playing around with ppxml2db.
The biggest confusion comes from analyzing dividends. So if we could achieve to not display SPIN-OFF/ SPLITT-OFF/etc. in dividend views, we can win a lot.

For example:

For columns in "All Securities" or "Statement of Assets" none of the above corporate activities should be calculated. Instead we should introduce a new column series, something like: Corporate activities, SPIN-OFF, Splitt-Off, etc.

Same would apply for Reports --> Performance --> Payments. Ignore corporate activities on the dividend tab, and introduce a new tab.

For ppxml2db, I did the trick with analyzing the notes field, since I can't change PP's behavior. But if we could have a flag "Coroporate Activity" those bookings can be excluded in dividend calculations and can be identified for a new category.