Dividend Match

Dividend Match helps institutional funds unlock value around dividend events through neutral, broker-verified matching.

Where It Started

MarginNet began with a simple but powerful idea:
If two offshore funds hold opposing positions around a dividend event, why shouldn’t they share the economics directly — without tax complications or pricing distortion?

That question led to the creation of Dividend Match — a facility designed to give institutional funds cleaner, fairer dividend outcomes through short-term, broker-verified, margin-backed contracts.

But this is just the beginning. Dividend Match reflects a broader mission:
To improve pricing efficiency wherever offsetting risk exists.

MarginNet’s core purpose is to help institutional funds unlock value from nettable exposures — whether around dividends, short-term directional views, or other market events. Wherever long and short views collide, we aim to reduce friction, reclaim performance, and return the spread to the rightful owner: the client.

The problem isn't dividend arbitrage. It's what it became.

Dividend arbitrage used to create value for clients — not just brokers.

Historically, prime brokers facilitated fair outcomes by offsetting long and short positions across their book. But as complex tax and lending structures emerged, the term DivArb became synonymous with opaque schemes and regulatory scrutiny.

At MarginNet, we define DivArb differently. The true arbitrage was never about tax games — it was about the spread prime brokers captured between two clients: one receiving a gross dividend, the other being charged a dividend at a non-treaty rate. That gap, created by the intermediary, became the real arbitrage.

In the aftermath, true economic value was lost.

Today, the pricing gap between long and short exposures remains wide — and unchallenged — because primes profit from the spread.

MarginNet.com exists to restore what dividend arbitrage was meant to be.
We match institutional funds with opposing exposures through broker-verified, margin-backed short-term contracts — restoring pricing efficiency, transparently and cleanly.

1990s

Wide dividend spreads. Banks profit from client opacity around netting.

2000s

Fund pricing improves, but complex tax structures begin emerging.

2010s

Dividend scandals trigger global scrutiny of structured arbitrage.

2020s

Wide spreads return. Funds lose visibility and pricing power.

🧠 The arbitrage was never in the tax — it was in the spread the broker took from both sides.

Let’s be crystal clear: there is absolutely nothing wrong with two Cayman funds agreeing a dividend rate between them.

There is zero tax risk — the short is simply borrowing the long’s position, and both parties are agreeing fair economics for the exposure.

Model Comparison

Today’s model is opaque, fragmented, and capital-inefficient.
MarginNet simplifies access, standardises terms, and unlocks cleaner pricing.

Institutional funds will have multiple prime brokers and this presents the following problems

Negotiation with multiple PBs, each with different dividend terms and rates.
Opacity around whether terms reflect a true market match or internal prime broker optimisation — including tax-driven structuring.
Regulatory capital for traditional PBs is calculated per counterparty, even for economically offsetting positions — creating inefficiencies in true net scenarios.
Expensive funding structure —
Long holders pay interest plus a large spread.
Short holders receive interest less a large spread.

MarginNet simplifies access, standardizes terms, and unlocks cleaner pricing. This provides the following benefits

Trades are only executed when a true net match exists between two funds — removing the need to chase rates across multiple PBs.
Margin-backed credit exposure is covered via a lean guarantee structure that’s materially more efficient than swap exposures on a bank balance sheet.
Aligned and efficient funding structure —
Long holders continue to pay interest with a reduced spread.
Short holders continue to receive interest with a reduced spread.

Why Use Dividend Match

Today, funds rely on prime brokers to price and finance their long and short positions — particularly around dividend dates. Despite having offsetting client flow, most brokers offer wider spreads and sub-optimal dividend rates, capturing the difference as profit.

Dividend Match unlocks this inefficiency by allowing two offsetting funds to trade directly via a centrally novated synthetic swap. This results in better dividend terms, tighter financing, and a transparent mechanism for pricing and collateral management — all settled through a clean Market-On-Close block.

Access better dividend rates

Obtain Better financing rates

Know you’re facing another offshore fund — not a tax-structured PB.

Earn superior risk-adjusted returns on short-dated, margin-backed fund exposure

Efficient use of balance sheet — credit exposure is secured with margin, and trades are typically short-term, reducing capital requirements.

Full visibility into both fund legs, margin, and modeled risks — all before you commit to a trade.

Tailored benefits for both sides of the trades, Whether you’re a fund seeking dividend alpha or a credit participant looking for short-duration yield, Dividend Match offers a more efficient, transparent and aligned way to monetise flow.

Key Benefits At A Glance

Matched Flow

Cut out unnecessary layers. Access the real rate directly.

Zero Tax Risk

No underlying means no jurisdictional risk or withholding.

Superior Returns

Outperform prime broker returns with secured, short-term flow.

How IT Works

Step 1 – Price Discovery:
Both Fund A and Fund B submit interest in dividend-paying securities to an approved broker.

Step 2 – Negotiation:
When a potential match is identified, the Approved Broker begins negotiating terms between the two offsetting funds. This includes size, spread, and timing of the synthetic transaction, ensuring alignment with each fund’s dividend exposure and preferences.

Step 3 – Terms agreed:
With Swap terms agreed between both parties, the broker then queues a Market-On-Close block trade. Subject to MarginNet approval for the swap.

Step 4 – Trade Opening:
A Market-On-Close (MOC) block trade is executed through the Approved Broker, with Fund A selling and Fund B buying. Both funds enter into matching swaps with MarginNet—Fund A receives performance plus a fixed dividend spread, while Fund B pays performance plus the same spread.

Initial margin is posted to a tri-party agent, and both funds can monitor their positions via MarginNet’s API.

Step 5 – Margin Management:
Each business day, variation margin is exchanged to maintain the agreed initial margin balance between the two opposing funds. In this example, the underlying security’s price has fallen, causing Fund A to pay variation margin to Fund B. This ensures the initial margin remains fully aligned on both sides of the synthetic position.

Step 6 – Dividend Ex-Date:
On ex-date, the dividend is incorporated into the variation margin process. Fund A receives the dividend; Fund B pays it—mirroring the price drop in the underlying and ensuring the swap remains economically aligned without requiring share delivery.

Step 7 – Unwind:
At swap maturity, Fund B sells and Fund A buys the security via a back-to-back MOC trade through the same Approved Broker. This price determines final swap settlement. Once complete, initial margin is returned to both funds, reflecting their net performance.

Ready to Unlock Dividend Efficiency?

We’re actively speaking with institutional funds, credit guarantors, and aligned partners interested in structured dividend matching.

If you’d like to explore collaboration, we’d love to hear from you.