When-, As- and If-Issued Securities
Chapters in this video
- 0:00 Trading securities that do not exist yet
- 0:42 How when-issued trading works: the pre-order analogy
- 1:49 The exam trap: never T+1 for WI settlement
- 2:26 Accrued interest and cancelled offering rules
- 3:55 When-distributed securities and corporate actions
- 4:32 WI versus WD side-by-side comparison
- 5:06 Rapid-fire exam recap
What this video covers
- Why when-issued (WI) securities have no settlement date at the time of trade, and when settlement is actually established
- How the pre-order analogy applies to new municipal bond issues and initial public offerings (IPOs)
- Why accrued interest is not calculated on WI bonds until the settlement date is set after issuance
- What happens to all WI trades if an offering is cancelled, and why zero obligation survives on either side
- How when-distributed (WD) securities differ in trigger: corporate actions such as stock splits, spin-offs, and reorganizations instead of new issuance
- Why accrued interest is generally not applicable to when-distributed securities, since these are typically equity transactions
- How to distinguish WI versus WD on exam day using the trigger-settlement-accrued interest framework
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