When-issued securities are a form of investment that grants ownership or creditor rights in a company or government. These securities can take the form of stocks, bonds, or other financial instruments. Unlike physical commodities, securities do not possess inherent value and their worth is contingent upon the financial state and future potential of the issuer. Investors can engage in speculation on the future value of when-issued securities by buying and selling them prior to their official issuance.
A when-issued security is a financial instrument that represents a future obligation to buy or sell a security at a specified price. It is a security that has been authorized but not yet issued or traded. For instance, a company may announce its plan to issue new shares of stock in the future. Prior to their actual issuance, investors can trade these shares, known as “when-issued” shares. Similarly, a bond may be issued but not yet traded, allowing investors to buy and sell it before it begins trading on the market. When-issued securities are commonly utilised by investors for speculating on the future price of a security and hedging against potential price changes.
A when-issued security refers to a financial instrument, such as a stock or bond, that has been authorized but not yet issued or made available for trading.
Unlike regular securities, when-issued securities are not yet available for trading on the open market. They are typically issued to investors before the official trading begins.
To participate in trading when-issued securities, you typically need to have a brokerage account that allows you to trade in these types of securities. You can place orders through your broker once the security becomes available for trading.
When-issued securities carry certain risks, such as price volatility and uncertainty regarding the final terms of the security. Additionally, if the issuer cancels the issuance, investors may face potential losses.
In most cases, when-issued securities can be bought and sold before they are officially issued. However, it is important to check with your broker or financial advisor to understand any specific restrictions or limitations.
The pricing of when-issued securities is typically determined through a bidding process or based on market demand. The final price is usually set shortly before the security is officially issued.
When-issued securities may or may not be eligible for dividends or interest payments, depending on the terms set by the issuer. It is important to review the specific terms and conditions of the security to understand its entitlements.
In some cases, when-issued securities can be used as collateral for loans. However, this depends on the policies of the lender and the specific terms of the security. It is advisable to consult with your lender or financial advisor for more information.
When-issued securities are subject to regulation by the relevant financial regulatory authorities, such as the Securities and Exchange Commission (SEC) in the United States. These regulations aim to ensure fair and transparent trading practices.
The duration of the when-issued period can vary depending on the specific security and its issuer. It can range from a few days to several weeks. It is important to stay updated with the issuer’s announcements and consult with your broker for accurate information.
This site contains general legal information but does not constitute professional legal advice for your particular situation. Persuing this glossary does not create an attorney-client or legal adviser relationship. If you have specific questions, please consult a qualified attorney licensed in your jurisdiction.
This glossary post was last updated: 17th April 2024.
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