Interim Securities

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Status: Best Practice Finalised, Last Updated: 28/01/2022

Description:
Many corporate actions which result in a new line of asset or cash payment, will produce a temporary or interim security, as a result of the CA which is replaced by the new asset, or cash on payment date.

As per the ISLA working group, it was noted that a greater percentage of firms do not book interim (ineligible or non-tradable) securities in their internal systems at all, accounting for them in other ways. For firms that do book interim securities, if one firm reports to the TR, it will create a single sided trade and hence a break.

ISLA's working group determined a universe of all types of interim securities, which could be the result or temporary result from a corporate action and agree the reportable characteristics of each type of Interim security as referenced below.

Best Practice:
With reference to the list below, some interim securities will need to be reported and some should be supressed for reporting to the TR. However, the effect on daily collateral will be mitigated by the fact that the total position will comprise the value reported to the TR.

Those parties who book the interim security will reduce the value of the original line, and those firms not booking an additional line will reprice the original SFT until pay date, when the new security line is booked.

Tradable, therefore reported under SFTR.
Spanish Trading Bonus Issues
German Takeover
Swedish Rights
Rapids (Renounceable)
Warrants (Tradable)
CVRS (Tradable)

Transferable, therefore not reported under SFTR
Coupons
CLAIMS (Within CREST)
DIV OP/ DRIPS (Within CREST)
Rapids (Non-renounceable)
Warrants (Non-Tradable)
CVRS (Non-Tradable)
Fixed Income Events (COAC-127)