Exchange
The exchange corporate action can be used as a tool for recording exchanges, i.e. in situations where one security is exchanged into one or more other securities.
In addition to directly exchanging one security to another, the exchange corporate action supports dividing the purchase values of the original security to the new securities received in the exchange, as well as exchanging securities with different currencies. The exchange corporate action can be used for example for recording changes of security, spin-offs, redemption shares and convertible bonds. The exchange corporate action creates one transaction per open purchase lots for each new security added, calculates the amount for the transactions from the ratio and the position of the chosen security in the portfolio, and uses the percentage share of the original purchase value of the position as the trade amount of the created transaction.
The exchange corporate action can be recorded to the system through the Corporate action window with the following information (a star indicates a mandatory field):
- Removed security*
The security that is exchanged to another security (i.e. choose the security that is removed from the portfolio and exchanged into some other security).
- Run based on*
An option to run a corporate action based on:
Ex-date. Define the ex-date and run the corporate action for all portfolio positions (settled and unsettled) that have transaction date on the selected date or earlier.
Record date. Define the record date and run the corporate action for settled portfolio positions that have settlement date on the selected date or earlier.
- Exchange date*
(The field is shown if you choose to run the corporate action based on the ex-date). The ex-date of the exchange. The exchange is calculated based on the position amount of the original security in portfolios (settled and unsettled) on the morning of the specified date (i.e. the position after the previous day's transactions). The exchange date will become the transaction date of the transaction created.
- Exchange record date*
(The field is shown if you choose to run the corporate action based on the record date). The exchange record date. The exchange is calculated based on the settled position amount of the original security on the morning of the record date. This date will become the transaction date of the transaction created.
- Transaction type*
The transaction type for the transactions to be created (if recording exchanges, select "Exchange" or similar).
To the fields below, define the security / securities the removed security is exchanged to (add a new row for each new security you receive from the exchange). New securities can be added with the + button, and exchange information can be defined in the fields available per security added:
- New security*
The security that is received in the exchange.
- Exchange ratio*
The exchange ratio (for example 1:2). The ratio defines how many new securities are received with one removed security.
- Fx rate*
The exchange rate used, if the currency of the removed security is different from the currency of the new security. By default, the exchange rate it 1 (exchanged securities are of the same currency).
- Share (%)*
The percent of the purchase value of the original security will be transferred as the purchase value of the new security. By default, the share is 100 % (the whole purchase value of removed security is transferred to the new security, usually the case when exchanging one security to another).
However, if a security is exchange into two securities (for example due to a spin-off) the purchase value of the removed security might be divided unevenly to the new securities: the division of the original purchase value of the removed security is defined to this field as a percentage.
Note
The exchange corporate action does not support changing a security to itself. If you need to exchange a security to itself, for example when recording a spin-off (a security spins off to itself and a new security), the removed security has to first be exchanged to a "temporary security" (create one to the system) and the temporary security can then be exchanged back to the original security with a new exchange corporate action.
A new corporate action is created with the OK button below the corporate action information. Remember to run the corporate action to your portfolio(s) in order to create appropriate transactions to your portfolios.
Exchange of funds with accrued interest
When you exchange fund securities that have accrued interest, paid accrual and accrued interest is transferred from the original position to the new position. This ensures that the position after the exchange includes previous position's accrual.
Exchange of funds with income distribution
To exchange funds with income distribution, select the fund exchange transaction type that has the "Removes 2nd security, realize accrual" effect (read more about transaction type effects in Preference - Transactions). The accrual of the original fund position is realized and the buyer gets the current market value accrual of the new fund position on the exchange date.
The accrual from the original position is sold and realized on the exchange date. You can view the accrual amount in the Removed accrual field of the exchange transaction.
The accrued income on the new position on the exchange date is included in the security's market price. You can view this accrual in the Accrual field of the exchange transaction.
The latest market value of the accrual on the new position is displayed in the Accrual column in the Overview.