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Finance: What is "when-issued"? 12 Views
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Description:
When-issued is a trading condition that applies to structural changes in companies that result in a new entity with its own set of trading rules.
- Social Studies / Finance
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- Life Skills / Personal Finance
- Finance / Finance Definitions
- Life Skills / Finance Definitions
- Finance / Personal Finance
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- Terms and Concepts / Stocks
- Terms and Concepts / Trading
Transcript
- 00:00
finance a la shmoop what is when issued all right well it's a trading condition [Definition of when-issued]
- 00:08
that applies to spin-offs or other structural changes in companies such
- 00:12
that a new thing or entity is created which will have its own separate set of
- 00:18
trading parameters and rules and elements and yeah okay well this one's [Woman looking confused]
- 00:24
just easier with an example
Full Transcript
- 00:27
shmoop enterprises global or shmeg creators of the finest hand cream soap [Bottle of Shmeg hand cream is taken off a shelf]
- 00:33
jokes on the planet decides to spin off its European business as a separate
- 00:39
company based in Paris we like the food and the tiny dogs and the arrogance and [Woman sat with a dog on her lap at a picnic table with a plate of food]
- 00:44
the armpit hair so we here at shmoop central declare that all shareholders of
- 00:50
SHM egg will get 0.35 shares of shmoo or a new company to be spun off of the [Shmeur stock being given to to Shmeg]
- 00:56
parent that new company will sell the same products as sh meg make them the
- 01:00
same way albeit with more european union labor and sell them only in Europe and [Guy working in a warehouse wearing a beret]
- 01:05
we mumbled that this notion makes sense because Europe is so protectionist
- 01:10
against them damn foreigners like us trying to sell anything into the [Definition of protectionist]
- 01:14
continent yeah they make us hire their labor first we're gonna sell stuff to
- 01:18
them and it's hard to sell anything into the continent and while we really try [Woman begging European businessmen]
- 01:23
hard to be incontinent ok the spin-off of shmore from Shmeg will officially [Newspaper article about the spinoff]
- 01:28
happen on May 4th our favorite day of the year and no it's not Bastille Day
- 01:32
but this security which will actually be trading on May 4th will begin trading on [May 4th highlighted on a calendar]
- 01:38
February 2nd as quote when issued unquote well why are securities kind of
- 01:44
traded here before they are actually traded like when issued is a kind of [3 zombies in front of a burnt down city]
- 01:49
zombie apocalypse derivative of an actual security being traded so like why
- 01:54
do it well in large part because when spin-offs like this happen there is an
- 01:58
unproven market with ambiguous market demand and appetite for those securities
- 02:03
maybe the Europeans are still angry we didn't enter the big one sooner and help [List of grudges against the US]
- 02:08
save them from the Nazis maybe they don't like Jack's secret sauce well [Pot of sauce appears next to a burger]
- 02:12
maybe just don't like our president and like
- 02:15
who doesn't like Oprah so what are they thinking anyway well but whatever the [Oprah giving a speech]
- 02:19
ability to kind of sort of test the market in the form of a when issued
- 02:23
security is a dandy ingredient to smooth friction sometimes a trust at big local [Pan of vegetables with when-issued stock]
- 02:28
partners might be brought in to commit to buying say 10 percent of a given when
- 02:32
issued security at a set price to hopefully stabilize a very uncertain [The big local partner looks excited]
- 02:37
market place and make it certain that when issued transactions that won't [Shmeg stock chart going up and down]
- 02:41
crater the parent company stock when it then comes time to actually begin
- 02:46
trading in February as when issued well the people who really want shmore can't [Big line of people]
- 02:50
rush to the head of the line so may the shmore be with you
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