Definition of When Issued§
“When Issued” (WI) is a term used in financial markets to describe transactions that are made conditionally based on the understanding that a security has been authorized but not yet issued. This term is commonly applied to new issues of stocks and bonds, stock splits, and U.S. Treasury securities, which are traded on a when-issued basis until they are actually distributed or made available to the public. In financial news listings, a “WI” notation next to a price indicates that the security is being traded on a “when, as, and if issued” basis.
Examples of When Issued Securities§
- New Stock Issues: When a company announces the issuance of new shares, these shares can be traded on a when-issued basis before the actual issuance.
- Stock Splits: Companies that declare a stock split may have the new, split-adjusted shares traded on a when-issued basis until they are officially distributed.
- U.S. Treasury Securities: Treasury securities, such as Treasury bonds and notes, which are auctioned but not yet delivered to the buyers, can be traded on a when-issued basis.
Frequently Asked Questions (FAQs)§
What does WI mean next to a stock price?§
“WI” stands for “When Issued,” indicating that the security is being traded conditionally based on its future issuance.
Are when-issued transactions final?§
No, when-issued transactions are conditional and become final only if and when the security is actually issued.
Can the price of a when-issued security change?§
Yes, the price of a when-issued security can fluctuate based on the market’s perception and expectations, similar to regular securities.
What happens if a security fails to be issued?§
If a security fails to be issued, the when-issued transactions are canceled, and no actual trading occurs.
Who can trade when-issued securities?§
Generally, institutional investors and experienced traders engage in when-issued trading due to the risks and complexities involved.
Related Terms§
- Initial Public Offering (IPO): The process by which a private company offers its shares to the public for the first time.
- Stock Split: An action taken by a company to divide its existing shares into multiple shares, thereby increasing the number of shares outstanding.
- Treasury Securities: Debt instruments issued by the U.S. Department of the Treasury to finance government spending.
Online References§
- Investopedia: When Issued (WI) Definition
- U.S. Securities and Exchange Commission (SEC): When Issued Trading
- Wikipedia: When Issued Basis
Suggested Books for Further Studies§
- “Investment Valuation: Tools and Techniques for Determining the Value of Any Asset” by Aswath Damodaran
- “Security Analysis” by Benjamin Graham and David L. Dodd
- “Financial Markets and Institutions” by Frederic S. Mishkin and Stanley G. Eakins
Fundamentals of When Issued: Finance Basics Quiz§
Thank you for exploring the intricate world of when-issued securities and testing your understanding with our quiz. Continue to expand your financial knowledge for better investment acumen!
