Non Fungible Unit Numbers
Non Fungible Unit Numbers This paper sets out examples of how the SFE Austraclear Replacement System handles Non Fungible Series Units for Discount Securities. Scenario 1 – Trades conform to the Minimum/Multiple Volume and Unit Face Value rules for the series
WPAC20 holds $10m of EBA771748:
From the right click menu in the Holdings window, the total number of units is displayed for the above holding:
It can be determined from the above that there are 20 units x $500,000 = $10m.
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The minimum and multiple volumes and unit face value for this series are displayed in the Series>>View Series window. These values are defined by the Issuer Representative when the series is created.
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WPAC20 has sold $2m to NABL30
The system will validate the minimum and multiple volumes and unit face value for all Discount Security series when it attempts to create a settlement instruction for the trade ie after the trade is matched and a DVP Instruction has been created. Where the trade conforms to the minimum and multiple volume and unit face value rules, a settlement instruction will be created and the trade settles successfully. The Holdings and Non Fungible Units are displayed as follows:
NABL30 now has $2m in holdings
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The system has split the series units from the end ie NABL30 now holds $2m represented by 4 series units, numbers 17-20 in the same way that FINTRACS splits the suffix of a line of Discount Securities from the end.
Further examples of the use of Non-Fungible Series Units:
NABL30 now sells $1m back to WPAC20
WPAC20 now sells $1m to RBAA20
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RBAA20 Holdings
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Scenario 2 - Trade does not conform to the Minimum/Multiple Volume and Unit Face Value rules for the series
The minimum and multiple volumes and unit face value for series LCOL131205ECD01 are displayed in the Series>>View Series window. These values are defined by the Issuer Representative when the series is created.
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LCOL20 sells $1,333,333.00 to CLOW20
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CLOW20 enters a buy for the same series to LCOL20
The trade reaches a Matched state.
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The system will validate the minimum and multiple volumes and unit face value for all Discount Security series when it attempts to create a settlement instruction for the trade ie after the trade is matched and a DVP Instruction has been created. Where the trade does not conform to the minimum and multiple volume and unit face value rules, a settlement instruction will not be created and the relevant DVP Instruction has a settlement status of Failed as displayed in the DVP Information screen. (View Reported Trades>> right click to view DVP Information):
The Properties of the DVP Instruction will display the reason for the failure in the CSD Information field:
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In this scenario because the DVP Instruction has failed, the system cannot proceed with the settlement therefore a settlement instruction is not created for this trade and it will not proceed to RTGS for processing. Failed DVP Instructions cannot be rectified, therefore in order to have this trade settle the trade will have to be deleted and a new trade entered using a valid Face Value.
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WPAC20 holds $10m of EBA771748:
From the right click menu in the Holdings window, the total number of units is displayed for the above holding:
It can be determined from the above that there are 20 units x $500,000 = $10m.
Page 1 of 10
The minimum and multiple volumes and unit face value for this series are displayed in the Series>>View Series window. These values are defined by the Issuer Representative when the series is created.
Page 2 of 10
WPAC20 has sold $2m to NABL30
The system will validate the minimum and multiple volumes and unit face value for all Discount Security series when it attempts to create a settlement instruction for the trade ie after the trade is matched and a DVP Instruction has been created. Where the trade conforms to the minimum and multiple volume and unit face value rules, a settlement instruction will be created and the trade settles successfully. The Holdings and Non Fungible Units are displayed as follows:
NABL30 now has $2m in holdings
Page 3 of 10
The system has split the series units from the end ie NABL30 now holds $2m represented by 4 series units, numbers 17-20 in the same way that FINTRACS splits the suffix of a line of Discount Securities from the end.
Further examples of the use of Non-Fungible Series Units:
NABL30 now sells $1m back to WPAC20
WPAC20 now sells $1m to RBAA20
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RBAA20 Holdings
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Scenario 2 - Trade does not conform to the Minimum/Multiple Volume and Unit Face Value rules for the series
The minimum and multiple volumes and unit face value for series LCOL131205ECD01 are displayed in the Series>>View Series window. These values are defined by the Issuer Representative when the series is created.
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LCOL20 sells $1,333,333.00 to CLOW20
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CLOW20 enters a buy for the same series to LCOL20
The trade reaches a Matched state.
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The system will validate the minimum and multiple volumes and unit face value for all Discount Security series when it attempts to create a settlement instruction for the trade ie after the trade is matched and a DVP Instruction has been created. Where the trade does not conform to the minimum and multiple volume and unit face value rules, a settlement instruction will not be created and the relevant DVP Instruction has a settlement status of Failed as displayed in the DVP Information screen. (View Reported Trades>> right click to view DVP Information):
The Properties of the DVP Instruction will display the reason for the failure in the CSD Information field:
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In this scenario because the DVP Instruction has failed, the system cannot proceed with the settlement therefore a settlement instruction is not created for this trade and it will not proceed to RTGS for processing. Failed DVP Instructions cannot be rectified, therefore in order to have this trade settle the trade will have to be deleted and a new trade entered using a valid Face Value.
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