What is When Issued ?

156 reads · Last updated: December 5, 2024

When issued (WI) is a transaction that is made conditionally because a security has been authorized but not yet issued. Treasury securities, stock splits, and new issues of stocks and bonds are all traded on a when-issued basis.Prior to a new issue's offering, underwriters solicit potential investors who may elect to book an order to purchase a portion of the new issue.

Definition

Conditional listing trading is a type of transaction where securities have been authorized but not yet issued. This includes transactions involving government bonds, stock splits, and the issuance of new stocks and bonds.

Origin

The origin of conditional listing trading dates back to the early development of securities markets, where exchanges allowed trading of securities not yet officially issued to enhance market liquidity and investor participation. This mechanism helps underwriters gauge market demand before new securities are officially listed.

Categories and Features

Conditional listing trading can be categorized into two main types: government bonds and securities, and corporate stocks and bonds. The former is typically issued by governments and carries lower risk, while the latter involves corporate issuance and carries relatively higher risk. The key feature of conditional listing trading is that the securities being traded are not yet officially listed, requiring investors to bear certain market risks.

Case Studies

A typical case involves a large tech company planning to issue new shares, where underwriters invite investors to subscribe in advance through conditional listing trading. This approach helps the company gauge market demand for its shares before official listing. Another case involves the government issuing new bonds and using conditional listing trading to test market acceptance, allowing them to adjust issuance strategies accordingly.

Common Issues

Common issues investors face in conditional listing trading include insufficient risk assessment of unlisted securities and misjudgment of market demand. Additionally, investors may misunderstand the nature of conditional listing trading, assuming it is the same as officially listed trading.

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