Flows Generated when Exercising Security Rights (SAP Library

Flows Generated when Exercising Security Rights

Below are several examples that help provide an overview of the flows that are generated automatically from the security right data when you exercise a security right:

Flows generated when a warrant expires

Example:

There are 100 Call with cash settlement warrants for an A-stock in your position that you have purchased for 4 EUR each. The base price is 400 EUR, the warrant ratio is 10:1 and the current market price is 380 EUR. The local currency is EUR.

Due to the market situation, all of the 100 warrants expire.

When you exercise the expiration right, the system generates the following flows:

Flow type	Units	Amount
Position outflow of warrant	100	0 EUR
Security price loss		100 x 4 EUR = 400 EUR

Flows generated when exercising a warrant with cash settlement

Example:

You exercise the warrants.

The system generates the following flows:

Flow type	Units	Amount
Position outflow of warrant	100	0 EUR
Take acquisition value of warrant off books		100 x 4 EUR = 400 EUR
Disbursement		400 EUR
Security price gain		500 EUR – 100 x 4 EUR = 100 EUR

Flows generated when exercising a call with delivery warrant

Example:

There are 100 Call with delivery warrants for an A-stock in your position that you have purchased for 4 EUR each. The base price is 400 EUR, the warrant ratio is 10:1 and the current market price is 450 EUR. The local currency is EUR.

You exercise the warrants.

The system generates the following flows:

Flow type	Units	Amount
Position outflow of warrant	100	100 x 4 EUR = 400 EUR
Position inflow of underlying	100/10 =10	400 EUR
Post acquisition value of underlying		100 / 10 x 400 EUR = 4000 EUR
Additional payment		4,000 EUR

Flows generated when exercising a put with delivery warrant

Example:

There are 100 Put with delivery warrants for an A-stock in your position that you have purchased for 4 EUR each. The base price is 400 EUR, the warrant ratio is 10:1 and the current market price is 450 EUR. The local currency is EUR. There are 20 A-stocks with an acquisition value of 340 EUR per unit in the position.

You exercise the warrants.

The system generates the following flows:

Flow type	Units	Amount
Position outflow of warrant	100	100 x 4 EUR = 400 EUR
Acquisition value transfer to underlying	100/10 =10	400 EUR
Take acquisition value of underlying off books		100 / 10 x 400 EUR = 4000 EUR
Payment		4000 EUR
Position outflow of underlying	100/10 =10	0 EUR
Security price gain		4000 EUR – 400 EUR – 10 x 340 EUR= 200 EUR

Flows generated when exercising a subscription right

Example:

You purchased 400 subscription rights for new A-stocks with subscription ratio 4:1.

The subscription price is 300 EUR. The subscription rights are managed with an acquisition value of 10 EUR per unit.

You exercise all 400 of the subscription rights.

The system generates the following flows:

Flow type	Units	Amount
Position outflow of subscription rights	400	400 x 10 EUR = 4,000 EUR
Position inflow of new stocks	400 / 4=100	4,000 EUR
Post acquisition value of new stock		100 x 300 EUR = 30,000 EUR
Inpayment		30,000 EUR

Flows generated when converting a convertible bond

Example:

There is a convertible bond with an acquisition value of 10,000 EUR (nominal 10,000 EUR) in the position with the right to convert this into 20 A-stocks. The conversion price is 10 EUR per stock.

You convert the bond.

The system generates the following flows:

Flow type	Units/nominal	Amount
Position outflow of convertible bond	10,000 EUR	10,000 EUR
Position inflow of A-stocks	20	10,000 EUR
Post acquisition value of A-stock		20 x 10 EUR = 200 EUR
Inpayment		200 EUR

Flows generated when detaching a warrant bond

Example:

There is a warrant bond cum in your position with an acquisition value of 10,000 EUR (nominal 10,000 EUR) appended with 20 A-stocks warrants.

Current price of the bond cum is 101%, the price of the bond ex is 99%.

The warrants are detached from the bond cum.

The system generates the following flows:

Flow type	Units/nominal	Amount
Position outflow of warrant bond cum	10,000 EUR	10,000 EUR
Position inflow of warrant bond ex	10,000 EUR	(10,000 EUR / 101) * 99 = 9,801.98 EUR
Position inflow of warrants	20	10,000 EUR -9,801.98 EUR = 198.02 EUR

Flows generated when swapping a stock

Example:

There are 100 A-stocks in your position with an acquisition value of 500 EUR per unit.

You have the offer of swapping the A-stocks for B-stocks at a ratio of 1:50 and to pay a clearing amount of 2 EUR per B-stock.

The owner exercises the stock swap for all 100 A-stocks.

The system generates the following flows:

Flow type	Units/nominal	Amount
Position outflow of A-stocks	100	100 x 500 EUR = 50,000 EUR
Position inflow of B-stocks	100 x 50 = 5,000	50,000 EUR
Take acquisition value of B-stocks off books		5,000 x 2 EUR = 10,000 EUR
Payment		10,000 EUR

Flows generated when calling a bond

Example:

You have a bond in your position with an acquisition value of 10,000 EUR (nominal 10,000 EUR).

The issuer has the right to call at 101% and takes up this right.

The system generates the following flows:

Flow type	Nominal	Amount
Position outflow of bond	10,000 EUR	10,000 EUR x 1.01 = 10,100 EUR
Security price gain		100 EUR