Exercising Security Rights (SAP Library

Exercising Security Rights

Use

Using the Security rights function, you can exercise the following rights (rights categories). You can also see from the table, which types of exercise are supported:

Rights category		Type of exercise / settlement
Option category		a) Delivery b) Cash settlement
Equity warrant	Put
	Call	a) Delivery b) Cash settlement
Bond warrant	Put	a) Delivery b) Cash settlement
	Call	a) Delivery b) Cash settlement
Currency warrant	Put	Cash settlement
	Call	Cash settlement
Index warrant	Put	Cash settlement
	Call	Cash settlement
Subscription right		Exercise security right.
Warrant bond (percentage-quoted or unit-quoted)		Detach
Convertible bond (percentage-quoted or unit-quoted)		Convert
Puttable bond (percentage-quoted or unit-quoted) = can be called by the bondholder		Call
Callable bond (percentage-quoted or unit-quoted) = can be called by the issuer		Call
Stock swap		Execute stock swap

Integration

You create securities that vest executable rights as Classes in the system.

As soon as you have created these types of classes (e.g. warrants) or the data for the executable right (e.g. the notice data for a bond) in the system, they appear in the structure for executable rights beneath the node of the relevant rights category when you call up the Exercise security right function.

See also:

Warrants

Convertible Bonds

Warrant Bonds

Subscription Rights (Overview: Capital Increase)

Entering Data for Giving Notice

Entering Stock Swap Data (or Stock Swap)

The user must be authorized to exercise a security right. The authorization object for exercising security rights is T_RIGHTS.

When you exercise the security right, the authorization object checks the authorization at Company code/securities account level for the following activities: Exercise, Display, Simulate, and Reverse.

If you selected a valid pair in the transaction (Rights category, ID number), the system first reads the positions of all the securities accounts in the given company code. It then checks each securities account to see if the user has display authorization for this company code and securities account.

If this authorization is missing, the position is not displayed for this securities account and cannot be exercised.
If the user has this authorization, the system checks to see if the user also has the authorization to exercise. If the user does not have the authorization to change, the system displays the securities account position, but the position to be exercised is zero. The fields are not ready for input.

When you reverse the exercise or simulate reversing it, the system checks for authorization and displays messages if it finds none.

Prerequisites

Customizing settings

You must have created flows types (in Customizing activity Define Flow Types) for the flow categories that you require for exercising the security rights. To do this, refer to the settings in the Customizing delivered with the system.

In Customizing choose Assign Flows Types to Application Subfunctions and Assign Flow Types to Application Subfunctions per Condition Group to specify which other flows you want to allow when you exercise the various security rights.

See also: Entering Other Flows

Other prerequisites for exercising security rights

Positions must exist for the security right.

Before you exercise a right, you must have performed a period-end closing for the class of the right on the key date of the exercise.

See also:

Period-End Closing

Before you exercise a right, you must have created the position indicators for all the relevant classes. You have the option of branching to this function from here.

See also:

Editing Position Indicators

Make sure that no flows were closed after the key date of the exercise.

See also:

Resetting the Period-End Closing

Process

Call up the function for exercising security rights by choosing Securities ® Trading ® Security right ® Exercise.

Enter the Company code and the Key date of the exercise.

Select the right that you want to exercise.

You can do this in two ways:

Using the tree structure: Search for the ID number in the structure underneath the related rights category and double-click the ID number you require.

Enter the ID number on the right of the screen. You can also use the F4 Help to search. Confirm your entries by choosing (ENTER).

Messages are displayed if the key date lies outside the validity periods of the right selected, if there are no positions for the right selected, or if the entries for the right are incomplete.

You are now in the change mode for the right selected.

For an overview of the structure of the function and the processing functions available here, see Overview: Exercising Security Rights.

Check the entries for the right in the header data. If you find errors in the header data for the right, you can correct these in the class data.

See also: Editing a Class

If you require market data for exercising the right, enter this in the Header data area.

Enter the Nominal amount to be exercised or the Number of units to be exercised for each securities account in the Position area.

The system runs a plausibility check when you exercise the right. It checks to see if the amount to be exercised was entered correctly. Example: The amount to be exercised is 70, but a minimum exercise of 100 was specified. In this case, a warning appears during the exercise.

Check that the flows generated are correct for each securities account by choosing Postprocess flows. Change these flows, if necessary, and/or enter other flows.

See also: Postprocessing Other Flows

Check the payment information for the payment flows. You must have defined payment details for each payment flow.

You can Define Global Payment Details that are valid for all payment flows or Define Payment Details per Securities Account that then belong to the payment flows for this securities account.

Check that all the prerequisites (see above) for exercising the right have been satisfied. In other words, you have created all the position indicators, you have performed the period-end closing on the key date, and so on. If you still have to satisfy some of these requirements, go to the processing functions by choosing Environment in the menu.

We recommend that you simulate exercising the right first. To do this, choose Test run. Any errors that occur during the test run that would prevent the right from being exercised are displayed in an Error Log, as they are when you actually exercise the right.

If you complete the test run successfully, a posting log appears showing all the flows that have been generated by the exercise.

Exercise the security right by choosing

(Exercise right).

A posting log is output showing all the flows that were executed.

The generated flows that relate to the ID number of the security right, are assigned the Closed flow indicator.

When you exercise the security right, the system writes a document for each securities account. This document forms the unit that you can use to reverse the exercise, should you need to.