When Issued

The term 'When Issued' (WI) refers to a transaction made conditionally on the basis that a security, although authorized, has not yet been issued or made available for trading.
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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

  1. 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.
  2. 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.
  3. 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.

  • 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

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

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