Managing Equity Deals

This chapter provides an overview of equities and discusses how to:

Define equities.
Maintain equities.
Sell equities.

Understanding Equities

Deal Management provides functionality for creating deals using equities, also known as stocks. Corporate entities issue equities.

Most corporate treasuries invest in some equity. The major events in the equity-investment life cycle are:

Defining the equity.
Investing in the equity.
Recording equity splits.
Recording equity dividends.
Selling the equity.

Note. Fields that are mentioned in this chapter are described in more detail in the chapters that cover instrument types and capturing deals.

Defining Equity Information

To define equity deal information, use the following components:

Equity Definition (TRX_EQTY_DEFN)
Equity Quotes (TRX_EQTY_QUOTE)

Use the TRX_EQTY_DEFN_CI component interface to load data into the Equity Quotes tables.

This section discusses how to:

Define equities.
Enter equity rates.

Pages Used to Define Equities

Page Name	Object Name	Navigation	Usage
Equity Definition	TRX_EQTY_DEFN	Deal Management, Equities, Equity Definition	Define equities in the system.
Equity Quotes	TRX_EQTY_QUOTE	Deal Management, Equities, Equity Quotes	Enter market prices for equities.
Equity Valuation	TR_EQUITY_MTM	Deal Management, Equities, Equity Valuation	Run a process to create valuation accounting events that are processed by the accounting program.

Defining Equities

Access the Equity Definition page

Equity ID

Displays the key identifier for an equity in Deal Management. Because the equity symbol, company name, or any field that uniquely identifies an equity can change when a company changes names or merges with another company, Deal Management uses the equity ID as the key identifier.

Ticker Symbol

Enter the series of letters that is used to identify this equity on an exchange.

Effective Date

Effective-dating logic is enforced only on information in the Equity Details section (level one), not on the Deals, Dividend Details, Split Details or Rights Details sections.

Equity Definition

Exchange	Enter the marketplace where this equity can be traded.
Security Type	Select the identification system that is used to assign the security ID if the stock is a security on the market with a security type and ID. Values are: CINS (CUSIP International Numbering System) CUSIP (Committee on Uniform Securities Identification Procedures) EPIC (Typically used on the UK stock market) ISID (International Securities Identification Directory) ISIN (International Securities Identification Number) QUICK (Numbering system that is used in the Tokyo Exchange) RIC (Reuters Identification Code) SEDOL (Stock Exchange Daily Official List) SICOVAM (Societe' Interprofessionelle pour la Compensation des Valeurs Mobili`eres) Valoren (A number that is assigned by Telekurs Financial, the Swiss numbering agency)
Security ID	Enter the number that is assigned to this stock according to the identification system that is selected in the Security Type field.
Industry Class	Enter the industry class identifier that is assigned to this stock.

Type of Equity

Common Shares	Select if the type of equity is common shares of stock.
Preferred Shares	Select if the type of equity is preferred shares of stock.
Equity Class	Select the class of preferred shares. Values are A, B, C, D, and Other.

Calculation for Purchase Price

Average Price	Select to calculate the sale price of the equity using a single purchase price for all shares that are to be sold. The seller identifies all the share lots purchased and calculates a single average purchase price for shares that are to be sold. The gain and loss is the same for each lot sold.
Specific Price	Select to calculate the sale price of the equity using multiple purchase prices based upon identifying the purchased lots that are to be sold and the number of shares that are sold from those lots. The gain and loss is different for each lot that is sold.

Calculation Method of Fraction Shares

Cash	Select when the fractional shares resulting from a stock split are sold and the proceeds sent to you for the value of those shares.
Round Up and Round Down	Select how the fractional shares resulting from a stock split will be rounded to the nearest whole share.
Fractional Shares	Select when the fractional shares resulting from a stock split are issued as fractional certificates.
Credit	Select when the fractional shares resulting from a stock split are credited back to the account holder.

Deals

Unit	Displays the business unit for the deal transaction.
Currency	The default currency is that used by the country that is tied to the market exchange.
Fair Value	Displays the market value of the equity as of a particular date.

Dividend Details

Declaration Date	Displays the date that the dividend was declared as defined on the Dividend Details page.
Record Holder Date	Displays the date on which the shareholder of record must own the stock to collect the dividend. This is defined on the Dividend Details page.
Payment Date	Displays the date that the dividend is paid to the shareholders as defined on the Dividend Details page.

Split Details

Split Date	Displays the date that the split is effective, as defined on the Split Details page.
Payment Date	Displays the date that any payment for the split is made, as defined on the Split Details page.
Ratio	Displays the ratio at which the split is announced, as defined on the Split Details page.

Rights Details

Issue Date	Displays the dates that the rights have been issued, as defined on the Rights Details page.
Exercise Date	Displays the dates on which these rights are exercised, as defined on the Rights Details page.
Ratio	Displays the ratio at which rights are issued, as defined on the Rights Details page.

Deals

This grid provides information on any deals associated with this particular equity.

See Entering Equity Deal Details.

Entering Stock Rates

Access the Equity Quotes page.

Note. Not all page elements are visible on this page. Depending on the page arrangement, you see additional elements by scrolling horizontally.

From Date and To Date	Enter dates to specify market prices using specific dates.
Search	Click to populate the quotes grid using the dates that are specified.
Price	Enter the price paid for the stock.
Opening Price, and Closing Price	Enter the first and last price at which this stock traded during the regular trading session on the quote date.
Price Diff (Price Difference)	Enter the difference between the opening price and the closing price.
Trading Volume	Enter the number of equities that were traded on the quote date.
Quote Date	Enter the date of the regular trading session that the entered quote information represents.
Quote Time	Enter the time of day on the quote date that the entered quote information represents.

Maintaining Equities

This section provides an overview of equity maintenance and discusses how to:

Record equity (stock) splits.
Record dividends.
Manage equities after mergers.
Import equity quote data.
Create equity detail reports.

Understanding Equity Maintenance

During the life of an equity in Deal Management, four major events are tracked:

Equity investments.
Equity splits
Dividends paid
Company mergers

Investing in Equities

Once an equity is defined within Deal Management, you invest in the equity using the equity instrument type in the standard deal-capture process.

See Capturing Deals and Trade Tickets.

Equity Splits

If the invested equity is strong and doing well, the company may announce a split. For example, in a 2:1 split, a company issues one additional share for every outstanding share. After the split, two shares exist for every pre-split share. This results in a price adjustment for each share that is held based on the equity-split ratio, as well as a change in the number of shares that are held. The system calculates the quantity of shares and the price once you initiate an equity split.

The split of an equity should be recorded in the system after the date of the split to reflect the current condition of the underlying deals. The deal does not have a split date and adjusts its shares and price when the split is recorded in the system. Because the ratio of the price of the equities and the number of shares changes, but the total monetary amount stays the same, no impact results to the accounting that is already entered for this deal .

Deal Management supports the following methods for handling fractional shares of equities as a result of an equity split:

Issue fractional certificates.
Round up or round down to the nearest whole number of shares.

The system adjusts the number of shares automatically.
Sell the fractional share and send the shareholder a check for its value.

The accounting for this event is similar to the accounting for a received dividend.

Note. The method that is used for the adjustment of fractional shares must be specified at the equity definition level for every equity.

Dividends Paid

The company, whose stock has been invested in, may announce dividends. The dividend can be in the form of cash or more stock. Dividends are ad hoc occurrences and so the process of generating dividends cannot be automated. Every time a dividend is announced, it must be entered into the system.

The method that is used to process dividends differs depending on the type of dividend. For cash dividends, the amount is recorded and accounted for in the same manner as an interest payment. For stock dividends, a new deal is created for the number of shares that are declared and the description of the deal indicates that this deal is the result of a dividend.

Yield for the dividend is calculated in the batch process once the dividend is recorded. This yield is the dividend amount divided by the current market price and is displayed in the dividend history.

Company Mergers

Two possible results may occur for equities as a result of a merger between two companies:

A cash buyout of all existing stock.

No stock in the merged company is issued.

In the event of a cash buyout of all existing stock, the buyout must be recorded as a sale.
An exchange of existing stock for stock of the merged company.

This is often an uneven ratio of the existing stock for the merged company stock.

If the merger results in an exchange of the existing stock for stock of the merged company, then the system replaces the existing stock holdings with the merging stock. All of the existing deals with the original stock are updated for the stock of the merged company. The price and number of shares are adjusted depending upon the exchange ratio that is specified on the Merger page. The status of the existing equity is changed to Inactiveas of the merger date.

Pages Used to Maintain Equities

Page Name	Object Name	Navigation	Usage
Split Details	TRX_EQTY_SPLIT	Deal Management, Equities, Equity Definition Click the Split link on the Equity Definition page.	Enter equity split details.
Dividend Details	TRX_EQTY_DVND	Deal Management, Equities, Equity Definition Click the Add Dividend link on the Equity Definition page.	Enter equity dividend details.
Rights Details	TRX_EQTY_RIGHTS	Deal Management, Equities, Equity Definition Click the Record Rights link on the Equity Definition page.	Enter equity rights details.
Merger	TRX_EQTY_MERGE	Deal Management, Equities, Equity Definition Click the Merger link on the Equity Definition page.	Enter details of the merger.
Layout Catalog	PMT_FORMAT_CATLOG	Banking, Administer Bank Integration, Layout Catalog	Create or modify the existing layout used for importing equity quote information from an external source into your system using the Equity Quote Import page. PeopleSoft delivers the preconfigured STOCK layout for this purpose. See Understanding the Layout Catalog.
Equity Quote Import	BSP_IMPORT	Deal Management, Equities, Equity Quote Import	Run the File Import Application Engine process (IMPORT_FILE) to download stock quote information from an external source.
Equity Detail	TRC3020_RUN	Deal Management, Reports, Equity Details	Create the Equity Details report that lists all the details of each stock that is held in the portfolio. Stock symbol, current price, split details, dividend details, type of shares, and number of shares held are shown in this report for each stock.

Recording Equity Splits

Access the Split Details page.

Fraction Shares

Displays the method that is specified for handling fractional shares of stock as a result of a stock split.

Split Date

Enter the date on which the split is effective. The split date should not be entered into the system until the actual split occurs. Doing otherwise could adversely affect deals involving those equities that are listed in the Deals section of the Equity Definition page.

Payment Date

Enter the date that any payment for the split is made.

Ratio

Enter the ratio at which the split is announced.

Recording Dividends

Access the Dividend Details page.

Declaration Date

Enter the date on which the dividend was declared.

Payment Date

Enter the date on which the dividend is paid to the shareholders.

Record Holder Date

Enter the date on which the shareholder of record must own the stock to collect the dividend.

Ex Dividend Date

Enter the date on which the stock trades for the previous price, except for the dividend, the record date minus two days.

Dividend Type

Stock	Select to indicate that the dividend will be paid as additional stock.
Percent	Enter the percentage to use to determine the amount of stock that is paid as a dividend.
Cash	Select to indicate that the dividend will be paid as cash.
Amount	Enter the amount of the cash payment for this dividend.
Currency	Displays the currency that is used in the cash payment for this dividend that is determined by the deals that are made using this stock . It is currency is that used by the country that is associated with the market exchange on which the equity is traded. See Entering Equity Deal Details.

Managing Equities After Mergers

Access the Merger page.

New Stock Symbol

Enter the series of letters that is used to identify this equity on an exchange.

Date of Merger

Enter the date on which the merger became effective.

Ratio

Enter the ratio of shares that is provided as a result of the merger.

Importing Equity Quote Data

Access the Equity Quote Import page.

Parameters

Import Type	Select a method for importing the equity-quote files. The options are: File: Select if you are importing a file, and complete the File Path and File Name fields. FTP: Select if you are importing the file by using file transfer protocol, and enter a bank node through which to transfer the data.
Integration Node	Enter the node that will be used to relay the equity-quotes files from the external source to your system. This field appears only if FTP is selected as the import type. See Defining Integration Broker Settings for Bank Statements and Payment Acknowledgments.
View Integration Node Details	Click to access the Bank Node Details page and review property details of the selected node. This field appears only if FTP is selected as the import type.
File Path	Enter the complete file path location. To select files using the Select File button, the file path must have a trailing backslash (\). You can also search for files of a specific type by entering an asterisk and the extension suffix. For example, to search all files with an .XXX suffix, enter: \.XXX Note.* Be sure that the application server and the Process Scheduler have access to the directory where the files are stored.
File Selection Help	Click to view help information about specifying file paths and file names.
File Name	Select the specific file to import. If you want to import multiple files based on extension, leave this field blank.
Layout ID	Select an equity-quote file layout. PeopleSoft delivers the STOCK layout, which is preconfigured for this purpose.
View Layout Details	Click to access the Layout Catalog page to view details of the equity-quote file layout.

Advanced Options

Encryption Profile	Select an encryption profile to decrypt payment acknowledgments. Encryption profiles contain both encryption and decryption information.
Use Integration Broker	Select to format the files and publish the formatted document to PeopleSoft Integration Broker. Integration Broker then processes the formatted file accordingly. You select this option if you want to use the equity quote information to trigger Integration Broker to perform other processes or integrate with other systems.
Post Process File Action	Select what action, if any, to perform on the equity-quote data files after the data has been processed. The values are: Copy: Copy the file to the directory that is entered in the Post Precess File Directory field. Delete: Delete the file after the data in it is processed. Move: Move the file to the directory that is entered in the Post Precess File Directory field. None: Take no action.
Post Process File Directory	Enter a file path to the directory to which the file will be moved or copied if either option is selected as the post process file action.

Layout Properties

Value

Property codes and values appear by default from values that are defined on the selected layout ID.

If you configure unique code mappings for a layout (on the Code Mappings page) you need to modify the displayed CODE_MAP_GROUP value with the appropriate unique map value.

See Defining Code Mappings for Bank Statements, Payments, and Payment Acknowledgments.

Note. If you are importing multiple files for a single run control ID, you must add requests (by using the Add button) for each file that is being requested. Do not enter a file name and run the import process, and then edit the file name and run the import process again. Doing this can result in duplicate-file-loading errors.

Selling Equities

This section provides an overview of selling equities and discusses how to sell equities.

Understanding Selling Equities

Equities that have been invested in can be sold at any time. One sale can contain:

All of the equities from a single deal.
A portion of the equities from a single deal.
A portion, or all, of the equities from several different deals.

You can elect to sell only a portion of the equities from a single deal by specifying a smaller number of shares in the Shares to Sell field than are listed in the # of Shares field. Be sure that the number of shares in Shares to Sell matches the number of shares that are listed in the Total Shares to Sell field. You can use either the Average Priceor the Specific Price method for calculating the sale price of the equity.

The method that is used to calculate the sale price of equities is specified on the Equity Definition page. The two calculation methods are:

Average Price Method.

This method calculates a single purchase price for all of the shares that are to be sold. You identify all lots purchased of the shares and the system calculates a single average purchase price for shares that are to be sold. The gain and loss is the same for each lot sold. This method should be used to calculate the gain or loss when the sale is across multiple deals. This method is applicable when multiple lots exist. If one lot exists, then using the average method or the specific price method produces the same results.
Specific Price Method.

This method identifies multiple purchase prices when you indicate the purchased lots that are to be sold and the number of shares sold from those lots. The gain and loss is different for each lot sold.

You can sell the equities from several different deals in a single transaction by entering the appropriate number of shares to be sold in the Shares to Sell field for each deal that is a part of the transaction. The total number of shares that are specified must equal the number of shares that are entered in Total Shares to Sell. When a sale contains multiple deals, you should specify that the Average Price is used to calculate the sale price. When a sale contains a single deal, using either the Average Price or the Specific Price method provides the same price for the equities.

When all of the equities in a deal are sold, the deal status changes to Sold. When you sell a portion of the equities in a single deal, the system creates a new deal for the remainder of the equities. A master deal ID links all new deals to the deal ID of the original deal. This is similar to the Sell/Buyback for IRP functionality.

Page Used to Sell Equities

Page Name	Object Name	Navigation	Usage
Sale Details	TRX_EQTY_SALE_SP	Deal Management, Equities, Equity Definition Click the Sell link on the Equity Definition page	Enter stock sale details.

Page Name

Object Name

Navigation

Usage

Sale Details

TRX_EQTY_SALE_SP

Deal Management, Equities, Equity Definition

Click the Sell link on the Equity Definition page

Enter stock sale details.

Selling Equities

Access the Sale Details page.

Sale Price

Enter the price that is obtained for the equity by the sale.

Sale Date

Enter the date of the sale.

Deals

# of Shares (number of shares)	Displays the number of shares that are included in the listed deal.
Shares to Sell	Enter the number of shares to sell in this transaction.
Total Shares	Enter the total number of shares to sell in this transaction. The system verifies that the number of shares that are entered is equal to the total of all of the shares that are entered at the individual deal level.
Commission / Fee	Enter the fee that is charged by a broker or agent for facilitating a transaction.
Calculate Sale Proceeds	Click to calculate the value of selling the selected shares for the entered sale price. The proceeds are calculated as the total of shares multiplied by the sale price minus the commission or fee for the transaction.

Sale Settlement

Settlement Instructions

Enter the settlement instructions. The default value is specified on the Settlement Instructions page.

Equity ID	Displays the key identifier for an equity in Deal Management. Because the equity symbol, company name, or any field that uniquely identifies an equity can change when a company changes names or merges with another company, Deal Management uses the equity ID as the key identifier.
Ticker Symbol	Enter the series of letters that is used to identify this equity on an exchange.
Effective Date	Effective-dating logic is enforced only on information in the Equity Details section (level one), not on the Deals, Dividend Details, Split Details or Rights Details sections.

Fraction Shares	Displays the method that is specified for handling fractional shares of stock as a result of a stock split.
Split Date	Enter the date on which the split is effective. The split date should not be entered into the system until the actual split occurs. Doing otherwise could adversely affect deals involving those equities that are listed in the Deals section of the Equity Definition page.
Payment Date	Enter the date that any payment for the split is made.
Ratio	Enter the ratio at which the split is announced.

Declaration Date	Enter the date on which the dividend was declared.
Payment Date	Enter the date on which the dividend is paid to the shareholders.
Record Holder Date	Enter the date on which the shareholder of record must own the stock to collect the dividend.
Ex Dividend Date	Enter the date on which the stock trades for the previous price, except for the dividend, the record date minus two days.

New Stock Symbol	Enter the series of letters that is used to identify this equity on an exchange.
Date of Merger	Enter the date on which the merger became effective.
Ratio	Enter the ratio of shares that is provided as a result of the merger.

Sale Price	Enter the price that is obtained for the equity by the sale.
Sale Date	Enter the date of the sale.