ACCOUNTING OF 'WHEN ISSUED' TRANSACTIONS

The accounting treatment of transactions undertaken in 'When Issued' (WI) securities would be as follows:

•  The 'WI' security should be recorded in books as an off balance sheet item till issue of the security.
•  The off balance sheet net position in 'WI' market should be marked to market scripwise on a daily basis at the day's closing price of the 'WI' security. In case the price of the 'WI' security is not available, the value of the underlying security (as stipulated in the Master Circular No: 8 dated July 12, 2006) be used instead. Depreciation, if any, should be provided for and appreciation, if any, should be ignored.
• The off balance sheet (net) position in 'WI' securities, scrip wise, would attract a risk weight of 2.5%.
• On delivery, the underlying security may be classified in any of the three categories, viz; 'Held to Maturity', 'Available for Sale' or 'Held for Trading', depending upon the intent of holding, at the contracted price.