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Overview
Since the start of the 2008 financial crisis there has been speculation that some countries could abandon their currencies in favor of ones that provides more economic stability. This would lead all securities and positions that are currently established in the abandoned currency to be redenominated to the new or legacy currency.
The following outlines Eagle’s recommended approach for handling a currency redenomination. Testing has centered on the most likely targets, but each country’s unique conventions and regulations may necessitate gathering input from local authorities/sub-custodians and modifying the workflow. Please contact your Relationship Manager or Client Operations Manager with questions.
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Conversion Playbook
1. Identify Impacted Positions & Securities
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- V12 & Above: set up and run the Redenomination of Bonds corporate action
- Note: the Redenomination of Bonds functionality was backported to multiple prior versions, so please contact your Relationship Manager or Client Operations Manager to find out if it is available in your specific branch
- V11 & Below: deliver off Security A (denominated in abandoned currency) and receive on Security B (denominated in new or legacy currency)
- Similar to the equity process, the deliver and receive transactions will have to be run for each tax lot and entity or portfolio basis and the units/par value may need to be adjusted based on the conversion factor, if applicable
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Special Cases
These are situations that Eagle has already identified as needing local input. These must be addressed on a case-by-case basis in collaboration with local authorities/sub-custodians.
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