Understand Mixed Cost Basis Rules

Mixed cost basis rules allow you to apply override values based on transaction criteria that includes processing security type (PST) group, processing security type, security type, cost basis rule type, and asset ID, as well as by using each of these criteria in combination with a specified entity.

When a trade is submitted, the system determines whether the accounting basis for that trade has a mixed cost basis rule assigned, and if so, determines whether the trade meets the criteria specified in the mixed cost basis rule details. If the system finds a match, it applies the rule's cost method, lot selection method, and lot selection rule values to the trade in place of the accounting basis level values. The system tries to match the trade to the most narrowly defined mixed cost basis rule details for the rule first, and then checks progressively broader mixed cost basis rule details, using the following hierarchy:

• Entity and Asset ID

• Entity ID and Cost Basis Rule Type

• Entity ID and Security Type

• Entity ID and Processing Security Type

• Entity ID and Processing Security Type Group

• Asset ID

• Cost Basis Rule Type

• Security Type

• Processing Security Type

• Processing Security Type Group

To set up mixed cost bases, you create a name for a mixed cost basis rule and then define mixed cost basis rule details for that rule. Each set of mixed cost basis rule details for a rule includes override values for the cost method, lot selection method, and lot selection rule, along with the criteria used to apply those override values to a transaction. You assign the mixed cost basis rule to each entity/accounting basis that uses that rule.