OVERVIEW
- When a merger or acquisition occurs, resulting in a stock swap, Spark should be updated using two separate transactions:
- And a “Long Out” Transaction to close position in the old security.
- A “Long In” transaction for the new security.
- The Long In will be used to record the acquisition of the new company’s shares and the Long Out will record the dissolution of the original company’s shares.
- While the quantity of shares may shift in this transaction, the net value of the Long In and Long Out should always be equal.
- This adjustment to Spark will avoid, or correct, recon discrepancies as it will update Spark to match the SOD report from the PB which will already have calculated the stock swap at the determined ratio.
ACCESSING LONG IN AND LONG OUT TRADE TICKETS
Open the Blotter and right click anywhere on the report. From the revealed menu, select “Transactions”. From transactions, an array of trade tickets will be made available.
- From this list of transaction types, you will be using:
- “Insert a Long Position/Cash…”
- “Remove a Long Position/Cash…”
LONG IN
1. For LI transaction, enter the Security ID for the shares you are receiving.
2. Use the broker designation “INTERNAL” and set Commission to 0.
3. Enter the number of shares being receive in the stock swap.
4. For the Trade Date, enter the Ex Date.
5. For the Settlement Date enter the Record Date.
SCENARIO 2 (BASIC STOCK SWAP) LONG OUT
1. For LO transaction, enter the Security ID for the shares you are closing.
2. Use the broker designation “INTERNAL” and set Commission to 0.
3. Enter the number of shares being receive in the stock swap.
4. For the Trade Date, enter the Ex Date.
5. For the Settlement Date enter the Record Date.
