When Issued (WI)

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When Issued (WI) Transactions

When issued (WI) transactions are conditional trades in securities that have been authorized or announced but not yet actually issued. They allow investors to buy or sell the right to receive a security before the official issuance and settlement occur. Common WI instruments include new Treasury issues, stock splits, spinoff shares, and newly issued stocks or bonds.

How WI Transactions Work

  • WI orders are conditional — they depend on the security being issued. If the offering is canceled or regulatory conditions aren’t met, WI trades may be voided.
  • Trades are typically placed before the official distribution date; settlement occurs only after the security is formally issued.
  • Underwriters or issuers often solicit orders in advance to gauge demand and help price the new issue.
  • The when-issued market provides an early price discovery mechanism and a preliminary indication of investor interest and liquidity.

Real-world example

A company plans to spin off its chemicals division and distribute shares of the new company to existing shareholders. After the record date, the right to receive those spinoff shares can be traded on a when-issued basis. Buyers of that right who still qualify on the distribution date receive the actual spinoff shares at issuance, at which point the WI market for that instrument ends.

Advantages

  • Early price discovery: WI trading reveals interest and likely demand for a new issue before formal issuance.
  • Improved liquidity: Investors can buy or sell positions prior to the official distribution, offering more flexibility.
  • Potential volatility dampening: Visible pre-issuance demand can reduce uncertainty and help stabilize prices at issuance.

Risks and limitations

  • Conditional nature: If the issue is canceled or blocked by regulators, WI trades may not settle.
  • Execution and settlement risk: Timing, broker rules, and settlement procedures may differ from regular trading.
  • Limited liquidity or price movement: WI markets can be thinner than on-exchange secondary markets, which can affect execution quality and spreads.
  • Market risk: Prices between WI trading and final issuance can change, producing gains or losses.

Practical considerations for investors

  • Confirm your broker’s rules for WI trading, margin requirements, and settlement procedures.
  • Treat WI prices as indicative — they reflect preliminary demand, not guaranteed final issuance prices.
  • Monitor announcements from the issuer or underwriters that could affect whether the issue proceeds.

Key takeaways

  • WI transactions let investors trade securities before formal issuance, offering early market signals and liquidity.
  • They are commonly used for Treasury issues, stock splits, spinoffs, and new equity or bond offerings.
  • While useful for price discovery, WI trades are conditional and carry cancellation, settlement, and liquidity risks.