There are a handful of rules in Rapptr where the regulation requires a calculation which is a percentage of the total issued nominal capital (value) of an issuer’s securities, instead of a total quantity of shares (or equivalent shares) outstanding. The jurisdictions that require shareholding to be calculated as a percentage of this value are the Netherlands, Denmark, Egypt, Indonesia, the Czech Republic, and Bahrain.
While we are usually interested in counting a number of shares (or the equivalent amount of shares one is entitled to), in the total issued nominal capital rules, we are interested in finding out how much of a total currency value is held. In Rapptr, we use the property TotalIssuedNominalCapital to hold this value. It is essentially the nominal value of issued shares or the sum of their par values. In concept, this can be calculated by multiplying the par value (which is a stated value on the issued share certificate) of each class of stock by the total number of outstanding shares of that class and summing these values across all share classes.
To work out the percentage ownership of an issuer's total issued nominal capital, one's quantity of shares (or equivalent shares) must be multiplied by the par value of each share. Doing so means we arrive at the amount of issued capital held. This becomes our numerator. In Rapptr, ParValue is the property representing the amount stated on the certificate of each stock. Please note that we separate this from FaceValue (which is used for bonds only).
How does Rapptr handle rules which use TotalIssuedNominalCapital?
At FundApps, we've found that most players in the industry simply do not have a source for an issuer's total issued nominal capital. Those that have been able to find a data feed also report a high level of incorrect or outdated data.
Since the provision of this field was so rare among clients, some of the rules related to this data only run when TotalIssuedNominalCapital is provided in the positions file. This is the case due to the amount of missing data that was returned for clients who were not able to populate the field, despite the regulatory requirement. In addition, ParValue is often set a currency amount of 1, meaning other checks in a given country related to the number of total shares outstanding sufficed as a compliance check.
In certain countries, however (The Netherlands for example), we are able to supply official regulatory data (to be described below)!
The Global Company Database (GCD) is coming to a rule near you!
We are constantly expanding the capability of our Global Company Database (GCD) and have now reached another important milestone. Given that the official regulatory data is available from the Dutch regulator, the AFM, we will now automatically pull the current official values for TotalIssuedNominalCapital for issuers whose HomeMemberState are the Netherlands from the Global Company Database.
In the past, these values were pulled from our regulatory data page, viewable in Rapptr under the heading "Dutch Issuer Data" on the screen Main Menu -> Regulatory Data. However, this required you to include the exact name (as shown on the Dutch Issuer Data list) in the IssuerName field in your positions file.
Going forward we will automatically match the ISIN as provided in your positions file with the ISINs housed in the GCD to pull the TINC value for you. As long as there is a match, the value will be pulled into the rule calculation. 🎉
What happens if there is no ISIN match?
If we cannot match the ISIN of a Dutch issuer with the ISINs we are storing in the GCD, the system will fall back on the previous logic whereas we will match the issuer name in your XML positions file with the company name shown in the Dutch issuer data.
In this instance, Rapptr will search for a match between the “Company Name” string (in the regulatory data) and the IssuerName property in the XML file. If a match is achieved, the engine will auto-populate a property called LookedUpTotalIssuedNominalCapital and the official regulatory value will be used for the rule calculation.
However, the issuer name provided in your positions file needs to exactly match the name in the Dutch issuer data. As an example, Heineken NV needs to be Heineken N.V. since the punctuation has to be identical. Capitalisation on the other hand will not affect the match. If there is no match and you have not provided TotalIssuedNominalCapital in the XML file, a missing data warning will occur with the reason: "Assets in this group have missing data: TotalIssuedNominalCapital".
Note: It is also important to note that you will still need to supply each security’s ParValue (price or face value of an equity security when originally issued and bearing no relation to the market price). Although Rapptr cannot auto-match ParValue due to missing security identifiers from the regulator, this data is listed in the Regulatory Data screen under “Dutch Share Class Data.” Here the ParValue is listed under Nominal Value. The ParValue property must always be in the same currency as the TotalIssuedNominalCapital property, which - in the case of Dutch issuers - is EUR.