Missing Data for Unlisted, Private or Suspended Securities

This article covers missing data for:

  • unlisted (instruments that are not listed on a market or OTC instruments where the underlying is not listed on a market), private (not traded or listed on a market), and
  • suspended securities (not currently trading on a market).

Shareholding disclosure obligations are generally concerned with monitoring a variant of an ownership percentage related to the voting rights or outstanding shares of a company. For many unlisted companies, the data required to calculate the relevant percentage isn't publicly available.

Where the data for core properties required by the rules engine (e.g. TotalSharesOutstanding, TotalVotingRights) is absent, meaningful results will not be returned in FundApps. Missing Data functionality will also likely report that you are missing a large number of properties, often dependent on whether these core properties can be obtained (which generally reflect if a company is publicly traded).

For many issuer-specific attributes, it is difficult to determine a reasonable default value for an override (e.g. TotalSharesOutstanding) which can be accurately used across a portfolio of unlisted securities where the data is unavailable.

As such, including the unlisted securities in the position file poses a challenge between needing to source issuer-specific attribute data (which is not easily available) and creating manual overrides with potentially implausible default values.



Primary Approach

In our view, until you are able to consistently source data or have a reasonable approach to determine plausible default values for attributes with missing data, we recommend that you do not include the unlisted securities in your positions file (unless you can at least obtain TotalSharesOutstanding and TotalVotingRights).


A note on depository receipts on unlisted, private, or suspended securities

We often experience clients holding depository receipts on securities where the data is difficult to source through the normal channels, for example, Alibaba or Weibo ADRs.

We'd like to address the ideal way to structure this scenario in your positions file.

Let's cover what we advise you NOT to do:

  1. Please do not provide the DR without any underlying equity instrument.
  2. Please do not insert the DR under the AssetClass: Equity. By doing this, your disclosure results will likely be incorrect due to how some jurisdictions select DRs (e.g. 13F) and due to how important the calculation of "equivalent shares" via a DR is.

In the positions file, a DR must have an underlying for the rules engine to work; DRs should be delivered under the AssetClass: ADR.

Our recommendation is to create a mock equity instrument as the underlying security and provide the required properties to the extent possible. Without the necessary properties, FundApps will not be able to produce meaningful results. We realize that in such cases, the properties that are required for this underlying mock equity may not be readily available - we suggest the following approaches (in this order):

  1. Research/source fields (such as TotalSharesOutstanding) for the private/unlisted underlying equity instrument, and update at a frequency you are comfortable with. This should especially be the preferred case if the DR has ConversionRatio which is not "1". Note that most active asset managers should be able to source this from the equity analyst, portfolio manager, or research team recommending the stock. This is particularly true for more fundamental active managers. For instrument properties like ISIN, do not use the ISIN of the DR (if it underlies a DR), or Convertible, but insert a dummy value i.e. ISIN="UnlistedShareClassIssuer1". Please note that the ISIN of the underlier is a big factor in SSR EU Equity rules. Therefore FIRDS will not be able to use this dummy ISIN to trigger any potential SSR EU Equity rules. 
  2. Set up the underlying equity instrument and populate any of it's properties which are of the Class "Issuer" (see the column "Class" in FundApps' Properties screen) with values from the DR, such as the TotalSharesOutstanding or TotalVotingRights that might be associated with the DR itself (Note that this would be the total number of DRs outstanding/issued, assuming there is only one line of DR setup for the underlying security. This figure might be difficult to obtain but is in theory available from the depository bank issuing the DRs). Warning: this may still lead to some inaccuracy in the result but is better than the last option. Be sure not to copy instrument properties like ISIN from the DR/convertible to the unlisted underlying.
  3. If you are unable to follow either of the above steps or unable to source the necessary properties, our recommendation is to not include the position.

Ultimately, what drives these recommendations is the fact that FundApps must work out where the ADR is disclosable, which requires properties at the equity level to calculate the equivalent shares you hold in the underlying equity.

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