1. User Guide
  2. Counterbalancing Strategies
  3. Counterbalancing Strategy Definition
  4. Counterbalancing Positions
  5. Sale of Marketable Assets

10.1.3.1 Sale of Marketable Assets

This counterbalancing position type allows you to sell a marketable instrument prior to its maturity. Sale of marketable assets generates new cash inflow in the sale bucket and reverses all original cash flows occurring between the sale bucket and maturity. Only unencumbered marketable assets (identified through encumbrance status and marketable asset indicator) are available for selection as a part of this counterbalancing strategy.

As part of this counterbalancing position, you are required to select a marketable instrument and provide the following sale parameters:
  • No. of Units / Percentage to be Sold: This is the number of units or percentage of the instrument that is to be sold. This value has to be within the sale limit, if any, specified for the asset.
  • Discount (in %): This is the discount applied to the asset value to determine the inflows on sale.
  • Revised Inflow Bucket: This is the sale bucket i.e. bucket where the cash inflows are generated due to the sale.
The cash flows on sale of marketable assets are calculated as follows:
  1. Original maturity bucket and maturity amount of the asset is identified.
  2. Cash inflows to be posted to the sale bucket are calculated as follows:
    cash inflow

  3. Original cash flows occurring from the sale bucket to the maturity bucket are reversed as follows:
    cash outflow

    Note:

    • The units or amount available for sale depends on the sale limit specified for each instrument. For instance, if the total units of Bond A held by the legal entity are 100 and a sale limit of 50% is specified, then, only 50 units of Bond A are allowed to be sold while counterbalancing.
    • If all the available units of an asset are sold then this asset will not appear in the Marketable Assets Browser for selection.
    • In case of partial sale, only the balance units or amount are available for further counterbalancing actions including sale and repo. If an instrument is sold partially, it is allowed to be selected again for the purpose of sale provided the sale parameters differ i.e. a different haircut or sale bucket.