Back Matter

Back Matter

Author(s):
International Monetary Fund
Published Date:
January 1997
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    APPENDICES
    Appendix I. A Short Introduction to the Coordinated Portfolio Investment Survey1

    Background

    1. International flows in the form of portfolio investment—equities and debt securities—have increased significantly in the 1980s and 1990s. This has reflected the liberalization of financial markets, financial innovation, and the changing behavior of investors. Unfortunately, the statistics have failed to measure the full extent of such developments. This was highlighted by a study of an International Monetary Fund (IMF) working party which found that recorded portfolio liabilities far outweigh portfolio assets at the worldwide level (external assets should equal external liabilities if perfectly measured). External assets were understated by as much as US$400 billion even at the end of 1988, and judging from the available transactions data (see below), the understatement appears to have further increased in the 1990s:

    Global Portfolio Investment Net Transactions(in billions of U.S. dollars)
    1991199219931994
    Assets322.0352.1511.2307.0
    Liabilities429.7457.8728.1365.1
    Difference
    (Liabilities
    less assets)107.7105.7216.958.2
    Source: IMF Balance of Payments Statistics Yearbook, Volume 46, Part 2

    2. Concerned by such discrepancies, a group of senior statisticians established in October 1994 a Task Force under the auspices of the IMF to develop a survey of portfolio investment assets to be coordinated among countries. While some countries already conduct some form of survey to measure portfolio investment, there had not been a coordinated international approach. The proposed survey is to be coordinated both in timing and design. This will, in turn, facilitate cross-country comparisons, permit data exchanges, encourage standardization, and help spread best statistical practice among countries.

    Object

    3. The survey is to be conducted to obtain statistics on portfolio investment in nonresident securities—equities and long-term bonds and notes—with bilateral country detail, at the end of 1997. (If successful, it is possible that the coordinated survey could be repeated.)

    Purposes

    • To improve the statistics on the cross-border holdings of securities, as well as provide a check on the coverage of portfolio investment financial flows and associated investment income data.

    • To exchange comparable data among participating countries (respecting confidentiality constraints), in order to improve countries’ estimates of their external portfolio investment liabilities as well as associated financial flows and investment income data.

    Benefits

    4. In addition to improving statistics on portfolio investment, countries will also be able to improve their statistics on external portfolio liabilities through the data exchange—hence, the importance of coordinating the survey. Both types of investment (external assets and liabilities) have been increasingly the focus of attention of policymakers, market participants, and independent researchers because of the sheer increase in recent years.

    Appendix II. Model Form for a Mixed Custodian/End-Investor Security by Security Survey

    Survey of Portfolio Investment in Foreign Equities and Long-Term Debt Securities, December 31, 1997

    Purpose of Collection

    This survey collects information on investment by domestic residents in equity and long-term debt securities issued by unrelated nonresidents (foreign securities) as at December 31, 1997. The data from the survey will be used in the compilation of xxxxxxxx’s balance of payments and international investment position statistics. These statistics are published by xxxxxxx. The survey is being conducted in coordination with other countries to facilitate international data comparability.

    Collection Authority

    The information requested is collected under the authority of the Statistics Act of xxxxxxx.

    Confidentiality

    The completed forms will remain confidential to the xxxxxxxxx.

    What to Report

    The attached forms need to be completed in accordance with the reporting instructions provided. If there are any questions regarding these instructions, please contact a member of the survey staff at xxxx x-xxx-xxxx.

    When and Where to Report

    Please return the completed forms by March 31, 1998 to:

    [Address of compiler]

    Respondents unable to meet the reporting deadline should contact a member of the survey staff at xxx-xxx-xxx to request an extension.

    How to Report

    Data may be submitted on magnetic tapes or cartridges, diskettes (floppy disks), or paper forms. Data submitted on magnetic tapes or cartridges must be submitted in the format specified in appendix x.

    [Name of Statistical Agency and date]

    General Reporting Notes

    This survey collects information on investment by domestic residents in equity and long-term debt securities issued by unrelated nonresidents (foreign securities).

    1. Who must report

    Domestic custodians who manage the safekeeping of foreign securities on behalf of domestic residents, and/or on their own account, as of December 31, 1997. Domestic custodians are defined as entities located in the domestic economy who manage the safekeeping of securities for investors.

    Domestic residents who own foreign securities as of close of business on December 31, 1997 and do not entrust the safekeeping of these securities to domestic custodians. This includes both those who invest for their own account as well as those who invest on behalf of asset pools, such as the managers of mutual funds, insurance companies, and pension funds.

    All entities that receive a copy of the survey forms must respond. Firms that do not fall into either of the above two categories need only complete the identification information on form 1 and tick the box indicating that they are exempt from completing forms 2 and 3

    2. What must be reported

    All entities that receive a copy of the survey forms must complete the respondent identification section of form 1 and return a copy to the compiling agency within 30 days of receipt of the survey forms. Even if an entity anticipates that it will be exempt from completing forms 2 and 3, the respondent identification section of form 1 should be completed and returned to the address listed on the previous page.

    All entities that receive a copy of the survey forms must submit their survey responses by March 31, 1998 to xxxxxxx (the compiling agency), whose address is listed on the previous page. Respondents unable to meet the reporting schedule should contact a member of the survey staff at xxx-xxx-xxx to request an extension.

    Reporters can file one consolidated report for their entire organization, or different units of the organization may file independently. If two or more units are filing separately, please contact a member of the survey staff for additional identification numbers.

    All survey respondents must complete form 1. This form contains basic identifying information as well as summary information pertaining to data reported on other forms. Firms exempt from completing forms 2 and 3 need only complete form 1. See guidance notes on page 6 for completing form 1.

    Form 2 is used to report detailed information on holdings of securities issued by unrelated nonresidents. Such information must be provided by all domestic custodians who manage the safekeeping of foreign securities for domestic residents, including on own account, except on account of securities they entrust to other domestic custodians; and by all investors who do not entrust the safekeeping of foreign securities to domestic custodians. See guidance notes on pages 6 to 8 for completing form 2.

    Form 3 is used by investors who own securities issued by nonresidents and entrust such securities to domestic custodians; and by domestic custodians who have entrusted some or all of their custody securities to other domestic custodians. These holdings of foreign securities should not be reported in detail on form 2. Instead, only the total amounts entrusted to domestic custodians should be reported, along with the name and address of the domestic custodian. See guidance notes on page 8 for completing form 3.

    Some respondents will need to complete both form 2 and form 3.

    3. Residency

    A nonresident is any individual, enterprise, or other organization ordinarily domiciled in a country other than xxxxxx. Nonresident branches and subsidiaries of xxxxxx enterprises are regarded as nonresidents. A resident is any individual, enterprise, or other organization ordinarily domiciled in xxxxxx. Branches and subsidiaries of nonresident enterprises domiciled in xxxxxx are regarded as xxxxxx residents. Ordinarily domiciled is defined as the center of economic interest of the entity, for instance, for an enterprise, where it engages in production.

    In the report form, securities are to be attributed to the country of residence of the nonresident issuer of the securities. Country attribution should be based on where the entity is ordinarily domiciled. If there is doubt as to the issuers’ country of domicile, then, as a general rule, the country of residence of any enterprise can be taken as where it is legally incorporated, or in the absence of legal incorporation, where it is legally domiciled. Securities issued by international organizations (IO) are not to be allocated to the country in which the IO is located but rather to the separate IO category code (see end of annex A).

    4. Definition of equity and long-term debt securities

    A security is defined as an instrument that is traded or tradable. This survey covers investment by domestic residents in equity and long-term debt securities only.

    Equity securities cover all instruments and records acknowledging, after the claims of all creditors have been met, claims to the residual values of enterprises.

    Include:

    • ordinary shares;

    • stocks;

    • participating preference shares;

    • depositary receipts (e.g., American depositary receipts) denoting ownership of equity securities issued by nonresidents (see general notes point 8 ahead);

    • shares/units in mutual funds and investment trusts;

    • equity securities that have been sold under repurchase agreements; and

    • equity securities that have been lent under a securities lending arrangement (see general notes point 7).

    Exclude:

    • nonparticipating preference shares (but include these instruments under long-term debt);

    • rights, options, warrants, and other derivative instruments;

    • equity securities that have been bought under repurchase agreements; and

    • equity securities that have been acquired under a securities lending arrangement (see general notes point 7).

    Long-term debt securities cover bonds, debentures, notes, etc. that usually give the holder the unconditional right to a fixed money income or contractually determined variable money income, and have an original term to maturity of over one year.

    Include:

    • bonds such as treasury, zero coupon, stripped (see general notes point 9), deep discounted, currency linked (e.g., dual-currency), floating rate, equity-related (e.g., convertible bonds), Eurobonds;

    • asset-backed securities such as mortgage backed bonds, collateralized mortgage obligations (CMO);

    • index-linked securities (e.g., property index certificates);

    • nonparticipating preference shares;

    • floating rate notes (FRN) such as perpetual notes (PRN), variable rate notes (VRN), structured FRN, reverse FRN, collared FRN, step up recovery FRN (SURF), range/corridor/accrual notes;

    • Euro medium-term notes (EMTN);

    • schuldscheine (German) notes;

    • bonds with optional maturity dates, the latest of which is more than one year after issue;

    • debentures;

    • negotiable certificates of deposits with contractual maturity of more than one year;

    • other long-term securities;

    • bearer depositary receipts denoting ownership of debt securities issued by nonresidents (see general notes point 8);

    • debt securities that you have sold under repurchase agreements; and

    • debt securities that you have lent under a securities lending arrangement (see general notes point 7).

    Exclude:

    • derivative instruments;

    • loans;

    • trade credit and accounts receivable;

    • money market instruments (e.g., treasury notes, banker’s acceptances, certificates of deposit with contractual maturity of one year or less, note issuance facilities, revolving underwriting facilities, and promissory notes);

    • debt securities that you have bought under repurchase agreements; and

    • debt securities that you have acquired under a securities lending arrangement (see general notes point 7).

    5. Valuation

    Market value should be used to report all holdings of securities. Do not report the face value of the security as the market value.

    Equity securities should be reported at market prices converted to xxxxxx (domestic currency) using the exchange rate prevailing at the close of business on December 31, 1997.

    For enterprises listed on a stock exchange, the market value of your holding of their equity securities should be calculated using the market price prevailing on their main stock exchange at the close of business on December 31, 1997.

    For unlisted enterprises, if a market value is not available at the close of business on December 31, 1997, estimate the market value of your holding of equity securities by using one of the following methods:

    • a recent transaction price;

    • director’s valuation; or

    • net asset value. (Net asset value is equal to total assets, including intangibles, less nonequity liabilities and the paid up value of non-voting shares. Assets and liabilities should be recorded at current, rather than historical, value.).

    Debt securities should be recorded using one of the market valuation methods listed below in order of preference and converted to xxxxxx (domestic currency), using the exchange rate prevailing at the close of business on December 31, 1997:

    • a quoted traded market price at the close of business on December 31, 1997;

    • the net present value of the expected stream of future payments/receipts associated with the securities;

    • for unlisted securities, the price used to value securities for accounting or regulatory purposes, etc.; or

    • for deep discount or zero coupon securities, the issue price plus amortization of the discount.

    6. Exclusion of securities issued by related enterprises

    Securities issued by a nonresident enterprise that is related to the resident owner of those securities should be excluded in this report. Related nonresident enterprises are enterprises in which an enterprise group has an equity interest of 10 percent or more. Ownership is measured in terms of ordinary shares or voting stock of incorporated enterprises or equivalent beneficial interest in unincorporated enterprises. The only exception is if the nonresident entity who issued the security and the domestic resident owner of the security are affiliated financial intermediaries, for instance, banks. In these circumstances, debt securities that do not represent a permanent interest should be included in this report.

    7. Treatment of securities involved in repurchase and securities lending arrangements

    A repurchase agreement (repo) is an arrangement involving the sale of securities at a specified price with a commitment to repurchase the same or similar securities at a fixed price on a specified future date. A reverse repo is the same transaction seen from the other side, that is, an agreement whereby a security is purchased at a specified price with a commitment to resell the same or similar securities at a fixed price on a specified future date. Securities (or stock) lending is an arrangement whereby the ownership of a security is transferred in return for collateral, usually another security, under the condition that the security or similar securities will revert to its original owner at a specified future date.

    • Securities acquired under repurchase or securities lending arrangements are to be excluded from the report form;

    • securities sold under repurchase or securities lending arrangements are to be included in the report form;

    • securities acquired under repurchase or securities lending arrangements and subsequently sold to a third party should be reported as a negative holding, namely, a short position (see form 2, item 10); and

    • all valuations of securities under repurchase or securities lending arrangements should be at market value as at the close of business on December 31, 1997.

    8. Treatment of depositary receipts

    Depositary receipts, which denote ownership of equity or debt securities issued by nonresidents, for instance, American depositary receipts (ADR) or bearer depositary receipts (BDR), should be attributed to the country of residence of the issuer of the security underlying the depositary receipt. Financial intermediaries should not report holdings of any securities against which depositary receipts have been issued and sold; but if a depositary receipt has been issued before the financial institution arranging the issue has acquired the underlying securities, then that financial institution should report a negative holding in the underlying security (see form 2, item 10).

    9. Treatment of stripped securities

    Stripped securities (strips) are securities that have been transformed from a principal amount with periodic interest coupons into a series of zero coupon securities, with the range of maturities matching the coupon payment dates and the redemption date of the principal amount. If strips remain the direct obligation of the original issuer, then the residency of the issuer of the strips remains the same as for the original security. Dealers who request that a settlement or clearing house create strips from an existing security issued by a nonresident should not report ownership of the underlying security once the strips have been created. On the other hand, if strips have been created and issued by an entity in its own name, then the residency of the issuer of the strips is that of the entity that issued the strips. In turn, such an issuer of strips should report its ownership of the underlying securities if they were issued by a nonresident. Strips with an original maturity of less than one year are classified as money market instruments and thus, if identifiable, should not be reported.

    If there are any questions regarding these instructions, please contact a member of the survey staff at xxxx x-xxx-xxxx.

    Form 1 Instructions

    This form must be completed by all organizations that receive these survey forms. This form is used to:

    • provide basic identifying information;

    • provide summaries of data reported on form 2 and form 3; and

    • claim an exemption.

    Advice on selected items:

    Item 1: Identification Number—Enter the 7—digit identification number from the top right-hand corner of the address label to these survey forms. If your number is unknown, please contact a member of the survey staff at xxx-xxx-xxxx.

    Item 7: Reporting Status—Mark “Exempt” if your firm is exempt from reporting forms 2 and 3 of the survey. Mark “form 2” if your enterprise is completing form 2 reports. Mark “form 3” if your enterprise is completing form 3 reports. Mark both “form 2” and “form 3” if your firm is completing both types of forms.

    Note: Organizations claiming an exemption should go to form 1, item 15.

    Item 9: Number of Form 2 Records Reported—Enter the total number of form 2 records submitted with your report, whether they are submitted on paper, tape, or diskette.

    Item 10: Number of Form 3 Records Reported—Enter the total number of form 3 records submitted.

    Item 11: Total Domestic Currency Value of All Priced Equities—For all equity securities (form 2, item 7 = 1) for which prices are known, enter the total domestic currency value (form 2, item 10) of all such records.

    Item 12: Total Domestic Currency Value of All Priced Long-Term Debt Securities—For all long-term debt securities (form 2, item 7 = 2) for which prices are known, enter the total domestic currency value (form 2, item 10) of all such records.

    Item 13: Total Number of Shares of Unpriced Equity—For all equity securities (form 2, item 7 = 1) for which prices are unknown, enter the total number of shares (form 2, item 12) of all such records.

    Item 14: Total Face Value of All Unpriced Long-Term Debt Securities—For all long-term securities (form 2, item 7 = 2) for which prices are unknown, enter the total face value (form 2, item 12) of all such records.

    Form 2 Instructions

    This form should be used by all domestic custodians to report their custody holdings for domestic clients of securities issued by nonresidents (if these securities have not in turn been entrusted to other domestic custodians), and by all domestic investors who own such securities but who have not entrusted the safekeeping of these securities to domestic custodians. Securities issued by entities related to the investor should not be reported (see general note 6 for more information on securities issued by related enterprises).

    Domestic custodians who entrust their holdings of foreign securities to other domestic custodians should report these holdings on form 3, not on form 2. Only the custodian who actually arranges for the safekeeping of securities abroad (either directly or through a foreign local subcustodian) should report its holdings on form 2.

    However, securities entrusted by custodians directly to central securities depositories, such as Depository Trust Company, Euroclear, and Cedel, should be reported on form 2 by the custodian who entrusted the securities to the central depository.

    Form 2 contains the following items:

    Item 1: Identification Number—Enter the 7—digit identification number from form 1, item 1.

    Item 2: Sequence Number—Starting at 1, sequentially number each record. The last record should have the same sequence number as the total number of records reported on form 1, item 9.

    Item 3: Security Identification Code—Enter the security identification code used to identify this record. Use either an ISIN code or a code issued by a national or international numbering agency, such as a SEDOL, CUSIP, or common code. Do not use internally-created codes unless this security has not been assigned a code by any recognized numbering agency.

    Item 4: Security Identification Coding System—From annex B, select the 2—digit code that corresponds to the security identification coding system which allocated the code reported in item 3.

    Item 5: Name of Other ID Coding System—If the security identification code entered in item 3 above was issued by a security identification coding system not listed in annex B, enter the name of that organization or system here.

    Item 6: Ownership Code—Indicate whether the security is held on own account or on behalf of a client.

    Item 7: Security Type—Indicate whether the security is equity or debt.

    Item 8: Name of Issuer—Enter the name of the organization that issued this security.

    Item 9: Security Description—Provide pertinent descriptive information.

    Item 10: Domestic Currency (d.c.) Value of Security Held—Enter the total domestic currency value (price times quantity) of your holdings of this security. If reporting a negative position in the security, enter “S” in the first separate box (see also general reporting notes points 7 and 8).

    For equity securities (form 2, item 7 = 1), enter the domestic currency price equivalent (form 2, item 11) of this security multiplied by the number of shares held (form 2, item 12).

    For debt securities (form 2, item 7 = 2), enter the product of the price (form 2, item 11) of this security multiplied by the face value (form 2, item 12) in the currency of denomination multiplied by the exchange rate (form 2, item 14).

    Item 11: Market Price—See general note 5 for further information on market prices.

    For equity securities, enter your best estimate of the price per share in domestic currency.

    For debt securities, enter the price as a percentage of the security’s original face value. Thus, if a security is trading at 90 percent of its original value, enter 900 in this field. In the case of zero-coupon or deep-discount issues, which trade when issued at a small percentage of their face value at maturity, enter the percentage of their face value at maturity that they are worth as of December 31, 1997. Thus, if a zero coupon bond was originally issued at a value equal to 17 percent of its face value at maturity, and has by December 31, 1997 appreciated to 43 percent of its face value at maturity, enter 430 in this field.

    Note: Custodians must provide prices for securities in a manner consistent with their normal business practices for providing prices to their customers. Thus, if a firm typically provides prices to its customers for all securities for which prices are commercially available, the same practice should be followed when reporting on the survey.

    Item 12: Face Value or Number of Shares Held—For equity securities, enter the number of shares held, rounded to the nearest share. For debt securities, enter the face value held in the currency of denomination. For asset-backed securities, for which principal is repaid over time, enter the remaining, unrepaid, face value of principal outstanding for this security as of close of business on December 31, 1997.

    Item 13: Original Face Value for Asset-Backed Securities Only—Pertaining to the amount entered in item 12 above, enter the original face value of principal that would have been outstanding if no principal had been repaid.

    For example, if $1,000,000 of an asset-backed security was bought at date of issue, and 30 percent of the principal of this security has been repaid as of close of business on December 31, 1997, $700,000 should be entered in item 12, and $1,000,000 should be entered in item 13. The ratio between the amounts entered in item 12 and item 13 (700,000/1,000,000 = .700) should equal the “factor value” for this security.

    Item 14: Exchange Rate Used—Enter the exchange rate used to convert the currency of denomination into domestic currency. This rate should be that prevailing at the close of business on December 31, 1997 and should be expressed as the domestic currency value of one unit of the currency of denomination.

    Item 15: Currency of Denomination—Enter the 3—digit code corresponding to the currency used in item 14 from the list provided in annex C. If the currency used in item 14 is not listed in annex C, please contact a member of the survey staff at xxxx x-xxx-xxxx.

    Item 16: Amount on Loan—Of the total amount held of this security as reported in item 12, how much of this position was on loan as of December 31, 1997.

    Item 17: Country of Issuer of Security—Enter the 2-digit country code from the list provided in annex A that corresponds to the country of domicile of the entity that issued the security.

    Form 3 Instructions

    This form should be used by all investors who own securities issued by unrelated nonresidents and who entrust their safekeeping to domestic custodians, and by domestic custodians who have entrusted the safekeeping of such securities entrusted to them to other domestic custodians. See general note 6 for more information on securities issued by related enterprises.

    On this form, indicate the name and address of the domestic custodian to whom the foreign securities have been entrusted, as well as the total estimated market value of these securities as of December 31, 1997.

    Advice on selected items:

    In item 1, starting at 1, sequentially number each record. The last record should have the same sequence number as the total number of records reported on form 1, item 10.

    In item 7 (total domestic currency market value of nonresident securities entrusted to the named custodian), enter the total estimated market value of securities entrusted to the named custodian as of close of business on December 31, 1997 in domestic currency.

    If there are any questions regarding these instructions, please contact a member of the survey staff at xxxx x-xxx-xxxx.

    SURVEY OF PORTFOLIO INVESTMENT – DECEMBER 31, 1997

    FORM 1

    SURVEY OF PORTFOLIO INVESTMENT - DECEMBER 31, 1997

    SURVEY OF PORTFOLIO INVESTMENT – DECEMBER 31, 1997

    ANNEX A COUNTRY CODES
    Afghanistan, Islamic State ofAF
    AlbaniaAL
    AlgeriaDZ
    AndorraAD
    AngolaAO
    AnguillaAI
    Antigua and BarbudaAG
    ArgentinaAR
    ArmeniaAM
    ArubaAW
    AustraliaAU
    AustriaAT
    AzerbaijanAZ
    Bahamas, TheBS
    BahrainBH
    BangladeshBD
    BarbadosBB
    BelarusBY
    BelgiumBE
    BelizeBZ
    BeninBJ
    BermudaBM
    BhutanBT
    BoliviaBO
    Bosnia and HerzegovinaBA
    BotswanaBW
    BrazilBR
    British Virgin IslandsVG
    Brunei DarussalamBN
    BulgariaBG
    Burkina FasoBF
    BurundiBI
    CambodiaKH
    CameroonCM
    CanadaCA
    Cape VerdeCV
    Cayman IslandsKY
    Central African RepublicCF
    ChadTD
    ChileCL
    ChinaCN
    ColombiaCO
    ComorosKM
    CongoCG
    Cook IslandsCK
    Costa RicaCR
    Côte d’IvoireCI
    CroatiaHR
    CubaCU
    CyprusCY
    Czech RepublicCZ
    DenmarkDK
    DjiboutiDJ
    DominicaDM
    Dominican RepublicDO
    EcuadorEC
    EgyptEG
    El SalvadorSV
    Equatorial GuineaGQ
    EritreaER
    EstoniaEE
    EthiopiaET
    Faeroe IslandsFO
    Falkland IslandsFK
    FijiFJ
    FinlandFI
    FranceFR
    French GuianaGF
    French PolynesiaPF
    GabonGA
    Gambia, TheGM
    GeorgiaGE
    GermanyDE
    GhanaGH
    GibraltarGI
    GreeceGR
    GreenlandGL
    GrenadaGD
    GuadeloupeGP
    GuamGU
    GuatemalaGT
    GuineaGN
    Guinea-BissauGW
    GuyanaGY
    HaitiHT
    HondurasHN
    Hong KongHK
    HungaryHU
    IcelandIS
    IndiaIN
    IndonesiaID
    Iran, Islamic Republic ofIR
    IraqIQ
    IrelandIE
    IsraelIL
    ItalyIT
    JamaicaJM
    JapanJP
    JordanJO
    KazakstanKZ
    KenyaKE
    KiribatiKI
    Korea, Democratic People’s Republic of (North)KP
    Korea, Republic of (South)KR
    KuwaitKW
    Kyrgyz RepublicKG
    Lao People’s Democratic Rep.LA
    LatviaLV
    LebanonLB
    LesothoLS
    LiberiaLR
    Libya, S.P.A.J.LY
    LiechtensteinLI
    LithuaniaLT
    LuxembourgLU
    MacaoMO
    Macedonia, FYR ofMK
    MadagascarMG
    MalawiMW
    MalaysiaMY
    MaldivesMV
    MaliML
    MaltaMT
    Marshall IslandsMH
    MartiniqueMQ
    MauritaniaMR
    MauritiusMU
    MexicoMX
    Micronesia, Fed. StatesFM
    MoldovaMD
    MonacoMC
    MongoliaMN
    MontserratMS
    MoroccoMA
    MozambiqueMZ
    MyanmarMM
    NamibiaNA
    NauruNR
    NepalNP
    NetherlandsNL
    Netherlands AntillesAN
    New CaledoniaNC
    New ZealandNZ
    NicaraguaNI
    NigerNE
    NigeriaNG
    Niue IslandNU
    Northern Mariana IslandsMP
    NorwayNO
    OmanOM
    PakistanPK
    PalauPW
    PanamaPA
    Papua New GuineaPG
    ParaguayPY
    PeruPE
    PhilippinesPH
    PitcairnPN
    PolandPL
    PortugalPT
    Portugal TimorTP
    Puerto RicoPR
    QatarQA
    RéunionRE
    RomaniaRO
    Russian FederationRU
    RwandaRW
    Saint HelenaSH
    Saint Kitts and NevisKN
    Saint LuciaLC
    Saint Pierre and MiquelonPM
    Saint Vincent and the GrenadinesVC
    San MarinoSM
    São Tomé and PríncipeST
    Saudi ArabiaSA
    SenegalSN
    Yugoslavia, Fed. Rep. of (Serbia/Montenegro)YU
    SeychellesSC
    Sierra LeoneSL
    SingaporeSG
    Slovak RepublicSK
    SloveniaSI
    Solomon IslandsSB
    SomaliaSO
    South AfricaZA
    SpainES
    Spanish SaharaEH
    Sri LankaLK
    SudanSD
    SurinameSR
    SwazilandSZ
    SwedenSE
    SwitzerlandCH
    Syrian Arab RepublicSY
    Taiwan Province of ChinaTW
    TajikistanTJ
    TanzaniaTZ
    ThailandTH
    TogoTG
    Tokelau IslandsTK
    TongaTO
    Trinidad and TobagoTT
    TunisiaTN
    TurkeyTR
    TurkmenistanTM
    Turks and Caicos IslandsTC
    TuvaluTV
    UgandaUG
    UkraineUA
    United Arab EmiratesAE
    United KingdomGB
    United StatesUS
    United States Pacific IslandsUM
    United States Virgin IslandsVI
    UruguayUY
    UzbekistanUZ
    VanuatuVU
    Vatican City StateVA
    VenezuelaVE
    VietnamVN
    Wallis and Futuna IslandsWF
    West Bank/Gaza StripWG
    Western SamoaWS
    Yemen, Republic ofYE
    ZaïreZR
    ZambiaZM
    ZimbabweZW
    International OrganizationsXX
    ANNEX B SECURITY IDENTIFICATION CODING SYSTEMS
    SYSTEM

    CODE
    ISSUING

    COUNTRY/AGENCY
    SECURITY IDENTIFICATION CODING SYSTEM
    01Association of NationalISIN (International Security Identification Number)
    Numbering Agencies (ANNA)
    02CedelCedel Code
    03EuroclearEuroclear Code
    04Euroclear/CedelCommon Code
    05AustraliaASX Security Code (Australian Stock Exchange)
    06AustriaWPK Nummer (Wertpapierkenn-Nummer)
    07BelgiumSVM Code (Secrétariat des Valeurs Mobilieres)
    08BrazilNational Stock Exchange Association (Comissao Nacional de Bolsas de Valores)
    09BrazilRio de Janeiro Stock Exchange
    10BrazilSao Paulo Stock Exchange
    11DenmarkFondskode
    12FranceSICOVAM (Société Interprofessionnelle pour la Compensation des Valeurs Mobilières)
    13GermanyWKN (Wertpapierkenn-Nummer)
    14Hong KongStock Exchange of Hong Kong Code
    15ItalyUIC (Ufficio Italiano dei Cambi)
    16ItalyABI Code (Codice Associazione Bancaria Italiana)
    17JapanSICC Code (Securities Identification Code Conference)
    18JapanTSE Code (Tokyo Stock Exchange Code) (Toushou Code)
    19KoreaClearing Code (Korean Stock Exchange)
    20MexicoMexican Stock Exchange Code (Clave de pizarra de la Bolsa Mexicana de Valores)
    21NetherlandsClearingcode (Amsterdam Stock Exchange)
    22New ZealandNew Zealand Stock Exchange Code
    23NorwayModified ISIN (Verdipapirsentralen) (VPS)
    24PortugalLisbon Stock Exchange Code
    25PortugalOporto Stock Exchange Code
    26South AfricaClearing House Code Johannesburg Stock Exchange)
    27SpainCNMV Code (Comisóon Nacional del Mercado de Valores)
    28SwedenVPC Number
    29SwitzerlandVALOR (Valorennummer)
    30ThailandStock Exchange of Thailand
    31United KingdomSEDOL (Stock Exchange Daily Official List)
    32United StatesCUSIP Number (for North American Securities)
    33United StatesCINS (CUSIP International Number System: for Non-North
    American Securities)
    ANNEX C CURRENCY CODES
    COUNTRYCURRENCYCURRENCY

    CODE
    Afghanistan, Islamic State ofAfghaniAFA
    AlbaniaLekALL
    AlgeriaAlgerian dinarDZD
    AngolaKwanzaAOK
    ArgentinaPesoARS
    ArmeniaDramAMD
    ArubaAruban florinAWG
    AustraliaAustralian dollarAUD
    AustriaSchillingATS
    AzerbaijanManatAZM
    Bahamas, TheBahamas dollarBSD
    BahrainBahraini dinarBHD
    BangladeshTakaBDT
    Bank of Central African StatesCFA franc BEACXAF
    BarbadosBarbados dollarBBD
    BelgiumBelgium francBEF
    BelizeBelize dollarBZD
    BermudaBermuda dollarBMD
    BhutanNgultrumBTN
    BoliviaBolivianoBOB
    BotswanaPulaBWP
    BrazilRealBRE
    Brunei DarussalamBrunei dollarBND
    BulgariaLevBGL
    BurundiBurundi francBIF
    CambodiaRielKHR
    CanadaCanadian dollarCAD
    Cape VerdeCape Verde escudoCVE
    Cayman IslandsCayman Islands dollarKYD
    Central Bank of West African StatesCFA franc BCEAOXOF
    ChileChilean pesoCLP
    ChinaYuanCNY
    ColombiaColombian pesoCOP
    ComorosComoros francKMF
    Costa RicaCosta Rican colonCRC
    CroatiaKunaHRK
    CubaCuban pesoCUP
    CyprusCyprus poundCYP
    Czech RepublicCzech korunaC2K
    DenmarkDanish kroneDKK
    DjiboutiDjibouti francDJF
    Dominican RepublicDominican pesoDOP
    East CaribbeanEast Caribbean dollarXCD
    EcuadorSucreECS
    EgyptEgyptian poundEGP
    El SalvadorEl Salvador colonSVC
    EstoniaEstonia kroonEEK
    EthiopiaEthiopian birrETB
    European UnionEcuXEU
    Falkland IslandsFalkland Islands poundFKP
    FijiFiji dollarFJD
    FinlandMarkkaFJM
    FranceFrench francFRF
    Gambia, TheDalasiGMD
    GermanyDeutsche markDEM
    GhanaCediGHC
    GibraltarGibraltar poundGIP
    GreeceDrachmaGDA
    GuatemalaQuetzalGTQ
    GuineaGuinea francGNF
    Guinea-BissauGuinea-Bissau pesoGWP
    GuyanaGuyana dollarGYD
    HaitiGourdeHTG
    HondurasLempiraHNL
    Hong KongHong Kong dollarHKD
    HungaryForintHUF
    IcelandIceland kronaISK
    IndiaIndian rupeeINR
    IndonesiaRupiahIDR
    Iran, Islamic Republic ofIranian rialIRR
    IraqIraqi dinarIQD
    IrelandIrish poundIEP
    IsraelNew sheqelILS
    ItalyItalian liraITL
    JamaicaJamaican dollarJMD
    JapanYenJPY
    JordanJordanian dinarJOD
    KazakstanTengeKZT
    KenyaKenyan shillingKES
    Korea, Democratic People’s Republic of (North)WonKPW
    Korea, Republic of (South)WonKRW
    KuwaitKuwaiti dinarKWD
    Lao People’s Democratic Rep.KipLAK
    LatviaLatsLVL
    LebanonLebanese poundLBP
    LesothoLotiLSM
    LiberiaLiberian dollarLRD
    Libya, S.P.A.J.Libyan dinarLYD
    LithuaniaLitasLTL
    LuxembourgLuxembourg francLUF
    MacaoPatacaMOP
    Macedonia, FYR ofDenarMKD
    MadagascarMalagasy francMGF
    MalawiKwachaMWK
    MalaysiaMalaysian ringgitMYR
    MaldivesRufiyaaMVR
    MaltaMaltese liraMTL
    MauritaniaOuguiyaMRO
    MauritiusMauritius rupeeMUR
    MexicoMexican pesoMXN
    MoldovaLeuMDL
    MongoliaTugrikMNT
    MoroccoMoroccan dirhamMAD
    MozambiqueMeticalMZM
    MyanmarKyatMMK
    NepalNepalese rupeeNPR
    NetherlandsNetherlands guilderNLG
    Netherlands AntillesNetherlands Antilles guilderANG
    New ZealandNew Zealand dollarNZD
    NicaraguaCordobaNIC
    NigeriaNairaNGN
    NorwayNorwegian kroneNOK
    OmanRial OmaniOMR
    PakistanPakistani rupeePKR
    PanamaBalboaPAB
    Papua New GuineaKinaPGK
    ParaguayGuaraniPYG
    PeruNew solPEN
    PhilippinesPhilippines pesoPHP
    PolandZlotyPLZ
    PortugalPortuguese escudoPTE
    QatarRiyalQAR
    RomaniaLeuROL
    Russian FederationRubleRUR
    RwandaRwanda francRWF
    St. HelenaSt. Helena poundSHP
    São Tomé & PríncipeDobraSTD
    Saudi ArabiaSaudi Arabia riyalSAR
    Yugoslavia, Fed. Rep. of (Serbia/Montenegro)New Yugoslavian dinarYUD
    SeychellesSeychelles rupeeSCR
    Sierra LeoneLeoneSLL
    SingaporeSingapore dollarSGD
    Slovak RepublicSlovak korunaSKK
    SloveniaTolarSIT
    Solomon IslandsSolomon Islands dollarSBD
    SomaliaSomali shillingSOS
    South AfricaRandZAR
    SpainSpanish pesetaESP
    Sri LankaSri Lanka rupeeLKR
    SudanDinarSDD
    SurinameSuriname guilderSRG
    SwazilandLilangeniSZL
    SwedenSwedish kronaSEK
    SwitzerlandSwiss francCHF
    Syrian Arab RepublicSyrian poundSYP
    Taiwan Province of ChinaNew Taiwan dollarTWD
    TanzaniaTanzanian shillingTZS
    ThailandBahtTHB
    TongaPa’angaTOP
    Trinidad and TobagoTrinidad and Tobago dollarTTD
    TunisiaTunisian dinarTND
    TurkeyTurkish liraTRL
    UgandaUganda shillingUGS
    UkraineKarbovanetsUAK
    United Arab EmiratesDirhamAED
    United KingdomPound sterlingGBP
    United StatesUnited States dollarUSD
    UruguayPeso UruguayoUYU
    VanuatuVatuVUV
    VenezuelaBolivarVEB
    VietnamDongVND
    Western SamoaTalaWST
    Yemen, Republic ofYemeni rialYER
    ZaïreNew zaiïreZRZ
    ZambiaKwachaZMK
    ZimbabweZimbabwean dollarZWD
    Appendix III. Model Form for a Mixed Custodian/End-Investor Survey on an Aggregate Basis

    Survey of Portfolio Investment in Foreign Equities and Long-Term Debt Securities, December 31, 1997

    Purpose of Collection

    This survey collects information on investment by domestic residents in equity and long-term debt securities issued by unrelated nonresidents (foreign securities) as at December 31, 1997. The data from the survey will be used in the compilation of xxxxxxxx’s balance of payments and international investment position statistics. These statistics are published by xxxxxxx. The survey is being conducted in coordination with other countries to facilitate international data comparability.

    Collection Authority

    The information requested is collected under the authority of the Statistics Act of xxxxxxx.

    Confidentiality

    The completed forms will remain confidential to the xxxxxxxxx.

    What to Report

    The attached forms need to be completed in accordance with the reporting instructions provided. If there are any questions regarding these instructions, please contact a member of the survey staff at xxxx x-xxx-xxxx.

    When and Where to Report

    Please return the completed forms by March 31, 1998 to:

    [Address of compiler]

    Respondents unable to meet the reporting deadline should contact a member of the survey staff at xxx-xxx-xxx to request an extension.

    How to Report

    Data may be submitted on magnetic tapes or cartridges, diskettes (floppy disks), or paper forms. Data submitted on magnetic tapes or cartridges must be submitted in the format specified in appendix x.

    [Name of Statistical Agency and date]

    General Reporting Notes

    This survey collects information on investment by domestic residents in equity and long-term debt securities issued by unrelated nonresidents (foreign securities).

    1. Who must report

    Domestic custodians who manage the safekeeping of foreign securities entrusted directly to them by domestic residents, and/or on their own account, as of December 31, 1997. Domestic custodians are defined as entities located in the domestic economy who manage the safekeeping of securities for investors.

    Domestic residents who own foreign securities as of close of business on December 31, 1997 and do not entrust the safekeeping of these securities to domestic custodians.

    All entities that receive a copy of the survey forms must respond. Entities that do not fall under either of the above two categories should complete the respondent identification section of form 1 and indicate that they are exempt from reporting.

    2. What must be reported

    All entities that receive a copy of the survey forms must complete the respondent identification section of form 1 and return a copy to the compiling agency within 30 days of receipt of the survey forms.

    All entities that receive a copy of the survey forms must submit their survey responses by March 31, 1998 to xxxxxxx (the compiling agency), whose address is listed in the key information section of form 1. Respondents unable to meet the reporting schedule should contact a member of the survey staff at xxx-xxx-xxx to request an extension.

    Reporters can file one consolidated report for their entire organization, or different units of the organization may file independently. If two or more units are filing separately, please contact a member of the survey staff for additional identification numbers.

    Domestic custodians are required to complete report forms 2a and 2b in respect of their own account holdings of equity and long-term debt securities issued by nonresidents, as at end of business on December 31, 1997; and also in respect of holdings of equity and long-term debt securities issued by nonresidents that domestic noncustodian residents (e.g., financial investors or private households) have entrusted directly to them, as at close of business on December 31, 1997. See guidance notes to completing forms 2a and 2b on pages 5 and 6. Securities issued by entities related to the investor should not be reported (see general note 6 ahead for more information on securities issued by related enterprises).

    Domestic custodians should not report holdings of foreign securities held on behalf of another domestic custodian nor foreign securities entrusted by a domestic resident to a nonresident affiliate of the reporting custodian.

    Domestic residents must report investments held as of December 31, 1997 in equity and long-term debt securities issued by unrelated nonresidents which have not been entrusted to domestic custodians.

    3. Residency

    A nonresident is any individual, enterprise, or other organization ordinarily domiciled in a country other than xxxxxx. Nonresident branches and subsidiaries of xxxxxx enterprises are regarded as nonresidents. A resident is any individual, enterprise, or other organization ordinarily domiciled in xxxxxx. Branches and subsidiaries of nonresident enterprises domiciled in xxxxxx are regarded as xxxxxx residents. Ordinarily domiciled is defined as the center of economic interest of the entity, for instance, for an enterprise, where it engages in production.

    In the report form, securities are to be attributed to the country of residence of the nonresident issuer of the securities. Country attribution should be based on where the entity is ordinarily domiciled. If there is doubt as to the issuers’ country of domicile, then, as a general rule, the country of residence of any enterprise can be taken as where it is legally incorporated, or in the absence of legal incorporation, where it is legally domiciled. Securities issued by international organizations (IO) are not to be allocated to the country in which the IO is located but rather to the separate IO category specified at the end of forms 2a and 2b.

    4. Definition of equity and long-term debt securities

    A security is defined as an instrument that is traded or tradable. This survey covers investment by domestic residents in equity and long-term debt securities only.

    • For the definition of equity securities, see note 1 in Notes to Form 2a (page 5); and

    • for the definition of long-term debt securities, see note 1 in Notes to Form 2b (page 6).

    5. Valuation

    Market value should be used to report all holdings of securities. Do not report the face value of the security as the market value.

    • For market valuation of equity securities, see note 2 in Notes to Form 2a (page 5); and

    • for market valuation of long-term debt securities, see note 2 in Notes to Form 2b (page 6).

    6. Exclusion of securities issued by related enterprises

    Securities issued by a nonresident enterprise that is related to the resident owner of those securities should be excluded from this report. Related nonresident enterprises are enterprises in which an enterprise group has an equity interest of 10 percent or more. Ownership is measured in terms of ordinary shares or voting stock of incorporated enterprises or equivalent beneficial interest in unincorporated enterprises. The only exception is if the nonresident entity who issued the security and the domestic resident owner of the security are affiliated financial intermediaries, for instance, banks. In these circumstances, debt securities that do not represent a permanent interest should be included in this report.

    7. Treatment of securities involved in repurchase and securities lending arrangements

    A repurchase agreement (repo) is an arrangement involving the sale of securities at a specified price with a commitment to repurchase the same or similar securities at a fixed price on a specified future date. A reverse repo is the same transaction seen from the other side, that is, an agreement whereby a security is purchased at a specified price with a commitment to resell the same or similar securities at a fixed price on a specified future date. Securities (or stock) lending is an arrangement whereby the ownership of a security is transferred in return for collateral, usually another security, under the condition that the security or similar securities will revert to its original owner at a specified future date.

    • Securities acquired under repurchase or securities lending arrangements are to be excluded from the report form;

    • securities sold under repurchase or securities lending arrangements are to be included in the report form;

    • securities acquired under repurchase or securities lending arrangements and subsequently sold to a third party should be reported as a negative holding, namely, a short position; and

    • all valuations of securities under repurchase or securities lending arrangements should be at market value as at the close of business on December 31, 1997.

    8. Treatment of depositary receipts

    Depositary receipts, which denote ownership of equity or debt securities issued by nonresidents, for instance, American depositary receipts (ADR) or bearer depositary receipts (BDR), should be attributed to the country of residence of the issuer of the security underlying the depositary receipt. Financial intermediaries should not report holdings of any securities against which depositary receipts have been issued and sold; but if a depositary receipt has been issued before the financial institution arranging the issue has acquired the underlying securities, then that financial institution should report a negative holding in the underlying security.

    9. Treatment of stripped securities

    Stripped securities (strips) are securities that have been transformed from a principal amount with periodic interest coupons into a series of zero coupon securities, with the range of maturities matching the coupon payment dates and the redemption date of the principal amount. If strips remain the direct obligation of the original issuer, then the residency of the issuer of the strips remains the same as for the original security. Dealers who request that a settlement or clearing house create strips from an existing security issued by a nonresident should not report ownership of the underlying security once the strips have been created. On the other hand, if strips have been created and issued by an entity in its own name, then the residency of the issuer of the strips is that of the entity that has issued the strips. In turn, such an issuer of strips should report its ownership of the underlying securities if they were issued by a nonresident. Strips with an original maturity of less than one year are classified as money market instruments and thus, if identifiable, should not be reported.

    If there are any questions regarding these instructions, please contact a member of the survey staff at xxxx x-xxx-xxxx.

    Notes to Form 1

    This form must be completed by all organizations that receive these survey forms. This form is used to provide basic identifying information. In item 1—Identification Number—please enter the 7–digit identification number from the top right-hand corner of the address label to these survey forms. If your number is unknown, please contact a member of the survey staff at xxx-xxx-xxxx. Please include the identification number on every page reported to the compiler.

    Notes to Form 2a: Equity Securities

    1. Definition of equity securities

    Equity securities cover all instruments and records acknowledging, after the claims of all creditors have been met, claims to the residual values of enterprises.

    Include:

    • ordinary shares;

    • stocks;

    • participating preference shares;

    • depositary receipts (e.g., American depositary receipts) denoting ownership of equity securities issued by nonresidents (see general notes point 8);

    • shares/units in mutual funds and investment trusts;

    • equity securities that have been sold under repurchase agreements; and

    • equity securities that have been lent under a securities lending arrangement (see general notes point 7).

    Exclude:

    • nonparticipating preference shares (but include these instruments under long-term debt);

    • rights, options, warrants, and other derivative instruments;

    • equity securities that have been bought under repurchase agreements; and

    • equity securities that have been acquired under a securities lending arrangement (see general notes point 7).

    2. Valuation of equity securities

    Equity securities should be reported at market prices converted to xxxxxx (domestic currency) using the exchange rate prevailing at the close of business on December 31, 1997.

    For enterprises listed on a stock exchange, the market value of your holding of their equity securities should be calculated using the market price prevailing on their main stock exchange at the close of business on December 31, 1997.

    For unlisted enterprises, if a market value is not available at the close of business on December 31, 1997, estimate the market value of your holding of equity securities by using one of the following:

    • a recent transaction price;

    • director’s valuation; or

    • net asset value. (Net asset value is equal to total assets, including intangibles, less nonequity liabilities and the paid up value of nonvoting shares. Assets and liabilities should be recorded at current, rather than historical, value.)

    3. At the end of report form 2a, please include the total value of all equity securities reported, namely, the sum of all individual country data plus any data for the international organizations.

    Notes to Form 2b: Long-Term Debt Securities

    1. Definition of long-term debt securities

    Long-term debt securities refer to bonds, debentures, notes, etc. that usually give the holder the unconditional right to a fixed money income or contractually determined variable money income and have an original term to maturity of over one year.

    Include:

    • bonds such as treasury, zero coupon, stripped (see general notes point 9), deep discounted, currency linked (e.g., dual-currency), floating rate, equity-related (e.g., convertible bonds), Eurobonds;

    • asset-backed securities such as mortgage backed bonds, collateralized mortgage obligations (CMO);

    • index-linked securities (e.g., property index certificates);

    • nonparticipating preference shares;

    • floating rate notes (FRN) such as perpetual notes (PRN), variable rate notes (VRN), structured FRN, reverse FRN, collared FRN, step up recovery FRN (SURF), range/corridor/accrual notes;

    • Euro medium-term notes (EMTN);

    • schuldscheine (German) notes;

    • bonds with optional maturity dates, the latest of which is more than one year after issue;

    • debentures;

    • negotiable certificates of deposits with contractual maturity of more than one year;

    • other long-term securities;

    • bearer depositary receipts denoting ownership of debt securities issued by nonresidents (see general notes point 8);

    • debt securities that you have sold under repurchase agreements; and

    • debt securities that you have lent under a securities lending arrangement (see general notes point 7).

    Exclude:

    • derivative instruments;

    • loans;

    • trade credit and accounts receivable;

    • money market instruments (e.g., treasury notes, banker’s acceptances, certificates of deposit with contractual maturity of one year or less, note issuance facilities, revolving underwriting facilities, and promissory notes);

    • debt securities that you have bought under repurchase agreements; and

    • debt securities that you have acquired under a securities lending arrangement (see general notes point 7).

    2. Valuation of debt securities

    Debt securities should be recorded using one of the market valuation methods listed below in order of preference and converted to xxxxxx (domestic currency), using the exchange rate prevailing at the close of business on December 31, 1997:

    • a quoted traded market price at the close of business on December 31, 1997;

    • the net present value of the expected stream of future payments/receipts associated with the securities;

    • for unlisted securities, the price used to value securities for accounting or regulatory purposes, etc.; or

    • for deep discount or zero coupon securities, the issue price plus amortization of the discount.

    3. Asset-backed securities

    In reporting the market value of holdings of asset-backed securities, the respondent must be aware of the possibility of early partial redemption of principal. The market value of the principal amount outstanding at close of business on December 31, 1997 should be reported; if principal has been repaid, this market value will not be the same as the original face value revalued at end-period market prices.

    4. At the end of report form 2b, please include the total value of all long-term debt securities reported, that is, the sum of all individual country data plus the data for the international organizations.

    If there are any questions regarding these instructions, please contact a member of the survey staff at xxxx x-xxx-xxxx.

    SURVEY OF PORTFOLIO INVESTMENT – DECEMBER 31, 1997

    FORM 1

    SURVEY OF PORTFOLIO INVESTMENT – DECEMBER 31, 1997

    FORM 2a: Investment in Equity Securities Issued by Unrelated Nonresidents

    (see notes to form 2a)

    Country of nonresident issuerMarket value of equity securities as at December 31, 1997
    Office

    use only
    Afghanistan, Islamic State ofAF
    AlbaniaAL
    AlgeriaDZ
    AndorraAD
    AngolaAO
    AnguillaAI
    Antigua and BarbudaAG
    ArgentinaAR
    ArmeniaAM
    ArubaAW
    AustraliaAU
    AustriaAT
    AzerbaijanAZ
    Bahamas, TheBS
    BahrainBH
    BangladeshBD
    BarbadosBB
    BelarusBY
    BelgiumBE
    BelizeBZ
    BeninBJ
    BermudaBM
    BhutanBT
    BoliviaBO
    Bosnia and HerzegovinaBA
    BotswanaBW
    BrazilBR
    British Virgin IslandsVG
    Brunei DarussalamBN
    BulgariaBG
    Burkina FasoBF
    BurundiBI
    CambodiaKH
    CameroonCM
    CanadaCA
    Cape VerdeCV
    Cayman IslandsKY
    Central African RepublicCF
    ChadTD
    ChileCL
    ChinaCN
    ColombiaCO
    ComorosKM
    CongoCG
    Cook IslandsCK
    Costa RicaCR
    Côte d’lvoireCI
    CroatiaHR
    CubaCU
    CyprusCY
    Czech RepublicCZ
    DenmarkDK
    DjiboutiDJ
    DominicaDM
    Dominican RepublicDO
    EcuadorEC
    EgyptEG
    El SalvadorSV
    Equatorial GuineaGQ
    EritreaER
    EstoniaEE
    EthiopiaET
    Faeroe IslandsFO
    Falkland IslandsFK
    FijiFJ
    FinlandFI
    FranceFR
    French GuianaGF
    French PolynesiaPF
    GabonGA
    Gambia, TheGM
    GeorgiaGE
    GermanyDE
    GhanaGH
    GibraltarGI
    GreeceGR
    GreenlandGL
    GrenadaGD
    GuadeloupeGP
    GuamGU
    GuatemalaGT
    GuineaGN
    Guinea-BissauGW
    GuyanaGY
    HaitiHT
    HondurasHN
    Hong KongHK
    HungaryHU
    IcelandIS
    IndiaIN
    IndonesiaID
    Iran, Islamic Republic ofIR
    IraqIQ
    IrelandIE
    IsraelIL
    ItalyIT
    JamaicaJM
    JapanJP
    JordanJO
    KazakstanKZ
    KenyaKE
    KiribatiKI
    Korea, Democratic People’s Republic of (North)KP
    Korea, Republic of (South)KR
    KuwaitKW
    Kyrgyz RepublicKG
    Lao People’s Democratic Rep.LA
    LatviaLV
    LebanonLB
    LesothoLS
    LiberiaLR
    Libya, S.P.A.J.LY
    LiechtensteinLI
    LithuaniaLT
    LuxembourgLU
    MacaoMO
    Macedonia, FYR ofMK
    MadagascarMG
    MalawiMW
    MalaysiaMY
    MaldivesMV
    MaliML
    MaltaMT
    Marshall IslandsMH
    MartiniqueMQ
    MauritaniaMR
    MauritiusMU
    MexicoMX
    Micronesia, Fed. StatesFM
    MoldovaMD
    MonacoMC
    MongoliaMN
    MontserratMS
    MoroccoMA
    MozambiqueMZ
    MyanmarMM
    NamibiaNA
    NauruNR
    NepalNP
    NetherlandsNL
    Netherlands AntillesAN
    New CaledoniaNC
    New ZealandNZ
    NicaraguaNI
    NigerNE
    NigeriaNG
    Niue IslandNU
    Northern Mariana IslandsMP
    NorwayNO
    OmanOM
    PakistanPK
    PalauPW
    PanamaPA
    Papua New GuineaPG
    ParaguayPY
    PeruPE
    PhilippinesPH
    PitcairnPN
    PolandPL
    PortugalPT
    Portugal TimorTP
    Puerto RicoPR
    QatarQA
    RéunionRE
    RomaniaRO
    Russian FederationRU
    RwandaRW
    Saint HelenaSH
    Saint Kitts and NevisKN
    Saint LuciaLC
    Saint Pierre and MiquelonPM
    Saint Vincent and the GrenadinesVC
    San MarinoSM
    São Tomé and PríncipeST
    Saudi ArabiaSA
    SenegalSN
    Yugoslavia, Fed. Rep. of (Serbia/Montenegro)YU
    SeychellesSC
    Sierra LeoneSL
    SingaporeSG
    Slovak RepublicSK
    SloveniaSI
    Solomon IslandsSB
    SomaliaSO
    South AfricaZA
    SpainES
    Spanish SaharaEH
    Sri LankaLK
    SudanSD
    SurinameSR
    SwazilandSZ
    SwedenSE
    SwitzerlandCH
    Syrian Arab RepublicSY
    Taiwan Province of ChinaTW
    TajikistanTJ
    TanzaniaTZ
    ThailandTH
    TogoTG
    Tokelau IslandsTK
    TongaTO
    Trinidad and TobagoTT
    TunisiaTN
    TurkeyTR
    TurkmenistanTM
    Turks and Caicos IslandsTC
    TuvaluTV
    UgandaUG
    UkraineUA
    United Arab EmiratesAE
    United KingdomGB
    United StatesUS
    United States Pacific IslandsUM
    United States Virgin IslandsVI
    UruguayUY
    UzbekistanUZ
    VanuatuVU
    Vatican City StateVA
    VenezuelaVE
    VietnamVN
    Wallis and Futuna IslandsWF
    West Bank/Gaza StripWG
    Western SamoaWS
    Yemen, Republic ofYE
    ZaïreZR
    ZambiaZM
    ZimbabweZW
    International OrganizationsXX
    Total Value of Equity Securities Reported

    Identification Number: Enter the 7-digit identification number from the mailing label on this survey.

    SURVEY OF PORTFOLIO INVESTMENT – DECEMBER 31, 1997

    FORM 2b: Investment in Long-Term Debt Securities Issued by Unrelated Nonresidents

    (see notes to form 2b)

    Country of nonresident issuerMarket value of long-term debt securities as at December 31, 1997
    Office

    use only
    Afghanistan, Islamic State ofAF
    AlbaniaAL
    AlgeriaDZ
    AndorraAD
    AngolaAO
    AnguillaAI
    Antigua and BarbudaAG
    ArgentinaAR
    ArmeniaAM
    ArubaAW
    AustraliaAU
    AustriaAT
    AzerbaijanAZ
    Bahamas, TheBS
    BahrainBH
    BangladeshBD
    BarbadosBB
    BelarusBY
    BelgiumBE
    BelizeBZ
    BeninBJ
    BermudaBM
    BhutanBT
    BoliviaBO
    Bosnia and HerzegovinaBA
    BotswanaBW
    BrazilBR
    British Virgin IslandsVG
    Brunei DarussalamBN
    BulgariaBG
    Burkina FasoBF
    BurundiBI
    CambodiaKH
    CameroonCM
    CanadaCA
    Cape VerdeCV
    Cayman IslandsKY
    Central African RepublicCF
    ChadTD
    ChileCL
    ChinaCN
    ColombiaCO
    ComorosKM
    CongoCG
    Cook IslandsCK
    Costa RicaCR
    Côte d’IvoireCI
    CroatiaHR
    CubaCU
    CyprusCY
    Czech RepublicCZ
    DenmarkDK
    DjiboutiDJ
    DominicaDM
    Dominican RepublicDO
    EcuadorEC
    EgyptEG
    El SalvadorSV
    Equatorial GuineaGQ
    EritreaER
    EstoniaEE
    EthiopiaET
    Faeroe IslandsFO
    Falkland IslandsFK
    FijiFJ
    FinlandFI
    FranceFR
    French GuianaGF
    French PolynesiaPF
    GabonGA
    Gambia, TheGM
    GeorgiaGE
    GermanyDE
    GhanaGH
    GibraltarGI
    GreeceGR
    GreenlandGL
    GrenadaGD
    GuadeloupeGP
    GuamGU
    GuatemalaGT
    GuineaGN
    Guinea-BissauGW
    GuyanaGY
    HaitiHT
    HondurasHN
    Hong KongHK
    HungaryHU
    IcelandIS
    IndiaIN
    IndonesiaID
    Iran, Islamic Republic ofIR
    IraqIQ
    IrelandIE
    IsraelIL
    ItalyIT
    JamaicaJM
    JapanJP
    JordanJO
    KazakstanKZ
    KenyaKE
    KiribatiKI
    Korea, Democratic People’s Republic of (North)KP
    Korea, Republic of (South)KR
    KuwaitKW
    Kyrgyz RepublicKG
    Lao People’s Democratic Rep.LA
    LatviaLV
    LebanonLB
    LesothoLS
    LiberiaLR
    Libya, S.P.A.J.LY
    LiechtensteinLI
    LithuaniaLT
    LuxembourgLU
    MacaoMO
    Macedonia, FYR ofMK
    MadagascarMG
    MalawiMW
    MalaysiaMY
    MaldivesMV
    MaliML
    MaltaMT
    Marshall IslandsMH
    MartiniqueMQ
    MauritaniaMR
    MauritiusMU
    MexicoMX
    Micronesia, Fed. StatesFM
    MoldovaMD
    MonacoMC
    MongoliaMN
    MontserratMS
    MoroccoMA
    MozambiqueMZ
    MyanmarMM
    NamibiaNA
    NauruNR
    NepalNP
    NetherlandsNL
    Netherlands AntillesAN
    New CaledoniaNC
    New ZealandNZ
    NicaraguaNI
    NigerNE
    NigeriaNG
    Niue IslandNU
    Northern Mariana IslandsMP
    NorwayNO
    OmanOM
    PakistanPK
    PalauPW
    PanamaPA
    Papua New GuineaPG
    ParaguayPY
    PeruPE
    PhilippinesPH
    PitcairnPN
    PolandPL
    PortugalPT
    Portugal TimorTP
    Puerto RicoPR
    QatarQA
    RéunionRE
    RomaniaRO
    Russian FederationRU
    RwandaRW
    Saint HelenaSH
    Saint Kitts and NevisKN
    Saint LuciaLC
    Saint Pierre and MiquelonPM
    Saint Vincent and the GrenadinesVC
    San MarinoSM
    São Tomé and PríncipeST
    Saudi ArabiaSA
    SenegalSN
    Yugoslavia, Fed. Rep. of (Serbia/Montenegro)YU
    SeychellesSC
    Sierra LeoneSL
    SingaporeSG
    Slovak RepublicSK
    SloveniaSI
    Solomon IslandsSB
    SomaliaSO
    South AfricaZA
    SpainES
    Spanish SaharaEH
    Sri LankaLK
    SudanSD
    SurinameSR
    SwazilandSZ
    SwedenSE
    SwitzerlandCH
    Syrian Arab RepublicSY
    Taiwan Province of ChinaTW
    TajikistanTJ
    TanzaniaTZ
    ThailandTH
    TogoTG
    Tokelau IslandsTK
    TongaTO
    Trinidad and TobagoTT
    TunisiaTN
    TurkeyTR
    TurkmenistanTM
    Turks and Caicos IslandsTC
    TuvaluTV
    UgandaUG
    UkraineUA
    United Arab EmiratesAE
    United KingdomGB
    United StatesUS
    United States Pacific IslandsUM
    United States Virgin IslandsVI
    UruguayUY
    UzbekistanUZ
    VanuatuVU
    Vatican City StateVA
    VenezuelaVE
    VietnamVN
    Wallis and Futuna IslandsWF
    West Bank/Gaza StripWG
    Western SamoaWS
    Yemen, Republic ofYE
    ZaïreZR
    ZambiaZM
    ZimbabweZW
    International OrganizationsXX
    Total Value of Long-Term Debt Securities Reported

    Identification Number: Enter the 7-digit identification number from the mailing label on this survey.

    Appendix IV. Model Form for an End-Investor Survey on an Aggregate Basis

    Survey of Portfolio Investment in Foreign Equities and Long-Term Debt Securities, December 31, 1997

    Purpose of Collection

    This survey collects information on investment by domestic residents in equity and long-term debt securities issued by unrelated nonresidents (foreign securities) as at December 31, 1997. The data from the survey will be used in the compilation of xxxxxxxx’s balance of payments and international investment position statistics. These statistics are published by xxxxxxx. The survey is being conducted in coordination with other countries to facilitate international data comparability.

    Collection Authority

    The information requested is collected under the authority of the Statistics Act of xxxxxxx.

    Confidentiality

    The completed forms will remain confidential to the xxxxxxxxx.

    What to Report

    The attached forms need to be completed in accordance with the reporting instructions provided. If there are any questions regarding these instructions, please contact a member of the survey staff at xxxx x-xxx-xxxx.

    When and Where to Report

    Please return the completed forms by March 31, 1998 to:

    [Address of compiler]

    Respondents unable to meet the reporting deadline should contact a member of the survey staff at xxx-xxx-xxx to request an extension.

    How to Report

    Data may be submitted on magnetic tapes or cartridges, diskettes (floppy disks), or paper forms. Data submitted on magnetic tapes or cartridges must be submitted in the format specified in appendix x.

    [Name of Statistical Agency and date]

    General Reporting Notes

    This survey collects information on investment by domestic residents in equity and long-term debt securities issued by unrelated nonresidents (foreign securities).

    1. Who must report

    Domestic residents who own equity and long-term debt securities issued by unrelated nonresidents as of close of business on December 31, 1997.

    2. What must be reported

    All entities that receive a copy of the survey forms must complete the respondent identification section of form 1 and return a copy to the compiling agency within 30 days of receipt of the survey forms.

    All entities that receive a copy of the survey forms must submit their survey responses by March 31, 1998 to xxxxxxx (the compiling agency), whose address is listed in the key information section of form 1. Respondents unable to meet the reporting schedule should contact a member of the survey staff at xxx-xxx-xxx to request an extension.

    Reporters can file one consolidated report for their entire organization, or different units of the organization may file independently. If two or more units are filing separately, please contact a member of the survey staff for additional identification numbers.

    Please complete the attached reporting forms 2a and 2b in respect of your entity’s holdings of equity and long-term debt securities issued by unrelated nonresidents as at close of business on December 31, 1997. See guidance notes on pages 5 and 6 for completing forms 2a and 2b.

    3. Residency

    A nonresident is any individual, enterprise, or other organization ordinarily domiciled in a country other than xxxxxx. Nonresident branches and subsidiaries of xxxxxx enterprises are regarded as nonresidents. A resident is any individual, enterprise, or other organization ordinarily domiciled in xxxxxx. Branches and subsidiaries of nonresident enterprises domiciled in xxxxxx are regarded as xxxxxx residents. Ordinarily domiciled is defined as the center of economic interest of the entity, for instance, for an enterprise, where it engages in production.

    In the report form, securities are to be attributed to the country of residence of the nonresident issuer of the securities. Country attribution should be based on where the entity is ordinarily domiciled. If there is doubt as to the issuers’ country of domicile, then, as a general rule, the country of residence of any enterprise can be taken as where it is legally incorporated, or in the absence of legal incorporation, where it is legally domiciled. Securities issued by international organizations (IO) are not to be allocated to the country in which the IO is located but rather to the separate IO category specified at the end of forms 2a and 2b.

    4. Definition of equity and long-term debt securities

    A security is defined as an instrument that is traded or tradable. This survey covers investment by domestic residents in equity and long-term debt securities only.

    • For the definition of equity securities, see note 1 in Notes to Form 2a (page 5); and

    • for the definition of long-term debt securities, see note 1 in Notes to Form 2b (page 6).

    5. Valuation

    Market value should be used to report all holdings of securities. Do not report the face value of the security as the market value.

    • For market valuation of equity securities, see note 2 in Notes to Form 2a (page 5); and

    • for market valuation of long-term debt securities, see note 2 in Notes to Form 2b (page 6).

    6. Exclusion of securities issued by related enterprises

    Securities issued by related nonresident enterprises and held by the reporting entity should be excluded from this report. Related nonresident enterprises are enterprises in which your enterprise group has an equity interest of 10 percent or more. Ownership is measured in terms of ordinary shares or voting stock of incorporated enterprises or equivalent beneficial interest in unincorporated enterprises. The only exception is if your enterprise is a financial institution. In these circumstances, debt securities issued by an affiliated nonresident financial intermediary and owned by your entity should be included in this report if the debt does not represent a permanent interest.

    7. Treatment of securities involved in repurchase and securities lending arrangements

    A repurchase agreement (repo) is an arrangement involving the sale of securities at a specified price with a commitment to repurchase the same or similar securities at a fixed price on a specified future date. A reverse repo is the same transaction seen from the other side, that is, an agreement whereby a security is purchased at a specified price with a commitment to resell the same or similar securities at a fixed price on a specified future date. Securities (or stock) lending is an arrangement whereby the ownership of a security is transferred in return for collateral, usually another security, under the condition that the security or similar securities will revert to its original owner at a specified future date.

    • Securities acquired under repurchase or securities lending arrangements are to be excluded from the report form;

    • securities sold under repurchase or securities lending arrangements are to be included in the report form;

    • securities acquired under repurchase or securities lending arrangements and subsequently sold to a third party should be reported as a negative holding, namely, a short position; and

    • all valuations of securities under repurchase or securities lending arrangements should be at market value as at the close of business on December 31, 1997.

    8. Treatment of depositary receipts

    Depositary receipts, which denote ownership of equity or debt securities issued by nonresidents, for instance, American depositary receipts (ADR) or bearer depositary receipts (BDR), should be attributed to the country of residence of the issuer of the security underlying the depositary receipt. Financial intermediaries should not report holdings of any securities against which depositary receipts have been issued and sold; but if a depositary receipt has been issued before the financial institution arranging the issue has acquired the underlying securities, then that financial institution should report a negative holding in the underlying security.

    9. Treatment of stripped securities

    Stripped securities (strips) are securities that have been transformed from a principal amount with periodic interest coupons into a series of zero coupon securities, with the range of maturities matching the coupon payment dates and the redemption date of the principal amount. If strips remain the direct obligation of the original issuer, then the residency of the issuer of the strips remains the same as for the original security. Dealers who request that a settlement or clearing house create strips from an existing security issued by a nonresident should not report ownership of the underlying security once the strips have been created. On the other hand, if strips have been created and issued by an entity in its own name, then the residency of the issuer of the strips is that of the entity that has issued the strips. In turn, such an issuer of strips should report its ownership of the underlying securities if they were issued by a nonresident. Strips with an original maturity of less than one year are classified as money market instruments and thus, if identifiable, should not be reported.

    If there are any questions regarding these instructions, please contact a member of the survey staff at xxxx x-xxx-xxxx.

    Notes to Form 1

    This form must be completed by all organizations that receive these survey forms. This form is used to provide basic identifying information. In item 1—Identification Number—please enter the 7—digit identification number from the top right-hand corner of the address label to these survey forms. If your number is unknown, please contact a member of the survey staff at xxx-xxx-xxxx. Please include the identification number on every page reported to the compiler.

    Notes to Form 2a: Equity Securities

    1. Definition of equity securities

    Equity securities cover all instruments and records acknowledging, after the claims of all creditors have been met, claims to the residual values of enterprises.

    Include:

    • ordinary shares;

    • Stocks;

    • participating preference shares;

    • depositary receipts (e.g., American depositary receipts) denoting ownership of equity securities issued by nonresidents (see general notes point 8);

    • shares/units in mutual funds and investment trusts;

    • equity securities that you have sold under repurchase agreements; and

    • equity securities that you have lent under a securities lending arrangement (see general notes point 7).

    Exclude:

    • nonparticipating preference shares (but include these instruments under long-term debt);

    • rights, options, warrants, and other derivative instruments;

    • equity securities that you have bought under repurchase agreements; and

    • equity securities that you have acquired under a securities loan arrangement (see general notes point 7).

    2. Valuation of equity securities

    Equity securities should be reported at market prices converted to xxxxxx (domestic currency) using the exchange rate prevailing at the close of business on December 31, 1997.

    For enterprises listed on a stock exchange, the market value of your holding of their equity securities should be calculated using the market price on their main stock exchange prevailing at the close of business on December 31, 1997.

    For unlisted enterprises, if a market value is not available at the close of business on December 31, 1997, estimate the market value of your holding of equity securities by using one of the following:

    • a recent transaction price;

    • director’s valuation; or

    • net asset value. (Net asset value is equal to total assets, including intangibles, less nonequity liabilities and the paid up value of nonvoting shares. Assets and liabilities should be recorded at current, rather than historical, value.)

    3. At the end of report form 2a, please include the total value of all equity securities reported, that is, the sum of all individual country data plus any data for international organizations.

    Notes to Form 2b: Long-Term Debt Securities

    1. Definition of long-term debt securities

    Long-term debt securities refer to bonds, debentures, notes, etc. that usually give the holder the unconditional right to a fixed money income or contractually determined variable money income and have an original term to maturity of over one year.

    Include:

    • bonds such as treasury, zero coupon, stripped (see general notes point 9), deep discounted, currency linked (e.g., dual-currency), floating rate, equity-related (e.g., convertible bonds), Eurobonds;

    • asset-backed securities such as mortgage backed bonds, collateralized mortgage obligations (CMO);

    • index-linked securities (e.g., property index certificates);

    • nonparticipating preference shares;

    • floating rate notes (FRN) such as perpetual notes (PRN), variable rate notes (VRN), structured FRN, reverse FRN, collared FRN, step up recovery FRN (SURF), range/corridor/accrual notes;

    • Euro medium-term notes (EMTN);

    • schuldscheine (German) notes;

    • bonds with optional maturity dates, the latest of which is more than one year after issue;

    • debentures;

    • negotiable certificates of deposits with contractual maturity of more than one year;

    • other long-term securities;

    • bearer depositary receipts denoting ownership of debt securities issued by nonresidents (see general notes point 8);

    • debt securities that you have sold under repurchase agreements; and

    • debt securities that you have lent under a securities lending arrangement (see general notes point 7).

    Exclude:

    • derivative instruments;

    • loans;

    • trade credit and accounts receivable;

    • money market instruments (e.g., treasury notes, banker’s acceptances, certificates of deposit with contractual maturity of one year or less, note issuance facilities, revolving underwriting facilities, and promissory notes);

    • debt securities that you have bought under repurchase agreements; and

    • debt securities that you have acquired under a securities lending arrangement (see general notes point 7).

    2. Valuation of debt securities

    Debt securities should be recorded using one of the market valuation methods listed below in order of preference and converted to xxxxxx (domestic currency), using the exchange rate prevailing at the close of business on December 31, 1997:

    • a quoted traded market price at the close of business on December 31, 1997;

    • the net present value of the expected stream of future payments/receipts associated with the securities;

    • for unlisted securities, the price used to value securities for accounting or regulatory purposes, etc.; or

    • for deep discount or zero coupon securities, the issue price plus amortization of the discount.

    3. Asset-backed securities

    In reporting the market value of holdings of asset-backed securities, the respondent must be aware of the possibility of early partial redemption of principal. The market value of the principal amount outstanding at close of business on December 31, 1997 should be reported; if principal has been repaid, this market value will not be the same as the original face value revalued at end-period market prices.

    4. At the end of report form 2b, please include the total value of all long-term debt securities reported, that is, the sum of all individual country data plus the data for the international organizations.

    If there are any questions regarding these instructions, please contact a member of the survey staff at xxxx x-xxx-xxxx.

    SURVEY OF PORTFOLIO INVESTMENT – DECEMBER 31, 1997

    FORM 1

    SURVEY OF PORTFOLIO INVESTMENT – DECEMBER 31, 1997

    FORM 2a: Investment in Equity Securities Issued by Unrelated Nonresidents

    (see notes to form 2a)

    Country of nonresident

    issuer
    Market value of equity securities as at

    December 31, 1997
    Office

    use only
    Afghanistan, Islamic State ofAF
    AlbaniaAL
    AlgeriaDZ
    AndorraAD
    AngolaAO
    AnguillaAI
    Antigua and BarbudaAG
    ArgentinaAR
    ArmeniaAM
    ArubaAW
    AustraliaAU
    AustriaAT
    AzerbaijanAZ
    Bahamas, TheBS
    BahrainBH
    BangladeshBD
    BarbadosBB
    BelarusBY
    BelgiumBE
    BelizeBZ
    BeninBJ
    BermudaBM
    BhutanBT
    BoliviaBO
    Bosnia and HerzegovinaBA
    BotswanaBW
    BrazilBR
    British Virgin IslandsVG
    Brunei DarussalamBN
    BulgariaBG
    Burkina FasoBF
    BurundiBI
    CambodiaKH
    CameroonCM
    CanadaCA
    Cape VerdeCV
    Cayman IslandsKY
    Central African RepublicCF
    ChadTD
    ChileCL
    ChinaCN
    ColombiaCO
    ComorosKM
    CongoCG
    Cook IslandsCK
    Costa RicaCR
    Côte d’lvoireCI
    CroatiaHR
    CubaCU
    CyprusCY
    Czech RepublicCZ
    DenmarkDK
    DjiboutiDJ
    DominicaDM
    Dominican RepublicDO
    EcuadorEC
    EgyptEG
    El SalvadorSV
    Equatorial GuineaGQ
    EritreaER
    EstoniaEE
    EthiopiaET
    Faeroe IslandsFO
    Falkland IslandsFK
    FijiFJ
    FinlandFI
    FranceFR
    French GuianaGF
    French PolynesiaPF
    GabonGA
    Gambia, TheGM
    GeorgiaGE
    GermanyDE
    GhanaGH
    GibraltarGI
    GreeceGR
    GreenlandGL
    GrenadaGD
    GuadeloupeGP
    GuamGU
    GuatemalaGT
    GuineaGN
    Guinea-BissauGW
    GuyanaGY
    HaitiHT
    HondurasHN
    Hong KongHK
    HungaryHU
    IcelandIS
    IndiaIN
    IndonesiaID
    Iran, Islamic Republic ofIR
    IraqIQ
    IrelandIE
    IsraelIL
    ItalyIT
    JamaicaJM
    JapanJP
    JordanJO
    KazakstanKZ
    KenyaKE
    KiribatiKI
    Korea, Democratic People’s Republic of (North)KP
    Korea, Republic of (South)KR
    KuwaitKW
    Kyrgyz RepublicKG
    Lao People’s Democratic Rep.LA
    LatviaLV
    LebanonLB
    LesothoLS
    LiberiaLR
    Libya, S.P.A.J.LY
    LiechtensteinLI
    LithuaniaLT
    LuxembourgLU
    MacaoMO
    Macedonia, FYR ofMK
    MadagascarMG
    MalawiMW
    MalaysiaMY
    MaldivesMV
    MaliML
    MaltaMT
    Marshall IslandsMH
    MartiniqueMQ
    MauritaniaMR
    MauritiusMU
    MexicoMX
    Micronesia, Fed. StateFM
    MoldovaMD
    MonacoMC
    MongoliaMN
    MontserratMS
    MoroccoMA
    MozambiqueMZ
    MyanmarMM
    NamibiaNA
    NauruNR
    NepalNP
    NetherlandsNL
    Netherlands AntillesAN
    New CaledoniaNC
    New ZealandNZ
    NicaraguaNI
    NigerNE
    NigeriaNG
    Niue IslandNU
    Northern Mariana IslandsMP
    NorwayNO
    OmanOM
    PakistanPK
    PalauPW
    PanamaPA
    Papua New GuineaPG
    ParaguayPY
    PeruPE
    PhilippinesPH
    PitcairnPN
    PolandPL
    PortugalPT
    Portugal TimorTP
    Puerto RicoPR
    QatarQA
    RéunionRE
    RomaniaRO
    Russian FederationRU
    RwandaRW
    Saint HelenaSH
    Saint Kitts and NevisKN
    Saint LuciaLC
    Saint Pierre and MiquelonPM
    Saint Vincent and the GrenadinesVC
    San MarinoSM
    São Tomé and PríncipeST
    Saudi ArabiaSA
    SenegalSN
    Yugoslavia, Fed. Rep. of (Serbia/Montenegro)YU
    SeychellesSC
    Sierra LeoneSL
    SingaporeSG
    Slovak RepublicSK
    SloveniaSI
    Solomon IslandsSB
    SomaliaSO
    South AfricaZA
    SpainES
    Spanish SaharaEH
    Sri LankaLK
    SudanSD
    SurinameSR
    SwazilandSZ
    SwedenSE
    SwitzerlandCH
    Syrian Arab RepublicSY
    Taiwan Province of ChinaTW
    TajikistanTJ
    TanzaniaTZ
    ThailandTH
    TogoTG
    Tokelau IslandsTK
    TongaTO
    Trinidad and TobagoTT
    TunisiaTN
    TurkeyTR
    TurkmenistanTM
    Turks and Caicos IslandsTC
    TuvaluTV
    UgandaUG
    UkraineUA
    United Arab EmiratesAE
    United KingdomGB
    United StatesUS
    United States Pacific IslandsUM
    United States Virgin IslandsVI
    UruguayUY
    UzbekistanUZ
    VanuatuVU
    Vatican City StateVA
    VenezuelaVE
    VietnamVN
    Wallis and Futuna IslandsWF
    West Bank/Gaza StripWG
    Western SamoaWS
    Yemen, Republic ofYE
    ZaïreZR
    ZambiaZM
    ZimbabweZW
    International OrganizationsXX
    Total Value of Equity Securities Reported

    Identification Number: Enter the 7-digit identification number from the mailing label on this survey.

    SURVEY OF PORTFOLIO INVESTMENT – DECEMBER 31, 1997

    FORM 2b: Investment in Long-Term Debt Securities Issued by Unrelated Nonresidents

    (see notes to form 2b)

    Country of nonresident issuerMarket value of long-term debt securities as at December 31, 1997
    Office

    use only
    Afghanistan, Islamic State ofAF
    AlbaniaAL
    AlgeriaDZ
    AndorraAD
    AngolaAO
    AnguillaAI
    Antigua and BarbudaAG
    ArgentinaAR
    ArmeniaAM
    ArubaAW
    AustraliaAU
    AustriaAT
    AzerbaijanAZ
    Bahamas, TheBS
    BahrainBH
    BangladeshBD
    BarbadosBB
    BelarusBY
    BelgiumBE
    BelizeBZ
    BeninBJ
    BermudaBM
    BhutanBT
    BoliviaBO
    Bosnia and HerzegovinaBA
    BotswanaBW
    BrazilBR
    British Virgin IslandsVG
    Brunei DarussalamBN
    BulgariaBG
    Burkina FasoBF
    BurundiBI
    CambodiaKH
    CameroonCM
    CanadaCA
    Cape VerdeCV
    Cayman IslandsKY
    Central African RepublicCF
    ChadTD
    ChileCL
    ChinaCN
    ColombiaCO
    ComorosKM
    CongoCG
    Cook IslandsCK
    Costa RicaCR
    Côte d’lvoireCI
    CroatiaHR
    CubaCU
    CyprusCY
    Czech RepublicCZ
    DenmarkDK
    DjiboutiDJ
    DominicaDM
    Dominican RepublicDO
    EcuadorEC
    EgyptEG
    El SalvadorSV
    Equatorial GuineaGQ
    EritreaER
    EstoniaEE
    EthiopiaET
    Faeroe IslandsFO
    Falkland IslandsFK
    FijiFJ
    FinlandFI
    FranceFR
    French GuianaGF
    French PolynesiaPF
    GabonGA
    Gambia, TheGM
    GeorgiaGE
    GermanyDE
    GhanaGH
    GibraltarGI
    GreeceGR
    GreenlandGL
    GrenadaGD
    GuadeloupeGP
    GuamGU
    GuatemalaGT
    GuineaGN
    Guinea-BissauGW
    GuyanaGY
    HaitiHT
    HondurasHN
    Hong KongHK
    HungaryHU
    IcelandIS
    IndiaIN
    IndonesiaID
    Iran, Islamic Republic ofIR
    IraqIQ
    IrelandIE
    IsraelIL
    ItalyIT
    JamaicaJM
    JapanJP
    JordanJO
    KazakstanKZ
    KenyaKE
    KiribatiKI
    Korea, Democratic People’s Republic of (North)KP
    Korea, Republic of (South)KR
    KuwaitKW
    Kyrgyz RepublicKG
    Lao People’s Democratic Rep.LA
    LatviaLV
    LebanonLB
    LesothoLS
    LiberiaLR
    Libya, S.P.A.J.LY
    LiechtensteinLI
    LithuaniaLT
    LuxembourgLU
    MacaoMO
    Macedonia, FYR ofMK
    MadagascarMG
    MalawiMW
    MalaysiaMY
    MaldivesMV
    MaliML
    MaltaMT
    Marshall IslandsMH
    MartiniqueMQ
    MauritaniaMR
    MauritiusMU
    MexicoMX
    Micronesia, Fed. StatesFM
    MoldovaMD
    MonacoMC
    MongoliaMN
    MontserratMS
    MoroccoMA
    MozambiqueMZ
    MyanmarMM
    NamibiaNA
    NauruNR
    NepalNP
    NetherlandsNL
    Netherlands AntillesAN
    New CaledoniaNC
    New ZealandNZ
    NicaraguaNI
    NigerNE
    NigeriaNG
    Niue IslandNU
    Northern Mariana IslandsMP
    NorwayNO
    OmanOM
    PakistanPK
    PalauPW
    PanamaPA
    Papua New GuineaPG
    ParaguayPY
    PeruPE
    PhilippinesPH
    PitcairnPN
    PolandPL
    PortugalPT
    Portugal TimorTP
    Puerto RicoPR
    QatarQA
    RéunionRE
    RomaniaRO
    Russian FederationRU
    RwandaRW
    Saint HelenaSH
    Saint Kitts and NevisKN
    Saint LuciaLC
    Saint Pierre and MiquelonPM
    Saint Vincent and the GrenadinesVC
    San MarinoSM
    São Tomé and PríncipeST
    Saudi ArabiaSA
    SenegalSN
    Yugoslavia, Fed. Rep. of (Serbia/Montenegro)YU
    SeychellesSC
    Sierra LeoneSL
    SingaporeSG
    Slovak RepublicSK
    SloveniaSI
    Solomon IslandsSB
    SomaliaSO
    South AfricaZA
    SpainES
    Spanish SaharaEH
    Sri LankaLK
    SudanSD
    SurinameSR
    SwazilandSZ
    SwedenSE
    SwitzerlandCH
    Syrian Arab RepublicSY
    Taiwan Province of ChinaTW
    TajikistanTJ
    TanzaniaTZ
    ThailandTH
    TogoTG
    Tokelau IslandsTK
    TongaTO
    Trinidad and TobagoTT
    TunisiaTN
    TurkeyTR
    TurkmenistanTM
    Turks and Caicos IslandsTC
    TuvaluTV
    UgandaUG
    UkraineUA
    United Arab EmiratesAE
    United KingdomGB
    United StatesUS
    United States Pacific IslandsUM
    United States Virgin IslandsVI
    UruguayUY
    UzbekistanUZ
    VanuatuVU
    Vatican City StateVA
    VenezuelaVE
    VietnamVN
    Wallis and Futuna IslandsWF
    West Bank/Gaza StripWG
    Western SamoaWS
    Yemen, Republic ofYE
    ZaïreZR
    ZambiaZM
    ZimbabweZW
    International OrganizationsXX
    Total Value of Long-Term Debt Securities Reported

    Identification Number: Enter the 7-digit identification number from the mailing label on this survey.

    Appendix V. Glossary of Security Terms

    The purpose of this glossary is to help national compilers draw up reporting instructions for the Coordinated Survey and to understand technical terms directly related to securities. The glossary is not a comprehensive capital markets manual; for instance, it does not cover terms relating to payments and settlement. Descriptions of financial instruments are provided in the Financial Terminology Database, which is described in appendix VII. The names of market organizations are provided in this glossary for reference.

    The glossary presents two distinctive features. First, it is divided into the following five sections:

    I. IMF methodological terms

    II. Administrative terms

    III. Valuation and income terms

    IV. Risk and hedging terms

    V. Market organization names

    Thus, terms of a similar nature are clustered together, allowing the reader to focus his or her search for, say, a risk term on a particular section—IV in this example—and not on the whole glossary. In addition, having all the similar terms contained in the glossary in one place might encourage general reference.

    The second distinctive feature of the glossary is that all entries have separate definition and comment sections. While the definition section essentially clarifies terms, the comment section amplifies them. Definitions by their nature explain exactly what a term means. However, to deepen knowledge, it is probably helpful for the reader to have some amplification, for instance, an explanation of what a term does not mean as well as what it does mean or an illustration of circumstances in which the term is used—hence, the comment section.

    I. IMF METHODOLOGICAL TERMS

    A. Core Principles

    Term: Ownership

    Definition

    Ownership of a financial claim arises from a contractual relationship. Change in ownership may be legal, or physical, or economic, involving control or possession.

    Comment

    The concept of ownership is central to the compilation of balance of payments data. In practice, ownership of financial claims and liabilities is usually measured by what is recorded on the books of both the creditor and debtor.

    Term: Residency

    Definition

    An entity is a resident unit when it has a center of economic interest in the economic territory of a country. The economic territory of a country consists of the geographic territory administered by a government; within this territory, persons, goods, and capital circulate freely. An institutional unit has a center of economic interest within a country when there exists some location—dwelling, place of production, or other premises—within the economic territory of the country on, or from, which the unit engages and intends to continue engaging, either indefinitely or over a long period of time—defined as one year or more—in economic activities and transactions on a significant scale.

    Comment

    Residency is an important concept in the balance of payments and should not be confused with nationality. Residents need not be nationals of the economy in which they are located. The country of legal incorporation is one practical method of determining residency of corporate entities.

    Term: Time of recording

    Definition

    The time of recording a transaction and, hence, a holding is governed by the principle of accrual accounting. For financial claims and liabilities a change of ownership is considered to have taken place at (or is proxied by) the time the parties to the transaction record it in their books or accounts. If no precise date can be fixed, the date on which the creditor receives payment or some other financial claim is decisive.

    Comment

    Change of ownership could be said to have occurred either when the contract committing both parties legally to a transaction in financial assets/liabilities is signed, or when the due for settlement date is reached, or when settlement actually occurs, if different. International statistical practice usually takes the date when the parties record the change in ownership on their books; hence the transaction and the change in holdings are recorded at the same time. Because the trend in securities markets is for a reduction in the settlement period, that is, the time between agreeing to a transaction and settling it, in order to reduce risk (see settlement risk), the three alternatives mentioned above are coming closer into line.

    Term: Valuation

    Definition

    All financial assets and liabilities should be measured at current market prices and, if necessary, be converted into the reference unit of account, using the appropriate exchange rate at the close of business on the reference date. Market price is the amount of money that willing buyers would pay to acquire a financial asset from a willing seller.

    Comment

    The use of market price is one of the key principles of balance of payments compilation. A uniform system of valuation is required so that data can be compiled on a consistent basis and international comparisons made. Because the market price is the actual price agreed by willing transactors, then it is the appropriate method of valuation.

    B. Category of Investment

    Term: Direct investment

    Definition

    Direct investment is the category of international investment in which a resident entity in one economy obtains a lasting interest in an enterprise resident in another. A direct investment is established when a resident in one economy owns 10 percent or more of the ordinary shares or voting power, for an incorporated enterprise, or the equivalent, for an unincorporated enterprise. Once established, all subsequent transactions between affiliated enterprises, both incorporated and unincorporated, are direct investment transactions. The one exception is transactions between financial intermediaries, which are limited to permanent debt (loan capital reflecting a permanent interest) and equity (share capital) investment. Other securities transactions of the financial intermediaries are classified as portfolio investment.

    Comment

    In the standard balance of payments presentation, investment in securities of enterprises that are in a direct investment relationship are classified separately from other investment in securities. Therefore, these “direct investment” securities should not to be reported in a survey of “portfolio investment” securities.

    Term: Portfolio investment

    Definition

    Portfolio investment includes investment in equity and debt securities, that is, bonds and notes, money market instruments, and financial derivatives. The essential characteristic of instruments classified as portfolio investments is that they are traded or tradable; if a debt security is not traded or tradable, then it should not be classified within portfolio investment.

    Comment

    Portfolio investment includes all securities, regardless of whether they can be traded on or outside of organized markets. The only exceptions are securities that are classified under “direct investment” or are held as “reserve assets.”

    Term: Other investment

    Definition

    Other investment is a residual category that includes all financial assets and liabilities not covered in direct investment, portfolio investment, or reserve assets.

    Comment

    The main components of “other investment” are trade credit, loans, and deposits. Unlike portfolio investments, “other investments” are typically not traded.

    C. Instruments Included under Portfolio Investment

    Term: Equity securities

    Definition

    Equity securities cover all instruments and records acknowledging, after the claims of all creditors have been met, claims to the residual values of incorporated enterprises. Shares, stocks, participation, or similar documents, such as depositary receipts, usually denote ownership of equity. Shares in mutual funds and investment trusts also are included.

    Comment

    Equity securities cover those instruments whose holders receive or bear the risks and rewards arising from ownership of the enterprise. Neither the principal sum invested nor the income arising from that investment is guaranteed. Securities such as certain categories of preference shares, which do entitle the holder to a specified return, should be classified as debt, not equity securities. Shares in mutual funds and investment trusts represent ownership of those entities and are recorded as equity investment.

    Term: Debt securities

    Definition

    Debt securities cover all tradable securities, excluding those classified as equity securities. Debt securities include bonds and notes, money market or negotiable debt instruments, and financial derivatives.

    Comment

    Definitions by type of debt security are given next.

    Term: Bonds and notes

    Definition

    Bonds and notes usually give the holder the unconditional right to a fixed money income or contractually determined variable money income. With the exception of perpetual bonds, bonds and notes also provide the holder with the unconditional right to a fixed sum as a repayment of principal on a specified date or dates.

    Comment

    This type of instrument usually has a maturity of one year and over.

    Term: Financial derivatives

    Definition

    A financial derivative is an instrument or agreement (contract) whose value depends on the price of the underlying instrument to which it is linked. But it does not require any investment in the underlying instrument itself. Financial derivatives give the holder the qualified right to receive an economic benefit in the form of cash, a primary financial instrument, etc. at some future date. They are regarded as financial instruments when they are tradable and have a market value.

    Comment

    The nature of financial derivatives is different from that of other securities because the holder has only a qualified right to receive an economic benefit. The coverage of financial derivatives is not a mandatory requirement of participation in the Coordinated Survey.

    Term: Money market instruments

    Definition

    Money market instruments generally give the holder the unconditional right to receive a stated, fixed sum of money on a specified date. These instruments usually are traded, at a discount, in organized markets; the discount is dependent upon the interest rate and the time remaining to maturity.

    Comment

    These instruments usually have a maturity of less than a year (in some markets up to two years), are typically “liquid,” and are traded in the so-called “money markets.” Longer term tradable securities are classified under bonds and notes. The coverage of money market instruments is not a mandatory requirement of participation in the Coordinated Survey.

    II. ADMINISTRATIVE TERMS

    Term: Allotment letters

    Definition

    A letter confirming that the potential investor has the right to participate in a new issue.

    Comment

    The allotment letter confirms that the investor has the right to purchase a specified amount of the new securities at a specified price on a specified day or days. The letter does not represent ownership of the security but ownership of the right to purchase a security. As such, the allotment letter can be a financial instrument in its own right.

    Term: Bearer

    Definition

    Bearer securities are not registered in the name of their owner. The holder may collect interest and dividends upon presentation of the security to a bank or fiduciary agent.

    Comment

    Bearer securities have been particularly in evidence in the Eurobond market. The main attraction to investors is that bearer bonds provide anonymity.

    Term: Book entry

    Definition

    Records are kept electronically so that a change of ownership of a security does not require a physical exchange of documents.

    Comment

    Under a book entry system, certificates denoting ownership are unlikely to exist unless the investor makes a specific request. Recording changes of ownership electronically reduces costs and settlement risk.

    Term: Bought deal

    Definition

    All of a security issue is taken onto the books of one or a limited number of security dealers, who then on-sell it.

    Comment

    A bought deal is a form of security issuance. As opposed to an auction, a bought deal means the borrower achieves greater certainty as to the cost of funds. The security dealer will own the securities and be faced with the market risk.

    Term: Coding

    Definition

    To help facilitate settlement and trade matching procedures, individual securities are allocated unique code numbers.

    Comment

    Individual countries have long allocated code numbers to individual securities, but the growth of cross-border trading in securities has led to increased cooperation between the national numbering agencies (NNAs). The consequence has been the creation of the Association of National Numbering Agencies (ANNA) and the prominent role given to the International Securities Identification Number (ISIN). Internationally traded securities are now given an ISIN code, which individually identifies them worldwide. The major national codes include CUSIP (USA) and SEDOL (UK).

    Term: Credit rating

    Definition

    A credit rating guides investors on the credit risk associated with an individual security. The rating agencies, for instance, Moody’s and Standard and Poor’s, allocate each security to a rating category, such as AA or BB, thus allowing a comparison between securities as to their credit risk.

    Comment

    Credit ratings are provided by credit rating companies. The “lower” the rating, the higher the credit risk and, all other things being equal, the higher the interest rate relative to a risk-free security in the same currency and of the same maturity.

    Term: Dematerialization

    Definition

    Dematerialization denotes replacing a paper-based system of settling security trades with a computer-based system, that is, switching to paperless trading.

    Comment

    A security has been dematerialized when transfers in ownership are registered entirely on a computer system, and the use of paper is eliminated.

    Term: Debenture

    Definition

    A debt instrument that is not backed by any collateral but, rather, by the general name of the issuer.

    Term: Depositary receipt

    Definition

    A document evidencing ownership of a security held in custody by a depositary.

    Comment

    This is an increasingly popular method by which corporate entities can access a foreign market.

    Term: Listed

    Definition

    A listed security is one registered on the list of an organized exchange. The security is traded under the exchange’s rules.

    Comment

    Certain types of institutions are only permitted to trade in listed securities, so a listing may well enhance the tradability or liquidity of a security. A listing protects the investor to the extent that the exchange has certain minimum standards to which all participants must adhere.

    Term: Negotiable

    Definition

    Title to a security is transferable from one entity to another without requiring recourse to or permission of the debtor.

    Comment

    In essence, negotiable means tradable.

    Term: Nominee account

    Definition

    The security is held in an account that bears a name other than that of the investor.

    Comment

    A nominee account may be opened for a variety of reasons. For instance, an investor may not want to reveal his or her name to the debtor, or it may be administratively more efficient for, say, a financial intermediary to hold all client accounts in one nominee account rather than register each of them separately.

    Term: Indenture

    Definition

    A legal document that sets out the terms and conditions under which a security is issued.

    Comment

    This document is required in order to ensure that the obligations of the issuer are clearly stated and that if they are not met, the investor has the right to legal recourse.

    Term: Prospectus

    Definition

    A document that sets out the terms and conditions of the sale of securities; it includes information on the issuing entity.

    Comment

    The prospectus can provide information of interest to statisticians, including the legal commitments and status of the issuing entity, the amount to be issued, etc.

    Term: Registered

    Definition

    The names of the owners of a security are kept on a central register.

    Comment

    A register is kept for administrative purposes, for instance, for paying of dividends or interest, etc. However, the securities may well be registered in the names of nominees so that the true identity of the owners is obscured.

    Term: Repackaged

    Definition

    An existing security is purchased by a financial institution and resold in a form that makes it more attractive to investors, thereby increasing its marketability and hence liquidity.

    Comment

    This is an increasingly popular activity among financial intermediaries. By transforming a financial asset that may be illiquid or no longer attractive to investors or that might attract greater investor interest repackaged in another form, a financial intermediary might generate extra income. In essence, the financial intermediary has spotted certain characteristics for which an investor is willing to pay, which generate income in excess of the cost of transformation. The increasing prevalence of book entry computerized registering of securities at a central depository has helped reduce the costs of repackaging and, hence, stimulated the activity.

    Term: Secured

    Definition

    To reduce the credit risk, the issuer provides collateral for the debt. In the event of bankruptcy or default by the borrower, the holders of the security have a claim on the collateral.

    Comment

    The extent to which the collateral is itself exposed to market and/or credit risk is relevant to the investor’s perception of the risk attached to the security. The investor is unlikely to have a claim on the collateral unless the issuer defaults on the terms and conditions under which the security was issued.

    Term: Structured

    Definition

    The characteristics of the security are designed in a particular manner to attract a certain type of investor and/or take advantage of particular market circumstances.

    Comment

    The growth of the derivatives market has created greater opportunities for security houses to tailor security issues more closely to the needs of investors. However, structuring issues to appeal to a particular type of investor risks the possibility of a loss of liquidity, particularly if the market moves in such a way as to make the structured features of the issue no longer attractive. In these circumstances, the issue may well then be repackaged.

    Term: Subordinated

    Definition

    The claims of the investor have been subordinated to those of other debtors, for instance, banks that have provided loans. In return for the higher risk factor, the investor often receives a higher yield.

    Comment

    Investors that purchase subordinated debt face the risk that in the event of bankruptcy their claims on the entity may not be met. However, as long as the investor is paid a contractually agreed rate of interest, the instrument is a debt instrument rather than an equity.

    Term: Subscription agreement

    Definition

    A subscription agreement is a document agreed between the issuer and the underwriting financial institutions, which includes the obligations of the underwriters to purchase securities to the extent that they are not purchased by end-investors.

    Comment

    Once a security has been fully subscribed by financial institutions, a general offering can be made.

    Term: Tranche

    Definition

    A tranche is an issue of securities that is directly associated—either through terms and conditions or through the type of collateral provided, etc.—with another issue by the same entity.

    Comment

    A key question could be whether tranches of an issue are fungible. If so, then all the tranches are counted as a single security by the coding agencies. Tranches may not be fungible. For instance, tranches of asset-backed issues can have different risk characteristics. In this instance, the tranches will be regarded as separate issues.

    Term: Underwritten

    Definition

    Financial intermediaries guarantee that the issuer receives the whole proceeds from a new issue of securities. Hence, in the event that a new security offering fails to attract sufficient investor interest, the financial institutions guaranteeing the issue agree to purchase the remainder of the offering.

    Comment

    The purpose of underwriting is to ensure that the borrower receives the proceeds from the issue even if market conditions move in such a way that the terms and conditions on offer are no longer attractive. The issuer pays a fee to the underwriters for this service. However, any issue purchased by the underwriters is regarded as sold and should have been taken onto the balance sheet of the underwriter.

    Term: Unlisted

    Definition

    A security is not registered (or listed) on any organized exchange.

    Comment

    The consequence of not listing a security is that it is likely to be less tradable (or liquid) than a listed security. Unlisted securities tend to be private placements where tradability or liquidity are not of significant importance to the issuer/investor. The other consequence is that the amount of information provided for an unlisted security is likely less than if it was listed.

    III. VALUATION AND INCOME TERMS

    Term: Accrued interest

    Definition

    A continuous method of recording income, which matches the cost of capital with the provision of capital.

    Comment

    Recording interest on an accrued basis is one of the recommendations of the fifth edition of the Balance of Payments Manual (BPM5). In essence, interest is accrued and therefore owed to the owner of the security continuously, and not just when interest is due to be paid or when it is paid. While the general, but not universal, practice in the international financial markets is for the quoted market price of a security to exclude any accrued interest, the recommended treatment in BPM5 is to include accrued interest in the market valuation.

    Term: Accumulated interest

    Definition

    Accumulated interest was due but not paid in the previous period(s) but remains payable.

    Comment

    Accumulated interest can be associated with preference shares. Under the terms of contract, an issuer may well have to pay a set amount of interest to preference share holders each period but might be allowed to accumulate interest payments if, after meeting the obligations on higher ranked debt, he/she is not in a position to meet his/her liability. These are so-called accumulating preference shares.

    Term: Basis points

    Definition

    This is an interest term. One basis point equals one hundredth of one percent.

    Comment

    Basis points are referred to in the financial markets mainly in the context of describing changes in market rates of interest. Hence a change of 50 basis points is equal to half of one percent.

    Term: Book value

    Definition

    The book value is the value at which an entity records the value of an asset or liability on its balance sheet (or book).

    Comment

    While book value can refer to either market value or historic cost, the term is frequently used to mean historic cost.

    Term: Compound interest rate

    Definition

    A compound interest rate is based on the assumption that accrued interest is reinvested at the same interest rate.

    Comment

    The yield, by assuming that accrued interest is reinvested, increases over time for any given initial investment.

    Term: Coupon

    Definition

    A coupon is a set amount of interest the debtor will pay to the investor each period. The coupon rate is this set amount expressed as an annual percentage of the par value of the security.

    Comment

    As the coupon is a set amount, then the coupon rate, in contrast to the compound interest rate, is unchanged over the maturity of the security.

    Term: Deep discount

    Definition

    A deep discount is a type of security that is sold at a price well below its face or redemption value, with the coupon rate well below that for comparable issues by the same borrower. The difference between the purchase and redemption price is regarded as accrued interest.

    Comment

    Essentially, the issuer of a deep discount security pays investment income to the investor mainly in the form of a repayment at maturity rather than in the form of regular coupons. Investors may prefer income in this form for a variety of reasons. For instance, the tax treatment of income in the form of a capital repayment may be different from the tax treatment of income in the form of coupon payments. Or they may prefer a capital repayment at maturity because it largely relieves them of the need to reinvest the income arising from the coupon payments.

    Term: Discount factor

    Definition

    The discount factor is the present value of one unit of income to be paid at some future date. The discount factor is calculated from a simple interest rate and for a 360-day year, as follows:

    D = Discount factor

    r = Simple interest rate (expressed as a decimal)

    t = Days to cash flow

    For annual compounding the equation is:

    R = Annually compounded interest rate

    Comment

    The discount factor is independent of any particular market conventions, compounding intervals, etc., and so is more representative of the time value of money than a quoted interest rate, such as a yield to maturity. Except in exceptional circumstances the discount factor should be less than one, because time has value, for instance, money possessed today is worth more than money possessed tomorrow.

    Term: Dividends

    Definition

    Dividends are the distribution of earnings allocated to shares and other forms of participation in the equity of incorporated private enterprises, cooperatives, and public corporations. Dividends represent income that is payable without a binding agreement between the creditor and the debtor.

    Comment

    Unlike interest payment on debt, dividends are not fixed or predetermined. Where the investor is a direct investor, that is, holds more than 10 percent of a company’s equity, then any earnings not distributed in the form of dividends are regarded as reinvested earnings attributable to the investor, proportionate to their share of the total equity capital.

    Term: Duration

    Definition

    The duration of a fixed income security is its weighted average term to maturity. The time period until the receipt of each cash flow, such as six months, is weighted by the present value of that cash flow (coupon or redemption payments), as a proportion of the present value of total cash flows over the life of the instrument. The yield to maturity of the bond is the discount factor used to calculate each present value. Duration is an indication of the sensitivity of the price of fixed income securities to market interest rate changes; the longer the duration the greater the sensitivity.

    Comment

    Duration is a characteristic of interest to investors. A zero coupon bond will have a duration equal to its maturity, because the present value of its one cash flow equals the present value of the total cash associated with it. Securities that pay cash throughout their lives have a shorter duration than a zero coupon bond, because some cash returns to the investor before maturity, and not all of it at maturity. The more that cash flows, associated with the security, are concentrated towards the early part of a security’s life, the shorter the duration relative to its maturity. The advantages of longer duration are that it (1) reduces or eliminates the “reinvestment of coupon” risk, that is, the risk that the interest rate at which the coupon payments can be reinvested is lower compared to previous interest rates; (2) increases price sensitivity to small changes in interest rates; and (3) allows investors to take a more leveraged position, that is, less money initially invested to gain exposure to a given size of investment. The advantages of longer duration can mean that investors are willing to pay a premium for a series of zero coupon bonds over the same cash flow packaged as a bond with coupon payments. Hence, there is the incentive for financial institutions to “strip” securities.

    Term: Fixed interest

    Definition

    The amount of interest, to be paid out at each payment date (the coupon), is contractually fixed between the debtor and creditor.

    Comment

    The amount of cash interest to be received is known with certainty in advance (assuming that the debtor does not default). For both the debtor and creditor, this certainty is the main advantage of the fixed interest security. If market interest rates change, then the market price of the security, that is, the market value of the stream of cash flows, is altered, so that the yield on the security, as opposed to the coupon rate, comes into line with market interest rates, generating capital gains and losses.

    Term: Floating interest

    Definition

    The amount of cash payable at each payment date is not predetermined but is dependent on some formula, usually based on a market rate of interest, which is contractually agreed between the debtor and creditor. For instance, the interest rate payable may be linked to the six-month London Inter Bank Offered Rate (LIBOR).

    Comment

    Because the amount of cash to be paid is based on some contractually agreed formula, usually based on market interest rates, the debtor and creditor are protected against changes in market conditions. This might, for example, allow them to ensure that their asset and liability positions are hedged, for instance, an investor with floating rate liabilities might prefer floating-rate to fixed-rate assets. Because the coupon payable on the security adjusts with the market yield, the market value of the principal sum, unlike fixed interest securities, does not change as market interest rates change, and therefore, capital gains and losses are not generated.

    Term: Holding gain/loss (capital gain/loss)

    Definition

    Holding gain/loss is the nominal gain/loss arising from a change in the market value of a financial asset while it is held by the investor.

    Comment

    Holding gains and losses are regarded as valuation changes; they are reflected in the position data but not transactions data under balance of payments methodology.

    Term: Indexed

    Definition

    Either the coupon payments or the principal are linked to a price index or an exchange rate index, or the like.

    Comment

    The purpose of indexing is to allow the debtor or creditor to hedge either the coupon or principal against some type of risk. Thus, a principal sum indexed to a price index is effectively hedging the principal sum against inflation. According to BPM5, the change in the value of a principal sum arising from indexation should be recorded as interest income over the life of the security.

    Term: Net present value

    Definition

    The net present value of any financial instrument is the expected net future receipts (that is, receipts less payments) associated with the instrument, divided by a relevant discount factor.

    Comment

    Future cash receipts and payments can be discounted to give their value in present day terms (present value). All things being equal, the sooner the expected cash receipts/payments, the larger their present value; the higher the discount factor, the smaller the present value of future cash receipts/payments. If the net present value of an instrument is positive, that is, the present value of future amounts receivable is greater than the present value of amounts payable, then the instrument is a financial asset, and vice versa.

    The present value of any single cash flow is given by the formula:

    PV = FA / ((1+i)n) in which

    PV = net present value

    FA = future amount receivable/payable

    i = an appropriate annual interest rate (expressed as a decimal)

    n = number of periods before amount becomes due

    Net present value is:

    NPV = sum (PVr) - SUM (PVp) in which

    PVr = present value of future amounts receivable

    PVp = present value of future amounts payable

    Term: Nominal value

    Definition

    The nominal value is the face value of the security.

    Comment

    The nominal value is unlikely to be the same as the market value for all but floating rate securities. Nonetheless, it is a common practice among some investors to record the value of securities held at nominal value. For example, they do not mark to market.

    Term: Par value

    Definition

    Par value is the amount at which a security is to be redeemed. This is another term for nominal value.

    Comment

    See nominal value.

    Term: Present value: See net present value.

    Term: Variable

    Definition

    The rate of interest paid can vary from period to period—the interest payable probably being related to a reference rate or index.

    Comment

    Variable interest is the converse of fixed interest and, therefore, is synonymous with the term floating interest.

    Term: Yield to maturity

    Definition

    Yield to maturity is the discount rate that equates the expected future cash flows of a security to its current market price.

    Comment

    This is a common method of expressing the yield on a security. But it is a single rate which, if the bond pays out interest on a periodic basis, is, in effect, a weighted average of various future spot rates.

    Term: Zero coupon

    Definition

    No interest is paid on the security.

    Comment

    Zero coupon bonds are sold at a deep discount to par so that “income” accrues in the form of the difference between the issue and redemption price.

    IV. RISK AND HEDGING TERMS

    Term: Basis risk

    Definition

    The basis risk arises from using a different reference interest rate, to price a financial asset, than that used to price the financial liability that is hedging or funding the asset.

    Comment

    Financial intermediaries may well fund financial assets with matching liabilities. However, if the reference rate used to price the liability is different from that used to price the asset (because the position is being hedged by a nonidentical instrument), then there is a risk that the two prices may not move exactly together, hence impacting on the profitability of the transaction for the financial intermediary.

    Term: Credit risk

    Definition

    The credit risk is the risk that the entity on which a claim is held will default.

    Comment

    In essence, credit risk relates to the financial soundness of an entity that takes on a financial liability. The more chance that the entity will default, the higher the credit risk. For securities traded in the international markets, credit rating agencies invariably are asked to provide a rating—AA or BB, etc.—on the credit risk associated with holding the security. The higher the credit risk, the greater the margin paid by the borrower over that on a low-risk security.

    Term: Currency risk

    Definition

    This is the risk that arises from hedging or matching a financial asset with a financial liability denominated in another currency.

    Comment

    The extent to which financial assets and liabilities are denominated in different currencies determines the possibility of making currency gains and losses. The greater the extent of currency mismatch, the greater the currency risk exposure.

    Term: Delta hedging

    Definition

    The delta of an option is the rate of change of its price with respect to changes in the price of the underlying asset. An option whose price changes by one dollar for every two-dollar change in the price of the underlying assets has a delta of 0.5. Delta hedging is a technique by which the value of a portfolio (consisting of options and underlying assets) is made insensitive to changes in the price of the underlying instrument, that is, the losses (gains) in the option position are offset by gains (losses) in the value of the underlying assets.

    Comment

    Variations in the price of the underlying asset cause the delta of an option to alter, which in turn requires the hedging institution to adjust the number of underlying assets held in the portfolio. Hence, the increasing use of options has stimulated securities trading through delta hedging.

    Term: Gap risk

    Definition

    The gap is the risk that the interest spread between two securities of similar type but different maturity will change.

    Comment

    Gap risk usually arises when an entity is hedging a long position in a financial instrument but does so with an instrument of a different maturity.

    Term: Long position

    Definition

    To purchase an asset gives rise to a long position in the asset, that is, having positive exposure to a change in the price of a security.

    Comment

    To go “long” is a trading term, which means that the trader owns more of the stock than he has sold; therefore, if the price of a security increases, the trader will make a holding gain and vice versa.

    Term: Market risk

    Definition

    Market risk is the possibility that the price of the security will alter because of changes in general market conditions. This is as opposed to the risk of a change in price caused by, for example, credit risks associated with the specific instrument.

    Comment

    The concern to protect against unexpected changes in market prices has been a significant factor behind the growth of derivatives. For instance, purchasing an option on an equity index is a method of protecting an investor against adverse general market movements. Thus, whereas credit risk relates to the counterparty, market risk relates to the general market conditions.

    Term: Settlement risk

    Definition

    Settlement risk is the possibility that, in the period between the agreement to, and the settlement of, a deal, the circumstances of one of the parties to the transaction may change in such a way that it is unable to meet its commitments.

    Comment

    Concern over settlement risk is one significant reason for the worldwide trend toward a reduction in the settlement period, that is, the time between agreeing to and settling a transaction.

    Term: Short position

    Definition

    The sale of an asset that one does not currently own gives rise to a short position in the asset, that is, has negative exposure to a change in the price of a security.

    Comment

    A trading term that is the opposite of long. To go “short” means that the trader has a negative position in the stock; the trader has sold more than he/she owns. The trader will go short in the expectation that the price will fall, and so he/she sells the stock at a higher price than he/she will have to pay to buy it, hence, making a profit.

    Term: Spread risk

    Definition

    The spread risk is the possibility that the interest spread between two different securities of the same maturity will change.

    Comment

    The spread risk arises from the comparison between securities with similar terms and conditions issued by different entities. It reflects the credit standing of the two entities, such as between a sovereign government issuing debt in its own currency and a corporate entity issuing debt in the same currency. If the credit standing of the corporate entity is considered to have deteriorated, the spread will widen, and vice versa.

    V. MARKET ORGANIZATION NAMES

    Term: ANNA

    Full Name: Association of National Numbering Agencies

    Purpose: An association created by national numbering agencies in 1990 to promote and regulate the use of the International Securities Identification Number (ISIN) code.

    Term: Cedel

    Purpose: One of the two international securities settlement and custody organizations in Europe. The other is Euroclear. Cedel is based in Luxembourg.

    Term: Depositary Trust Corporation

    Purpose: A securities settlement and custody organization based in the U.S.

    Term: Euroclear

    Purpose: One of the two international securities settlement and custody organizations in Europe. The other is Cedel. Euroclear is based in Brussels.

    Term: IPMA

    Full Name: International Primary Market Association

    Purpose: An organization created and run by institutions active in the international new issue market. The IPMA sets guidelines for market participants to follow when issuing new securities in the international markets.

    Term: ISMA

    Full Name: International Securities Market Association

    Purpose: An organization created and run by institutions active in the international securities market. ISMA has a rule book which, in essence, sets the regulatory framework for international securities market trading. Its trade matching system (TRAX) helps reduce settlement risk.

    Term: PSA

    Full Name: Public Securities Association

    Purpose: A trade organization created and run by institutions active primarily in the U.S. government securities market. Introduction

    Appendix VI. Custodian/Investor Relationships

    Introduction

    1. Chapter 2, section II emphasizes the importance of understanding the client/custodian relationship in order to avoid under- or double counting. The series of flowcharts in this appendix is derived from the custodian survey undertaken by the U.S. authorities with the reference date of end-March 1994. These flowcharts were provided to potential respondents to clarify to them which forms they needed to complete. The respondents were, in effect, asked to identify their own situations from the flowcharts and act according to the instructions provided.

    2. In light of this experience, the U.S. authorities are of the view that including fund managers in the survey complicated data collection; fund managers will not be approached for the end-December 1997 Survey.

    3. The complexity of the custodian/client relationship will vary between countries, but clear principles arise from these flowcharts:

    • The custodian to which the client entrusts the security may in turn entrust the security to another custodian; for instance, a local custodian may entrust securities to a global custodian. The instructions must be consistent as to who should report in these circumstances.

    • Starting with the client and working “up” through the chain, each “level” provides the name of the financial intermediary with whom it is dealing. Consequently, the compiler can confirm that the respondent is completing the correct report form, and, if need be, the compiler can better understand the client/custodian relationship.

    • If the chain involves a nonresident financial institution, then the last leg of the chain within the resident economy must report the holdings; the domestic compiler cannot approach a nonresident entity.

    The U.S. report forms referred to in the flowcharts are:

    • FORM 1: Respondent identification form;

    • FORM 2: Detailed record of nonresident long-term securities;

    • FORM 3: Form for U.S. custodians to identify other U.S. custodians;

    • FORM 4: Form for U.S. fund managers—to identify U.S. primary custodians of record; and

    • FORM 5: Exemption declaration form.

    FLOWCHART 1GENERAL INSTRUCTIONS FOR ALL SURVEY RESPONDENTS

    FLOWCHART 2SPECIFIC INSTRUCTIONS FOR U.S. CUSTODIANS

    FLOWCHART 3SPECIFIC INSTRUCTIONS FOR U.S. FUND MANAGERS

    FLOWCHART 4A U.S. FUND MANAGER EMPLOYS A U.S. GLOBAL CUSTODIAN

    FLOWCHART 5A U.S. PRIVATE-LABEL 1/ CUSTODIAN SUBCONTRACTS WITH A U.S. GLOBAL CUSTODIAN

    1/ A private label custodian is a local or primary custodian that does not have a global subcustodian

    FLOWCHART 6A U.S. PRIVATE-LABEL 1/ CUSTODIAN SUBCONTRACTS WITH A NONRESIDENT GLOBAL CUSTODIAN

    1/ A private label custodian is a local or primary custodian that does not have a global subcustodian network.

    FLOWCHART 7A U.S. GLOBAL CUSTODIAN EMPLOYS A NONRESIDENT SUBSIDIARY OF ANOTHER U.S. GLOBAL CUSTODIAN AS ITS NONRESIDENT LOCAL SUBCUSTODIAN

    FLOWCHART 8A U.S. PRIVATE-LABEL CUSTODIAN SUBCONTRACTS WITH A NONRESIDENT SUBSIDIARY OF A U.S. GLOBAL CUSTODIAN

    FLOWCHART 9A U.S. FUND MANAGER EMPLOYS A NONRESIDENT GLOBAL CUSTODIAN WITH LOCAL SUBCUSTODIANS IN THE UNITED STATES

    FLOWCHART 10A U.S. FUND MANAGER EMPLOYS A U.S. OR SUBSIDIARY BRANCH OF A NONRESIDENT GLOBAL CUSTODIAN

    FLOWCHART 11A U.S. INSTITUTIONAL INVESTOR OR FUND MANAGER EMPLOYS ANOTHER U.S. FUND MANAGER

    FLOWCHART 12A U.S. INSTITUTIONAL INVESTOR OR FUND MANAGER EMPLOYS A NONRESIDENT FUND MANAGER AND A NONRESIDENT GLOBAL CUSTODIAN

    Appendix VII. Security Databases

    1. The experience of Task Force members is that for a survey conducted on a security-by-security basis, it is extremely useful to have an internationally recognized security code reported alongside the details of the security held and for compilers to have access to a security database(s). With this information, compilers can check that data have been correctly reported; they also have the basic information to produce extra reports on, for example, the maturity of securities by currency type. With access to market prices for the reference date of the survey, compilers can confirm market valuation data supplied (or even produce market valuation data if respondents provide data at face value). Price information may be included in the securities database acquired or is observable through local markets or commercial vendors such as Reuters or Bloomberg.

    2. This appendix provides some information on security databases. The first two sections discuss official and commercial databases of individual securities. The third section presents information on the International Securities Identification Number (ISIN) code system, including the associated securities database. The fourth section discusses the structure and content of the Financial Terminology Database—a valuable reference source to guide national compilers in making classification decisions.

    I. Official Databases

    A. Bank for International Settlements Securities Databases

    3. The Bank for International Settlements (BIS) maintains three debt security databases: one for international bonds, a second for Euronotes, and a third for domestic debt securities. The databases on international bonds and Euronotes contain information on individual issues. The BIS publishes data on amounts outstanding, announced issues/facilities, and net issues with a breakdown by type of issue, currency, type of issuer, and residence and nationality of issuer each quarter in its International Banking and Financial Market Developments. The BIS makes available data, on individual bond issues, to central banks upon request.

    B. Organisation for Economic Cooperation and Development Database

    4. The Organisation for Economic Cooperation and Development (OECD) collects information on international security issues from various published sources. Individual bond and equity issues data are stored in a database that is maintained to meet the analytical requirements of the OECD’s Committee on Financial Markets. In addition, to make publicly available up-to-date statistics on a regular basis, the OECD publishes aggregate data by borrower and by currency or market for major categories of securities in the OECD’s Financial Statistics Monthly. To provide more detail, it also publishes Financial Market Trends three times a year.

    II. Commercial Databases

    5. Numerous commercial databases exist. Below is a list, in alphabetic order, of those commercial databases containing international securities that have been or are being used by at least one organization represented on the Task Force. However, the list is provided for information purposes only; the Task Force makes no recommendations. Any compilers who approach any commercial database vendors will need to make their own judgments as to whether the product being offered meets their needs.

    • Bloomberg: 499 Park Avenue, New York, New York 10022, United States

    • Euromoney Bondware: Nestor House, Playhouse Yard, London EC4V 5EX, United Kingdom

    • Interactive Data: 95 Hayden Avenue, Lexington, Massachusetts 02173–9144, United States

    • International Financing Review: 33 Aldgate High Street, London EC3N 1DL, United Kingdom

    • International Securities Market Association: Seven Limeharbour, London E14 9NQ, United Kingdom

    • Muller Data: 90 Fifth Avenue, New York, New York 10011, United States

    • Reuters: 85 Fleet Street, London EC4P 4AJ, United Kingdom

    • Sicovam: 5 Rue du Centre, Niosy le Grand 93167, France

    • Telekurs: Postfach 8021, Zurich 8005, Switzerland

    • Wertpapiersammelstelle Frankfurt: Dusseldorfer Strasse 167, Frankfurt am Main D-60329, Germany

    III. ISIN Code System

    6. One initial point of contact for compilers could be the local national numbering agency (NNA). As explained in chapter 3, section III, NNAs allocate a unique identifier to each security. In addition, they are linked into the Association of National Numbering Agencies’ (ANNAs’) Global ISIN Access Mechanism (GIAM) network. This allows them to make enquiries concerning any security worldwide that has an ISIN number, regardless of which NNA allocated the number. The possibility of access to the GIAM network by statistical agencies is being investigated by the IMF’s Committee on Balance of Payments Statistics at the time of this writing. Set out below is information on the ISIN code system, including the GIAM network.

    A. Background

    7. The ISIN code consists of a two-character country code, a nine-digit numeric string, and a one-digit check digit. It was adapted from national codes, which existed prior to the development of the ISIN; in essence, the two-digit country code was added to the original national code.

    8. NNAs who allocate the codes have sole authority to allocate numbers within their jurisdiction—usually a single country. The allocation of the country code follows different rules according to the type of security. Equity securities (which are usually issued in home markets) are allocated the code of the country of residence of the issuer. Debt securities are allocated the code of the country of the lead manager (effectively the residency of the NNA)—information that is of little use to national compilers.

    9. An ISIN code is allocated to a security at the request of a market participant, who must provide certain details on the security. This so-called mandatory information, which includes the name and residency of the issuer, is stored in a background file (masterfile) maintained by each NNA. The NNA maintains copyright over the information contained in the masterfile. Two features are worth noting: first, the allocation of ISINs is market driven; second, individual NNAs allocate ISIN numbers.

    B. History

    10. In 1989, the Group of Thirty1 recommended the adoption of ISIN codes as the international standard for the identification of securities. Although ISINs had been in existence since 1981, there is little evidence of their use prior to 1989. In 1990, the Association of National Numbering Agencies (ANNA) was formed with the primary objective of maintaining and implementing the international standard. The International Standards Organization (ISO) designated ANNA as the registration authority to coordinate all aspects of the implementation of the ISIN numbering system.

    11. In 1994, at the initiative of ANNA, the individual masterfiles of the NNAs were linked through the Global ISIN Access Mechanism (GIAM) network, so that each NNA could access information held in any other NNA’s masterfile.

    12. In 1994 ANNA produced a draft document proposing a companion code to the ISIN—the Classification of Financial Instrument (CFI) code. This code would be developed to meet a perceived need to provide information on the characteristics of securities allocated an ISIN number. The proposal is for a six-character code that can define all types of securities. The first character indicates whether a security is debt or equity; the second character, the type of debt or equity (for instance, common or preferred shares), and so on. The country of residence of the issuer is not identified in the CFI code.

    C. Potential Benefits to Statisticians

    ISIN codes

    13. The use of ISIN codes in the commercial world is well established. Settlement houses such as Euroclear require the ISIN code of the security being settled, encouraging its use. (Euroclear is an “NNA,” allocating numbers to “international” debt issues.) Not all outstanding securities have ISINs, but the percentage of internationally traded equity and long-term debt securities without a number is declining all the time and, in terms of the value of securities outstanding, is probably small. Because the ISIN code allocated to a security is usually readily available in commercial bond databases, the opportunity exists for statisticians to attribute securities consistently both within and across countries.

    CFI code

    14. Unlike the ISIN code, the CFI code was not active at the end of 1995. For statisticians, there would be advantages in using the CFI code. It is already akin to a statistical message, and a comparison between the classification of equity and long-term debt instruments in the CFI code and the classification in BPM5 shows a broad similarity, but they are not identical. If the CFI code becomes widely used, then, in principle, benefits would accrue to all types of statistical collection systems, because transactions and holdings in securities could be classified “at source,” that is, in the books of the reporting entity. However, as the CFI code is not yet active, no firm conclusions on its use by statisticians can be reached.

    GIAM network

    15. The GIAM network basically gives access to a set of databases of individual securities. Not only is information on the country of residence of the issuer available but also such details as the currency of denomination, date of issue and redemption, and the coupon. Access to the GIAM network would, in theory, bring benefits particularly to compilation systems that collect security-by-security information. Compilers could ask respondents to include the ISIN code in any report of a securities transaction or holding and then, by setting up a system which linked the reported ISIN code with the information in the background file, allocate holdings and transactions geographically (and use the other masterfile information). However, the data on the GIAM network would need to be downloaded and reformatted (for statistical purposes) to bring about the full benefits; otherwise, the statistician would be allocating each security manually. In addition, there is uncertainty over the accessibility of historic information on the GIAM network.

    IV. Financial Terminology Database (FTD)

    A. Background

    16. At both the international and European levels, statisticians are working to promote harmonization of balance of payments statistics. As part of the effort to harmonize the components of the financial account of the balance of payments, the Financial Flows and Stocks Task Force (FFSTF) of the European Monetary Institute (EMI) asked the Bank of England to create a database of financial terminology (FTD). The FTD was established in February 1994; it continues to evolve, and new entries are added periodically.

    17. The FTD is a reference tool, which national compilers can consult before deciding how a particular financial instrument should be classified. It currently focuses on instruments falling into the portfolio investment component of the balance of payments. Each entry includes a description of the particular instrument, together with methodological guidance on its treatment (see an example following paragraph 26 of this appendix). The database is not intended to be a comprehensive capital markets manual.

    B. Structure of the Database

    18. The FTD is structured as a hierarchical series of records, similar in concept to the standard components of the financial account set out in BPM5 (see diagram 1 ahead): portfolio investment is split between equity and debt and then further subdivided into bonds and notes, money market instruments, and financial derivatives. Each instrument that falls within portfolio investment is allocated to the appropriate instrument group. In the case where an instrument could fall into one of two categories, it is classified in the category that best reflects its predominant characteristics. For example, the definition of depositary receipts is found under equity because of the relative importance of American depositary receipts (ADRs). There is, however, a cross-reference in the depositary receipts definition to bearer depositary receipts (BDRs) and vice versa, although the description of the latter is located under debt.

    19. Entries are further divided into two subcategories. The first category, termed “instrument description,” covers terminology used to describe securities containing specific characteristics. Examples include zero coupon bonds and index-linked securities. In these cases, the specific characteristics of the instruments can cause difficulties in terms of balance of payments treatment. The second category, described as “market description,” covers terms that either describe where an instrument is issued or cover a range of instruments with different characteristics, which the market links together under a common term. Examples of the first type are Eurobonds and foreign bonds (Yankee bonds, Samurai bonds). Examples of the second type are Brady bonds and credit derivatives.

    20. Similar types of entries are clustered together in groups. For example, one record covers structured floating rate notes (FRNs), with a subgroup of entries “attached” to this, covering specific types of structured FRNs (such as collared, corridor, and reverse FRNs). This database structure has been used in preference to, for example, a simple alphabetical listing, because it forces compilers to consider whether a particular instrument is a variation on an existing theme or a “new” instrument in its own right. A list of the typical entries—grouped by instrument type—is included in the upcoming example.

    C. Components of an Individual Instrument Record

    21. Each record details the name of the instrument, its group within the database (the portfolio investment category), any subgrouping details (for instance, subgroup of structured FRNs), the economic rationale behind the instrument, a source (or sources) of further information, and the balance of payments treatment. An example of a typical database record is provided in the upcoming example.

    22. The economic rationale section of the record highlights some of the key features of the instrument, such as interest rate structure, maturity, type of return, capital certainty, etc. This description guides compilers when identifying instruments and assessing their correct classification within the balance of payments.

    23. The treatment field records the treatment of the particular instrument, which has been agreed upon by members of the FFSTF. In the majority of cases, the field refers to the relevant section of BPM5. In cases where instruments are not explicitly covered by BPM5, the database records the agreed FFSTF treatment. Initial proposals for the treatment of new entries are made by the Bank of England, based on the principles in BPM5, and discussed by the FFSTF at approximately six-month intervals.

    D. Format of the Database

    24. The database has been built in Microsoft Access for Windows. Instrument records may be viewed by using an Access table or by entering the database through the menu-driven instrument hierarchy. Full user instructions are supplied with copies of the database, and individual users are free to customize their own copy of the database (stored locally) to meet their own specific needs (e.g., to include an instrument’s name in their own language).

    25. A paper copy of the database is available for those recipients who do not use Microsoft Access.

    26. Furnished next is a list of entries, confirmed and provisional, as at end-November 1995, a diagrammatic presentation of the structure of the database, and one typical entry in the FTD. Further enquiries should be addressed to the Balance of Payments sections of the Bank of England (Tel: +44 171 601 4480) or the EMI (Tel: +49 69 27 227 686).

    FINANCIAL TERMINOLOGY DATABASE: ENTRIES AS AT END-NOVEMBER 1995
    NAMEINSTRUMENT GROUPPORTFOLIO INVESTMENT

    CATEGORY
    Asset-backed securitiesASSET-BACKED SECURITIESBONDS & NOTES
    Mortgage-backed bond
    Collateralized mortgage obligation (CMO)
    Pfandbriefe
    Bearer depositary receiptsBEARER DEPOSITARY RECEIPTSBONDS AND NOTES
    Currency linked bondsCURRENCY LINKED BONDSBONDS AND NOTES
    Dual currency bonds
    Dragon bondsDRAGON MARKETSBONDS AND NOTES
    Bonds with enhanced “duration”ENHANCED DURATIONBONDS AND NOTES
    Stripped bonds
    Bunny bonds
    Treasury receipts (TRs)
    Equity warrant bondEQUITY RELATEDBONDS AND NOTES
    Convertible bond
    Equity-related bond
    EuromarketEUROMARKETSBONDS AND NOTES
    Eurobond
    Euro medium-term notes (EMTN)
    Brady bonds
    Geisha bondsFOREIGN MARKETSBONDS AND NOTES
    Alpine bonds
    Shibosai bond
    Daimyo bond
    Navigator bond
    Samurai bond
    Matador bond
    Yankee bond
    Foreign bond
    Shogun bond
    Marathon bond
    Bulldog bond
    Structured FRNSTRUCTURED FLOATING RATE NOTES (FRN)BONDS AND NOTES
    Reverse FRN
    Collared FRN
    Step-up recovery FRN (SURF)
    Range FRN / Corridor FRN / Accrual note
    Global bondGLOBAL MARKETSBONDS AND NOTES
    Index-linked securitiesINDEX LINKEDBONDS AND NOTES
    Property index certificates (PlCs)
    Nonparticipating preferred shareNONPARTICIPATINGBONDS AND NOTES
    Preferred share
    “Perpetual” FRN“PERPETUAL” FRNsBONDS AND NOTES
    “Fake” perpetual
    Variable rates note (VRNs)
    SchuldscheineTRADABLE LOANSBONDS AND NOTES
    Hybrid or Asian FRN / CD
    Mutual fundMUTUAL FUNDSEQUITY
    Depositary receiptDEPOSITARY RECEIPTSEQUITY
    American depositary receipt (ADR)
    Global depositary receipt (GDR)
    American depositary share (ADS)
    Participating preferred sharePREFERRED SHARESEQUITY
    Preferred share
    Credit derivativeCREDIT DERIVATIVESFINANCIAL DERIVATIVES1/
    Financial futuresFINANCIAL FUTURESFINANCIAL DERIVATIVES
    OptionsOPTIONSFINANCIAL DERIVATIVES
    Spread option
    Equity option
    SwapsSWAPSFINANCIAL DERIVATIVES
    Currency swap
    Interest rate swap
    Equity swap
    Bank loan swap
    Notes issued under a note issuance facility (NIF)/Revolving underwritten facility (RUF)EUROMARKETSMONEY MARKET INSTRUMENTS

    As of end-November 1995 the financial derivatives entries had not been discussed in the Financial Flows and Stocks Task Force of the European Monetary Institute.

    FINANCIAL TERMINOLOGY DATABASE: STRUCTURE AS AT END-NOVEMBER 1995

    DIAGRAM 1:FINANCIAL TERMINOLOGY DATABASE—HIERARCHICAL STRUCTURE

    DIAGRAM 2:SUBCATEGORIES WITHIN “DEBT SECURITIES”

    DIAGRAM 3:SUBCATEGORIES WITHIN “EQUITY SECURITIES”

    A typical entry in the FTD:
    Financial Terminology Database

    06-FEB-95
    Name:Range FRN/Corridor FRN/Accrual Note
    Description type:ID
    Portfolio investment category:Bonds/notes
    Subgroup of:Subgroup of structural floating rate notes
    Economic rationale:Range or corridor FRNs offer a coupon payment that is based upon the

    number of days during the preceding period on which a pre-agreed

    reference rate (e.g., 3-month dollar Libor or the D-Mark/dollar spot

    exchange rate) lies within a predefined corridor or range. When the

    reference rate lies within the range, the investor earns a much higher

    coupon than would be the case with a “plain vanilla” FRN from the same

    borrower. However, when the rate is outside the range, no interest accrues.

    Maturities are typically one to two years. These products offer an enhanced

    yield to investors who believe that rates will stay within a particular range. yield to investors who believe that rates will stay within a particular. They are often structured to reflect an investor’s view on the future rate, yield to investors who believe that rates will stay within a particular

    which is contrary to a particular forward-rate curve. The issuer hedges its

    position and achieves inexpensive funding by swapping the proceeds into

    plain vanilla funds (the swap counterparty will then assume the risk that the

    reference rate will stay within the range).
    Source of information:Euromoney publications, International Financing Review, International

    Securities Market Association
    Balance of payments treatment:Treat as bonds and notes. IMF BoP Manual para 389-390. Unlike the other

    structured FRNs, there is no financial derivative embedded in the

    instrument.
    Record no:53
    Form identifier:Fr
    Related records:
    Creation date:11/08/94
    Treatment agreed:Yes
    Agreement date:30/11/94
    Appendix VIII. Reconciling Position and Transactions Data, and Estimating Income from Position Data1

    I. Reconciling Position and Transactions Data

    1. Reconciliation of changes in positions and transactions data is an excellent method of independently validating both sets of data. Two observations of end-period holdings that are reasonably close permit the best opportunity for reconciliation. But even results from a single-point-in-time survey are of use, because the actual measured holdings can be compared to estimated positions for the same point in time. This appendix illustrates a method of reconciliation using aggregated data. In addition, national compilers are encouraged to read paragraphs 732 to 743 of the IMF’s Balance of Payments Compilation Guide.2

    A. Price Effects

    2. Transactions data should be compiled at prevailing market prices, whereas position data should be compiled at end-period prices. Consequently, to reconcile transactions and change in positions data, compilers need to allow for valuation differences. These differences fall into three main categories: market price effect on outstanding position data, exchange rate effect on outstanding position data, and the revaluation of net transactions.

    Market price effect on the outstanding position

    3. Changes in the value of outstanding securities holdings from one end-period to another can arise solely from changes in market prices. To adjust for this effect, the compiler requires information on market prices in local markets. Many securities trade on some form of organized market, and prices are generally available either in the local markets or from international financial information systems, for instance, Reuters and Bloomberg or large securities firms. When nonresident securities, held by domestic residents, are not traded frequently (or at all), their valuation must be estimated (see chapter 3, section IV).

    4. For equities, stock market price indices can be used as a proxy for changes in value of resident holdings. For instance, because nonresident holdings of U.S. equities closely approximate the distribution of stocks in the Standard and Poor’s Index of 500 leading U.S. stocks, U.S. compilers use it as a proxy for computing the market price valuation changes in nonresident holdings of U.S. equities. However, to estimate the market price effect on holdings of equities, the compiler will require some information on the currency—or country—distribution of holdings.

    5. For long-term securities, prices or bid/ask quotes for many international issues currently traded or offered are available in the International Securities Market Association’s Weekly Eurobond Guide. Local domestic market prices can be obtained from local domestic sources. Many large securities dealers and other financial firms provide systematic pricing information as well. In the absence of market prices, yields may be used to estimate price changes, because bond prices move inversely with the yield. For example, if the yield of a bond with a one-year original maturity rises, over a period, 50 basis points (bp), the value of equivalent five-year bonds falls by 50bp times 5, and the value of an equivalent 30-year bond falls by 50bp times 30, other things being equal. However, to estimate the market price effect on long-term securities holdings, the compiler will require some knowledge of currency and the maturities (and perhaps the credit rating) of holdings.

    Foreign exchange effect

    6. Valuation changes in domestic currency terms arise from exchange movements vis-à-vis securities holdings denominated in foreign currencies. Such exchange rate effects—unrealized exchange gains/losses—are rarely reported to compilers separately, although in many countries they are becoming more transparent in the regulatory and/or supervisory reporting of financial institutions and in the generally accepted accounting practices. If they are not reported, they must be estimated for this reconciliation purpose.

    7. In order to estimate the foreign exchange rate effect, the compilers must know the currency composition of securities holdings or (in order to employ a weighted exchange rate) should roughly approximate the relative significance of each currency in the total holdings. In the absence of reported data, compilers may rely on complimentary information to estimate the foreign currency components. Securities transactions by country may provide a broad indication as to what currencies are involved, or generally recognized national market/investor practices/preferences may indicate the currency composition. Other anecdotal information is available from the BIS and OECD listings of international bond issues by currency (see appendix VII). Once the currency composition is determined or estimated, positions denominated in foreign currency could be converted using spot exchange market rates. Exchange rates of national currencies are readily available from domestic market participants and from the International Financial Statistics published by the IMF.

    Revaluing of net purchases effect

    8. Transactions, either gross purchases or gross sales, in nonresident securities should be recorded at the market prices and exchange rates current at the time of the transaction. Their values, therefore, reflect prices and exchange rates over the period and need to be revalued to end-period market prices and exchange rates in order to reconcile with end-period positions data. If the timing of the transactions is unknown to the national compiler—as is likely—it must be assumed that the transactions were spread evenly throughout the period. So net transactions should be revalued from average to end-period market prices. The more frequent the position data observations, the more plausible the assumption. Periods of significant turnover in positions can cause bias in any estimates.

    Non-price effect

    9. A fourth (non-price) effect—the effect of writeoffs and other principally statistical adjustments—also needs to be taken account of, if relevant. But this effect is not discussed ahead.

    B. Detailed Calculations to Reconcile Position and Transactions Data

    Step 1: Convert holdings in domestic currency into foreign currencies:

    (1) Disaggregate previous end-period holdings in domestic currency terms into their foreign currency components.

    (2) Convert the disaggregated data into foreign currencies using previous end-period spot exchange rates.

    Step 2: Adjust valuation, owing to changes in foreign currency securities prices:

    (3) Estimate valuation change by:

    Where:

    Vc = valuation change

    Pt = present end-period market prices in foreign currency

    Pt-1 = previous end-period market prices in foreign currency

    (4) Multiply (2) by (3) to revalue holdings at present end-period market prices in foreign currency.

    Step 3: Convert holdings in foreign currency to domestic currency:

    (5) Convert (4) into domestic currency using present end-period spot exchange rates.

    Step 4: Add transactions revalued to present end-period closing prices:

    (6) Disaggregate transactions, in domestic currency terms, into their foreign currency components.

    (7) Convert the disaggregated transactions data into foreign currencies using average period exchange rates. (If the currency composition of transactions is unavailable, a proxy could be the currency composition of end-period holdings, perhaps averaged over the two relevant end-periods.)

    (8) Estimate valuation change by:

    Where:

    Vc = valuation change

    Pt = present end-period market prices in foreign currency

    Pa = average period market prices in foreign currency

    (9) Multiply (7) by (8) to revalue transactions to present end-period market prices in foreign currency.

    (10) Convert (9) into domestic currency using present end-period spot exchange rates.

    (11) Add the aggregate (5) and (10) data to compile revalued position data for foreign currency securities.

    Step 5: Revalue positions, if any, denominated in domestic currency, that is, nonresident securities denominated in domestic currency:

    (12) Positions are revalued for price changes from previous end-period closing prices to present end-period prices, using the method described in (3) and (4) above.

    (13) Transactions are revalued for price changes from average present period prices to present end-period prices, using the method described in (8) and (9) above.

    Step 6: Compile total position in nonresident securities:

    (14) Add (11), (12), and (13) to compile revalued position data for all holdings of nonresident securities.

    (15) Compare estimated present end-period closing position (14) to reported present end-period position data. Differences at the aggregate or at the detail level should be investigated and explained.

    It is advisable to reconcile transactions and changes in position data for equities and long-term securities separately.

    II. Applications for Income Estimation or Verification

    A. Introduction

    10. Portfolio investment positions data and the associated market income rates of return can be used to estimate income flows for presentation in the economic accounts or to evaluate income flows reported or derived in some other manner. Estimating income flows is reasonably straightforward, multiplying the market-valued positions by income rates of return. (Rates of return for many securities and for market aggregations are available from suppliers of financial information and securities firms.) Knowledge of the currency composition and maturity of securities held is required.

    11. If positions are employed to evaluate reported or otherwise derived income flows, the implied rates of return may be compared with market-derived rates of return. To calculate the implied/actual rate of return, the best approach is to divide the reported present period income by the previous end-period positions. If the position is substantially traded over a short period, the average of the previous and present periods’ closing positions may be more representative.

    12. Certain other aspects of comparison must also be considered, not the least of which is the degree of comparability of the two—the reported and estimating—data systems. Are both on a cash or accrual basis? Do the currency composition and other key components remain reasonably stable through the period? Seasonal patterns and market conventions in timing of payments need to be addressed as well; floating-rate instruments pay monthly or bimonthly, and fixed-rate instruments pay semiannually or annually. In a volatile period, a simple averaging of end-period positions in the calculation of the implied yield gives little account of any large skewed changes in the position’s composition that could affect the comparison of the implied and market returns. Nonetheless, despite these potential difficulties, several countries successfully employ these techniques (some at the individual respondent level and others at aggregate levels) to evaluate the quality of their data.

    B. Detailed Computation of Income Flows Using Positions and Yields

    Dividend flows on equities

    (1) Add present and previous end-period reported positions in nonresident equities in domestic currency and divide by two, to compute average position for the period; disaggregate by currency (might be acceptable to assume for equity that country equals currency).

    (2) Convert the disaggregated data into foreign currencies using average period exchange rates.

    (3) Multiply (2) by local dividend yields (normally quoted on an annual basis) to compute estimated dividend flows (divide by four to derive the quarterly amount) in foreign currency.

    (4) Convert estimated foreign currency dividend flows into domestic currency using average period exchange rates. Depending on national practices, any withholding taxes imposed by the foreign country will have to be estimated.

    Interest flows on debt securities

    (1) Follow dividend flows procedures (1) through (2).

    (2) Obtain local market yields (normally quoted on an annual basis) appropriate to nonresident securities held by domestic residents. Knowledge of types and maturities of securities held is important. For instance, are positions in high-quality government issues or low-grade corporate issues, with original maturities of 5–7 years or 20–30 years, with fixed or floating rates of return, paying semiannually or annually? If the statistical system is on a cash basis, then be aware that most international bonds pay semiannually; thus, present-period income flows could reflect positions as much as two periods earlier than the previous end-period.

    (3) Multiply (1) by (2) to compute estimated interest flows in foreign currency. If computing accrual-based flows, divide by four to derive the quarterly amount.

    (4) Convert estimated foreign currency interest flows into domestic currency using average exchange rates. Depending on national practices, any withholding taxes imposed by the foreign country will have to be estimated.

    A committee of senior balance of payments statisticians that was established by the Fund in 1992 to oversee the implementation of the recommendations contained in the reports of two IMF working parties that investigated the principal sources of discrepancy in global balance of payments statistics published by the Fund, advise the Fund on methodological and compilation issues in the context of balance of payments and international investment position statistics, and foster greater coordination of data collection among countries.

    The term Coordinated Portfolio Investment Survey (or Coordinated Survey) is defined in the Survey Guide as the coordination of national portfolio investment surveys in terms of timing and (minimum) data requirements.

    Residency is an important concept in the Coordinated Survey and should not be confused with nationality. The economy in which an entity has its center of economic interest is where it resides. Residents need not be nationals of the economy in which they are located. The country of legal incorporation, or, in the absence of legal incorporation, legal domicile, is one practical method of determining residency of corporate entities.

    In a number of markets, it is more common to use the term foreign securities, that is, substituting the word “foreign” for “nonresident,” to denote claims on nonresidents in the form of securities. The model survey forms (in appendices II, III, and IV) reflect this common usage. However, different definitions of “foreign securities” exist among countries (defined on the basis of the market where the securities are issued or on the basis of the currency in which the securities are denominated, as well as on the basis of the residency of the issuer). Hence, throughout this Survey Guide the term nonresident securities is used.

    The term “country,” as used in this publication, does not in all cases refer to a territorial entity that is a state as understood by international law and practice; the term also covers some nonsover-eign territorial entities.

    The government sector or the central bank may own nonresident securities as part of reserve assets. These securities do not come under the ambit of the Coordinated Survey and so are not explicitly covered in this Survey Guide. However, the IMF Committee on Balance of Payments Statistics has requested that the IMF collect the required information through a separate exercise. Some countries collect data on nonresident securities owned by the government/central bank through a “custodian survey” (see paragraphs 52 and 55).

    A global custodian manages the custody of end-investor securities via a global subcustodian network of subsidiaries and correspondent agent banks. A primary or local custodian may not have a global subcustodian network and therefore may subcontract the safekeeping of the client’s securities to a global custodian.

    Chapter 4, section IV provides guidance on compiling a register of potential survey respondents.

    In an integrated end-investor survey system, which collects aggregate data, some of the additional detail may be collected on other survey forms.

    See appendix VII for more detail on security databases.

    This group was established in 1993 in response to a perceived need to develop a list of technical terms for which definitions could be harmonized; this development would permit international exchange of data on investment positions. Composed of participants from Australia, Canada, France, Germany, Japan, the United Kingdom, the United States, the BIS, Eurostat, IMF, and OECD, the group produced a final report in October 1994.

    Residency is defined in Chapter IV of BPM5, which the national compiler should consult (see also paragraph 6 and appendix V of this Survey Guide). Residency is not the same as nationality.

    Defined in BPM5 as amounts of money that willing buyers pay to acquire something from willing sellers. See also the definition of valuation in appendix V.

    The one exception is transactions between affiliated financial intermediaries. Only those securities that can be regarded as permanent debt (loan capital reflecting a permanent interest) and equity (share capital) are to be classified as direct investments. Other securities transactions of the related financial intermediaries are classified as portfolio investment (see BPM5 paragraph 372).

    While not explicitly covered in the international manuals, “buy/sell back” arrangements are similar to repurchase agreements. Under a “buy/sell back,” a security is bought but then simultaneously sold back to the “original seller” under a forward agreement.

    If the “buyer” onsells the security acquired under a repo to a third party, then a negative or “short position” in the security should be reported; otherwise, the holding of the security will be double counted (see box 4).

    A depositary is an entity to whom securities are entrusted for safekeeping.

    The U.S. authorities have found it useful to publish a legally binding notice about the survey, which announces it and states that any institution meeting the reporting guidelines is legally required to report, whether or not the institution is sent a survey questionnaire. This approach might bring in some firms that are not on the register. Whether this approach can be undertaken depends on local institutional and legal arrangements.

    Portfolio investment is a technical term to describe liabilities to and claims on nonresidents in the form of securities.

    An influential private sector group, based in Washington, D.C, which reports on issues pertaining to the securities markets.

    This appendix is based on work at the U.S. Department of Commerce, Bureau of Economic Analysis, and the Bank of England.

    Some compilers will face problems, particularly when checking data for claims vis-à-vis individual countries, if their transactions data are based on the “transactor” principle, as opposed to the debtor/creditor principle used for position data (see BPM5 paragraphs 484 to 488).

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