Chapter

Appendix II: Model Form for an End-Investor Survey on an Aggregate Basis

Author(s):
International Monetary Fund
Published Date:
May 2002
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Survey of Portfolio Investment:

Holdings of Equities and Debt Securities Issued by Unrelated Nonresidents as at December 31, 2001

Purpose of Collection

This survey collects information on holdings of residents of [name of country] in equities and debt securities issued by unrelated nonresidents as at December 31, 2001. The data from the survey will be used in the compilation of the balance of payments and international investment position statistics of [name of country]. These statistics are published by [name of compiling agency]. 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 [state legal authority]. [Delete if voluntary]

Confidentiality

The completed forms will remain confidential to the [name of compiling agency].

What to Report

The survey should be completed in accordance with the reporting instructions provided. If there are any questions regarding these instructions, please contact [name of member of the survey staff] at [name of compiling agency].

When and Where to Report

Please provide the results of this survey by March 31, 2002 to:

[Postal and e-mail addresses, telephone, and fax numbers of compiler]

Respondents unable to meet the reporting deadline should contact [name of member of the survey staff] at [name of compiling agency] to request an extension.

How to Report

Data may be submitted on diskettes, electronic mail, or paper forms. Please keep a copy for your records.

[Name of compiling agency and date]

Notes

Note 1. Who must report

Entities that are resident in [name of country] and that own equities or debt securities issued by unrelated nonresidents of [name of country] as at the close of business on December 31, 2001.

Note 2. What must be reported

All entities that receive a copy of the forms must return the respondent identification section (Form 1) within 30 days of receipt of the forms, even those entities indicating that they are exempt from completing Form 1.

Those respondents meeting the criteria above (see Note 1) must return the completed survey forms (Form 2) by March 31, 2002. Respondents unable to meet the reporting schedule should contact [name of compiling agency] indicated on the first page of this form to request an extension.

Reporters can file a consolidated report for all related entities that are resident in [name of country], or each resident entity may file independently. If two or more entities are filing separately, please contact the member of the survey staff indicated on the first page of this form at [name of compiling agency] for additional identification numbers. If a consolidated report is being supplied for two or more entities, do not supply separate reports for the same entities.

Note 3. Residence

The reporting unit for this form is a resident of [name of country], that is, an individual, enterprise, or other organization domiciled in [name of country]. It includes branches and subsidiaries of nonresident enterprises if the branches or subsidiaries are domiciled in [name of country]. Domicile is defined as the center of economic interest of the entity, for instance, where an enterprise engages in production. Corporations legally registered in [name of country] are considered to be resident even if they have no “physical presence.” A nonresident of [name of country] is any individual, enterprise, or other organization domiciled in a country other than [name of country]. Branches and subsidiaries of [name of country] enterprises domiciled in other jurisdictions are regarded as nonresidents of [name of country].

The securities are classified by the jurisdiction of residence of the issuer of the securities. The residence of an enterprise can be taken to be where it is legally incorporated or, in the absence of legal incorporation, where it is legally domiciled. The country of residence of the issuer may differ from the currency of issue, the place of issue, or the country of the guarantor of the security. (Some securities are guaranteed by another party (such as the parent company or a government), and the guarantee may be either explicit or implicit. Even where the funds raised are for use by the guarantor, the residence of the issuer of the security should be used, not the residence of the guarantor.) Securities issued by international organizations should be shown under the separate code for international organizations (XX), not included under the country in which the organization is located.

Note 4. Definition of equities and long- and short-term debt securities

A security is defined as an instrument that is traded or tradable. Examples of equities, long-term debt securities, and short-term debt securities are given below. This survey covers only securities issued by unrelated nonresident entities. See Note 6 to determine whether an entity is related. If you have any questions about how to classify an instrument, please contact the member of staff indicated on the first page of this form at [name of compiling agency].

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 in equities:

  • ordinary shares;

  • stocks;

  • participating preference shares;

  • depository receipts (e.g., American depository receipts) denoting ownership of equity securities issued by nonresidents (see Note 8);

  • shares/units in mutual funds and investment trusts;

  • equity securities that have been sold under repurchase agreements (see Note 7); and

  • equity securities that have been “lent” under a securities lending arrangement (see Note 7).

Exclude from equities:

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

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

  • equity securities that have been bought under repurchase agreements (see Note 7); and

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

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

Include in long-term debt securities:

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

  • asset-backed securities such as mortgage backed bonds and collateralized mortgage obligations (CMOs);

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

  • nonparticipating preference shares;

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

  • euro medium-term notes (EMTN);

  • Schuldscheine (German) notes;

  • bonds with optional maturity dates, the last 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 debt securities;

  • bearer depository receipts denoting ownership of debt securities issued by nonresidents (see Note 8);

  • debt securities that have been sold under repurchase agreements (see Note 7); and

  • debt securities that have been “lent” under a securities lending arrangement (see Note 7).

Exclude from long-term debt securities:

  • derivative instruments;

  • loans;

  • trade credit and accounts receivable;

  • money market instruments (e.g., treasury notes, bankers’ acceptances, negotiable certificates of deposit with contractual maturity of one year or less, note issuance facilities, revolving underwriting facilities, and promissory notes), including short-term debt securities;

  • debt securities that have been bought under repurchase agreements (see Note 7); and

  • debt securities that have been acquired under a securities lending arrangement (see Note 7).

Short-term debt securities cover only market instruments, such as bills, commercial paper, and bankers’ acceptances that usually give the holder the unconditional right to receive a stated, fixed sum of money on a specified date and have an original term to maturity of one year or less.

Include in short-term debt securities:

  • treasury bills and notes;

  • bankers’ acceptances;

  • commercial and financial paper;

  • certificates of deposit with contractual maturity of one year or less;

  • short-term notes issued under note issuance facilities or revolving underwriting facilities and promissory notes (such short-term notes are included even though the underlying facility [the contingency] may be for more than one year because the notes themselves are of a short-term nature);

  • debt securities that have been sold under repurchase agreements (see Note 7); and

  • debt securities that have been “lent” under a securities lending arrangement (see Note 7).

Exclude from short-term debt securities:

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

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

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

  • nonparticipating preference shares;

  • floating-rate notes (FRN) such as perpetual-rate notes (PRN), variable rate notes (VRN), structured FRN, reverse FRN, collared FRN, step up recovery FRN (SURF), and 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 debt securities;

  • bearer depository receipts denoting ownership of debt securities issued by nonresidents (see Note 8);

  • debt securities that have been bought under repurchase agreements (see Note 7);

  • debt securities that have been acquired under a securities lending arrangement (see Note 7);

  • derivative instruments;

  • loans; and

  • trade credit and accounts receivable.

Financial derivatives are not to be reported because they are not classified as securities, but as a separate type of instrument. Record the value of the underlying security separately from any derivative that may be held in relation to it; however, if a security has an embedded derivative, do not attempt to separate the security from the embedded security. Include the value of such a security, including the embedded financial derivative in your submission.

If you have any questions about how to classify an instrument, please contact the survey staff member indicated on the first page of this form at [name of compiling agency].

Note 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 [domestic currency] using the exchange rate prevailing at December 31, 2001.

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 December 31, 2001.

For unlisted enterprises, if a market value is not available at December 31, 2001, estimate the market value of your holding of equity securities by using one of the following:

  • a recent transaction price;

  • directors’ 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).

Debt securities should be recorded using one of the market valuation methods listed below in descending order of preference and converted to [domestic currency], using the exchange rate prevailing at December 31, 2001:

  • a quoted traded market price at December 31, 2001;

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

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

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

  • for debt instruments issued at a premium, the issue price less the amortization of the premium.

Note 6. Exclusion of securities issued by related enterprises

Securities (whether equities or debt) 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 or where a nonresident has more than 10 percent or more holdings in your group. Ownership is measured in terms of ordinary shares or voting stock of incorporated enterprises or equivalent beneficial interest in unincorporated enterprises. Where such a relationship exists, exclude all securities (debt and equities).

The only exception is if the nonresident entity that issued the security and the resident owner of the security are affiliated financial intermediaries—banks, for instance. In these circumstances, securities issued by related enterprises, other than equity or permanent debt, should be included in this report.

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

A repurchase agreement1 (repo) is an arrangement involving the sale of securities at a specified price with a commitment2 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 or bond) 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 reverse repos or securities borrowing arrangements are to be excluded from the form.

  • Securities sold under repos or “lent” under securities lending arrangements are to be included in the form.

  • Securities acquired under reverse repo or securities borrowing arrangements and subsequently sold to a third party should be reported as a negative holding—namely, a short position.

  • Valuations of securities under repurchase or securities lending arrangements should be at market value as at December 31, 2001.

Note 8. Treatment of depository receipts

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

Note 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 residence of the issuer of the strips remains the same as for the original security. Dealers who request that a settlement house or clearing house create strips from an existing security issued by a nonresident should not report ownership of the underlying security after the strips have been created.

  • If strips have been created and issued by an entity in its own name, then the security should be classified according to the residence of the issuer of 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 be reported as short-term debt securities.

Note 10. 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 December 31, 2001, 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.

If there are any questions regarding these instructions, please contact the survey staff member at [name of compiling agency] indicated on the front of this form.

SURVEY OF PORTFOLIO INVESTMENTS—DECEMBER 31, 2001

SURVEY OF PORTFOLIO INVESTMENTS—DECEMBER 31, 2001

For presentation, only the first and last countries on the list are shown here. The complete list of countries is shown in Annex B of Appendix I.

Also included are sale/buy backs, carries, bond or stock lending with cash collateral, and similar transactions that involve the sale of a security with a commitment to repurchase it at a fixed price on a specified date or on demand.

If there is no commitment to repurchase the securities, the transaction should be regarded as a straight sale of the security and should not be classified as a repo.

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