What is total issued nominal capital?
There are a handful of rules in Rapptr where the regulation requires a calculation which is a percentage of the total issued nominal capital (value) of an issuer’s securities, instead of a total quantity of shares (or equivalent shares) outstanding. The jurisdictions that require shareholding to be calculated as a percentage of this value are the Netherlands, Denmark and Egypt.
While we are usually interested in counting a number of shares (or the equivalent amount of shares one is entitled to), in the total issued nominal capital rules, we are interested in finding out how much of a total currency value is held. In Rapptr, we use the property TotalIssuedNominalCapital to hold this value. It is essentially the nominal value of issued shares or the sum of their par values. In concept, this can be calculated by multiplying the par value (which is a stated value on the issued share certificate) of each class of stock by the total number of outstanding shares of that class, and summing these values across all share classes.
To work out the percentage ownership of an issuer's total issued nominal capital, one's quantity of shares (or equivalent shares) must be multiplied by the par value of each share. Doing so means we arrive at the amount of issued capital held. This becomes our numerator. In Rapptr, ParValue is the property representing the amount stated on the certificate of each stock. Please note that we separate this from FaceValue (which is used for bonds only).
How does Rapptr handle rules which use TotalIssuedNominalCapital?
At FundApps, we've found that most players in the industry simply do not have a source for an issuer's total issued nominal capital. Those that have been able to find a data feed also report a high level of incorrect or outdated data.
Since the provision of this field was so rare among clients, some of the rules related to this data only run when TotalIssuedNominalCapital is provided in the positions file. This is the case due to the amount of missing data that was returned for clients who were not able to populate the field, despite the regulatory requirement. In addition, ParValue is often set a currency amount of 1, meaning other checks in a given country related to the number of total shares outstanding sufficed as a compliance check.
In certain countries, however (The Netherlands for example), we are able to supply official regulatory data (to be described below) and in such cases, it’s important that clients actively make the decision whether to either deactivate such rules due to missing data, or take advantage of the automated matching/supply of data.
A solution from Regulatory Data (RegData)!
We have now been able to automatically source the current official values for TotalIssuedNominalCapital from issuers whose HomeMemberState is the Netherlands (NL) given that official regulatory data is available from the Netherlands regulator, the AFM. This data is viewable in Rapptr under the heading "Dutch Issuer Data" on the screen Main Menu -> Regulatory Data, including links to the official source data. Rapptr will use the value from the RegData column entitled “Total Placed Capital” if the following steps are taken.
Please note that there is a separate regulatory data list called “Dutch Share Class Data” which is not used in any rules but is provided as a reference for more granular security class information (including security par values).
To ensure that this data is applied to certain securities (those with HomeMemberState as NL) in your file, you must include the exact name (as shown on the Dutch Issuer Data list by navigating Main Menu -> Regulatory Data) in the IssuerName field in your position file.
As an example Heineken NV needs to be Heineken N.V. Punctuation needs to be identical, but capitalisation will not affect the match. If the IssuerName isn't exact, an unknown error will occur with the reason: Assets in this group have missing data: TotalIssuedNominalCapital.
Rapptr will then search for a match from the “Company Name” string (in regulatory data) with IssuerName and auto-populate a property called LookedUpTotalIssuedNominalCapital if a match is achieved. In such cases, the official regulatory value will be used in place of TotalIssuedNominalCapital.
It is highly recommended that if you decide to use this feature, you supply the exact IssuerName for ALL of the issuers that have HomeMemberState of NL. Otherwise, missing data and Unknown results will likely be generated. It is also important that if you chose this approach, you also supply each security’s ParValue (price or face value of an equity security when originally issued and bearing no relation to the market price). Although Rapptr cannot auto-match ParValue due to missing security identifiers from the regulator, this data is listed in the Regulatory Data screen under “Dutch Share Class Data.”