Corporate action events
EXRI: Call on Intermediate Securities
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EXRI is the exercise event on rights or other intermediate securities: after the rights were distributed in a first event (RHDI), EXRI lets holders subscribe for new securities, sell or buy rights, or let them lapse.
- Code
- EXRI
- Usually announced as
- CHOS (VOLU also allowed)
What EXRI means
In a rights issue the company offers existing holders new shares at a set subscription price, usually below the market price. Most markets run it as two events: first the rights are credited to holders in proportion to their holdings (RHDI), then holders decide what to do with them (EXRI). Rights can often be traded during the subscription period.
Exercising means paying the subscription price for each new share. Holders may also apply for more shares than their rights allow (oversubscription), sell rights in the market, buy more rights, or do nothing. Rights not exercised usually lapse worthless at expiry, although some issuers sell lapsed rights and pass on the proceeds.
When you see it
- An MT564 on the rights ISIN with
:22F::CAEV//EXRIand:22F::CAMV//CHOS, optionsEXER(subscribe),OVER(oversubscribe),SLLE(sell rights),BUYA(buy rights) andLAPS(let them lapse). The SMPG grid notes that SLLE and BUYA apply only when rights are tradable, and that some markets offer SLLE when the issuer buys rights back. The grid also allows VOLU. Key data: the subscription price (:90a::PRPP), the ratio, the subscription period, the cash debit date (:98a::SUBS), the market deadline and expiry. - Where the market processes a rights issue as one event, the code is RHTS instead of RHDI plus EXRI. New shares that do not yet rank equally with the old ones are later merged with them in an assimilation event (PARI). A warrant exercise is EXWA.
What to do next
- Agree the decision with the client early: rights lose their value if they lapse. The corporate action lifecycle guide shows where the election fits between announcement and payment. Instruct with an MT565 before the account servicer’s deadline, and make sure the cash for the subscription is in the account by the debit date.
- When the MT566 confirmations arrive, reconcile the rights debited, the cash paid and the new shares credited. For oversubscription, reconcile the allocation and the refund of unused cash. Record proceeds from rights sold or lapsed-rights compensation.
Where it appears in MT and ISO 20022
MT (ISO 15022)
Questions
- What is the difference between RHDI, EXRI and RHTS?
- RHDI credits the rights. EXRI is the second event in which holders use them. RHTS is used where the market handles the distribution and the subscription as one event.
- What happens to rights I do not exercise?
- Normally they lapse at expiry and become worthless. Some issuers sell lapsed rights in the market and pay the net proceeds to the holders who did not take up; the announcement says which applies.
- Why was my EXRI instruction rejected?
- Common causes are a quantity above the rights held, an instruction after the account servicer’s deadline, or missing cash cover for the subscription price. See why an MT567 rejects an instruction.