How are the Face Value, Trade Value and the settlement value different from each other?
The Cumulative face Value of the securities in a transaction is the face Value of the Transaction and is normally the identifiable feature of each transaction. Say, a transaction of Rs.5,00,000 worth of G-Secs will comprise a trade of 5000 G-Secs of Rs.100 each. The Trade value is the cumulative price of the traded G-Secs (i.e. no. of securities multiplied by the price) Say, the G-Secs referred to above may be traded at Rs.102 each so that the Trade Value is Rs.5,10,000 (102 x 5000). The Settlement value will be the trade value plus the Accrued Interest. The Accrued Interest per unit of the Bond is calculated as = Coupon of Bond x Face Value of the G-Sec. (100) x (No. of Days from Interest Payment Date to Settlement Date)/360 In computing the no. of days between the Interest Payment Date and the Settlement Date of the trade, only one of the two days is to be included.
The Cumulative face Value of the securities in a transaction is the face Value of the Transaction and is normally the identifiable feature of each transaction. Say, a transaction of Rs.5,00,000 worth of G-Secs will comprise a trade of 5000 G-Secs of Rs.100 each. The Trade value is the cumulative price of the traded G-Secs (i.e. no. of securities multiplied by the price) Say, the G-Secs referred to above may be traded at Rs.102 each so that the Trade Value is Rs.5,10,000 (102 x 5000). The Settlement value will be the trade value plus the Accrued Interest.
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