When-Issued
Categories: Derivatives, IPO
A conditional transaction where the security has has not yet been issued but is authorized to be issued. When-issued transactions can happen as part of IPOs, secondary offerings, and stock splits: The trade happens but doesn't really go through until the stock is actually issued. If it never gets issued, the transaction or trade gets cancelled.
Example
Shmoop Enterprises Global or SHMEG decides to spin off its European business as a separate company based in Paris. (We like the food and the tiny dogs.) So we declare that all shareholders of SHMEG will get 0.35 shares of SHMEUR, a new company to be spun off of the parent. The spin will officially happen on May 4th (our favorite day of the year), but they can begin trading in March as "when-issued," so that people who really want SHMEUR can rush to the head of the line.