Chapter 23
The Management of Positions
23.1 INTRODUCTION
Once trades have been executed, they create positions. If the quantity purchased of a particular instrument exceeds the quantity sold, then the position is a long position; if the quantity sold exceeds the quantity purchased, then it is a short position.
During the life of a position, there are a number of events that take place. Some of these events are externally driven and result from actions taken by the issuer of a security, or by the nature of a derivatives contract or the legal agreement underpinning a debt instrument, while others are internally driven and arise from good financial practice. Table 23.1 summarises all the events that are examined in this chapter.
Table 23.1 Position events
| Event description | Event driver | Instrument types affected |
| Interest rate fixing | Legal documentation of contract or debt issue | Swaps, floating rate notes |
| Interest (coupon) payment | Legal documentation of contract or debt issue | Swaps, all types of debt instruments, money market loans and deposits |
| Collection of maturity proceeds | Legal documentation of contract or debt issue | Swaps, all types of debt instruments, money market loans and deposits |
| Dividend payment | Equity issuer | Equities |
| Corporate actions | Equity issuer | Equities |
| Contract expiry | Exchange that developed the contract | Futures and options |
| Funding of positions | Internal process/good accounting practice | All instruments |
| Mark to market | Internal process/good accounting ... |
