Stock trades and realized gains/losses

[Hugh A.J. Kennedy]

Matthew Vanecek wrote:
So you think we should treat them as different shares altogether, re
retrieving prices, etc?  That's logical--price in DM != price in $.
Would the symbol be different in Frankfurt than in NY?



Actually now it is the Euro in Frankfurt, but nevermind!!!! The point is
that the share price will be sort of equal (arbitrage tends to keep shares
in line), however there is an additional issue in that the working hours of
each exchange isn't the same. I would therefore go in the direction of using
something like a RIC (Reuters Identification Code) with the exchange code
combined with the share. The share symbol can be different, because there
are two different naming authorities involved. The unique identifier used
for a share is the ISIN (International Securities Identification Number),
This consists of a 2 character country code, followed by a nine digit code
and a tenth modulo-11 check-digit (this is specified somewhere in an ISO
standard). If this is the same then the share is the same. The ISIN is
usually given out by the registering authority in the country where the
issue is registered. A share listed on a local exchange and on the national
exchange like Daimler-Chrysler, DAI will definitely have the same code and
the share is absolutely identical.

So in brief, shares are identified by the place where an issue was
registered. An issue in the US has to be registered there so it may have the
same value - but it is not identical. The price of a share is governed by
the market where it is traded. It is possible that DAI, for example may have
a small difference between XETRA (the Frankfurt Electronic Trading System)
and the Stuttgart regional exchange, although in this case the instrument is
the same and people can and do arbitrage between the two exchanges.

There are comparatively few shares that are double listed (for the issuer,
it is far from easy) and few private persons who would have the same shares
in two countries.

Thanks for weighing in.

No probs, I've had a good look at where GnuCash seems to be going and I like
it and certainly want to help.

Hugh Kennedy

 -----Original Message-----
From: 	Matthew Vanecek [mailto:mevanecek@yahoo.com]
Sent:	10 January 2003 16:31
To:	Hugh A.J. Kennedy
Cc:	gnucash-devel@lists.gnucash.org
Subject:	Re: Stock trades and realized gains/losses

 << File: signature.asc >> On Fri, 2003-01-10 at 07:38, Hugh A.J. Kennedy
wrote:
> Ok, I have worked on three stock exchanges, a national depository and for
> numerous exchange members so I have another viewpoint (which may be
> inappropriate for the private trader or even plain wrong).
>

Any insight from experience is valuable. :)

> I prefer accounting for shares in lots because many countries implement
> 'speculation taxes' that tax capital gains differently for short-term than
> long term holdings. It therefore becomes extremely useful to keep track of
> share packets depending upon when they were bought and their initial
> purchase price.
>

> Valuing a share on a minute by minute basis isn't so interesting unless we
> want to address the day-trader. For valuation purposes a once-per-day at
> closing or on-request (and wait) is fine.
>
I'd prefer on-request for ad-hoc, with actual 'official' reports based
on purchase cost +/- adjustments (note that adjustments are strictly
optional entries, but are still good practice, in gaap).

> The last point is for international processing, a share in Frankfurt is
not
> the same as the same share in New York. The actual share is sitting in a
> registry at a central depository, either DTC in the case of the NYSE or
> Deutsche Boerse Clearing in the case of Frankfurt. What this means is that
> there may be additional costs if you wish to sell your Frankfurt share in
> New York or vice versa. It is therefore important to be able to keep the
> shares separate.
>

So you think we should treat them as different shares altogether, re
retrieving prices, etc?  That's logical--price in DM != price in $.
Would the symbol be different in Frankfurt than in NY?

Thanks for weighing in.

--
Matthew Vanecek
perl -e 'print $i=pack(c5,(41*2),sqrt(7056),(unpack(c,H)-2),oct(115),10);'
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For 93 million miles, there is nothing between the sun and my shadow except
me.
I'm always getting in the way of something...