Fungible: Difference between revisions

From The Jolly Contrarian
Jump to navigation Jump to search
No edit summary
No edit summary
 
(18 intermediate revisions by the same user not shown)
Line 1: Line 1:
{{a|glossary|}}Entirely interchangeable. In the context of [[securities]], being of the same issue, and having the same securities identification number. The same, but not, if you see, the ''same''.
{{a|g|{{image|fungi to be with|png|A fun guy to be with, yesterday.}}}}{{d|Fungible|/fʌnʤəbl/|adj|}}<br>
Of two things, in all respects but their basic [[ontology]], ''identical''. For the intents and purposes of all those ''who are not pedants'', interchangeable. Undifferentiable, but not the same thing.
 
The same, you see, but not ''the same''. 
 
===Fungible securities===
Until recently, the word “fungible” only really found purchase in the world of transferable [[securities]], where it denotes distinct securities of the same issue, and having the same [[ISIN|securities identification number]] — thus satisfying all the world bar those concerned with what is on or off one’s [[balance sheet]] and how one’s [[financial reporting]] should reflect it, who like the comfort of knowing that the security which comes back to you, which is economically identical to the one you sent out, might not ''be'' the one you sent out, but that is still okay. Two fungible instruments are distinct but nevertheless indistinguishable in legal and economic terms. 
 
Two ordinary shares in a company, ''are'' fungible with each other.
 
An “on-the-run” treasury and an “off-the-run” treasury are ''not'' fungible with each other.
===“Equivalent” means fungible===
So, the key takeaway for nervous types is this: “fungible” does not mean “somewhat like”. It means ''exactly like''. The word “[[equivalent]]” when used as a term of securities transfer art means “entirely fungible”. Not just “broadly similar”.
===[[Non-fungible token]]s===
I said, “until recently”. Recently we have witnessed the emergence of the [[non-fungible token]]. This is a new asset class specifically designed for gullible people who like to be up with current trends. Non-fungible things are like the dark inversion of fungible things. Where fungible securities are ''the same, but not the same'', [[NFT]]s are ''not the same, but the same''.
 
===Fungible, not fungible, and non-fungible===
There are great divides in the bedeviling [[pedantry]] of law, between things that are the ''same'' but somehow, over a period of time, ''different''; things that are ''different'' but nonetheless at a given point in time, the same; and — in recent days — things that don’t exist at all, but being unique representations of that nothing on a [[blockchain]], in a [[Cartesian]] sense ''do'' exist, but weakly, and only along the very single fragile dimension that they are [[ontologically]] distinct. [[Amend]]ment describes that first class; [[fungibility]] the second; credulous gulls the third.  
 
So, with feeling:


*'''Not fungible''': Securities from different series, even if issued by the same issuer, are ''not'' fungible with each other.
*'''Fungible''': Individual securities comprising part of a single series (and having a the same [[ISIN]] ''are'' fungible with each other.
*'''Fungible''': Individual securities comprising part of a single series (and having a the same [[ISIN]] ''are'' fungible with each other.
There is a great divide in the bedeviling pedantry of law, the between things that are the ''same'' but somehow ''different'', and things that are ''different'' but nonetheless precisely the same. [[Amend]]ment describes that first class; [[fungibility]] the second.
*'''''Not'' fungible''': Securities from different series, even if issued by the same issuer, are ''not'' fungible with each other.  
===Definition===
*'''[[Non-fungible|''Non''-fungible]]''': Tokenised representations of meritless gobbets of intellectual property (no-longer-existent graffiti prints, memes, tweets etc.) that are created on a [[blockchain]] and are therefore uniquely unique, not to mention ''[[blockchain]]'' — and can be sold to uniquely credulous people.  
Assets are fungible where their nature allows them to be replaced in whole or in part with other assets of a like nature.  However, it applies only to the equivalence of each unit of a commodity with other units of the same commodity. Fungibility does not describe or relate to any exchange of one commodity for some other, different commodity.
====Examples====
For example shares in a company can be described as fungible as you can replace those shares with other [[equivalent]] shares in the same company.  However, shares of an “equivalent” value in another company would not be considered a valid replacement.
 
Money can also be considered a fungible asset.  If you borrow £10 from someone, you do not need to give the same £10 note back. You could give that person another £10 note, or two £5 notes, or any combination of coins that add up to £10 (as long as they are happy to accept that many coppers!)
===“[[Equivalent]]and “[[fungible]]”: ''la même chose''===
Note: in financial markets speak, “[[equivalent]]” means ''[[fungible]]''. It doesn’t mean “somewhat like". Go see our “[[equivalent]]” article for more.


{{sa}}
{{sa}}
*[[Amendment]]
*[[Amendment]]
*[[Equivalent]]
*[[Equivalent]]
*[[Non-fungible token]]
*[[Deem]]ing
*[[Deem]]ing
*[[True sale opinion]]
*[[True sale opinion]]

Latest revision as of 14:46, 5 August 2022

The Jolly Contrarian’s Glossary
The snippy guide to financial services lingo.™
A fun guy to be with, yesterday.
Index — Click the ᐅ to expand:
Tell me more
Sign up for our newsletter — or just get in touch: for ½ a weekly 🍺 you get to consult JC. Ask about it here.

Fungible
/fʌnʤəbl/ (adj.)

Of two things, in all respects but their basic ontology, identical. For the intents and purposes of all those who are not pedants, interchangeable. Undifferentiable, but not the same thing.

The same, you see, but not the same.

Fungible securities

Until recently, the word “fungible” only really found purchase in the world of transferable securities, where it denotes distinct securities of the same issue, and having the same securities identification number — thus satisfying all the world bar those concerned with what is on or off one’s balance sheet and how one’s financial reporting should reflect it, who like the comfort of knowing that the security which comes back to you, which is economically identical to the one you sent out, might not be the one you sent out, but that is still okay. Two fungible instruments are distinct but nevertheless indistinguishable in legal and economic terms.

Two ordinary shares in a company, are fungible with each other.

An “on-the-run” treasury and an “off-the-run” treasury are not fungible with each other.

“Equivalent” means fungible

So, the key takeaway for nervous types is this: “fungible” does not mean “somewhat like”. It means exactly like. The word “equivalent” when used as a term of securities transfer art means “entirely fungible”. Not just “broadly similar”.

Non-fungible tokens

I said, “until recently”. Recently we have witnessed the emergence of the non-fungible token. This is a new asset class specifically designed for gullible people who like to be up with current trends. Non-fungible things are like the dark inversion of fungible things. Where fungible securities are the same, but not the same, NFTs are not the same, but the same.

Fungible, not fungible, and non-fungible

There are great divides in the bedeviling pedantry of law, between things that are the same but somehow, over a period of time, different; things that are different but nonetheless at a given point in time, the same; and — in recent days — things that don’t exist at all, but being unique representations of that nothing on a blockchain, in a Cartesian sense do exist, but weakly, and only along the very single fragile dimension that they are ontologically distinct. Amendment describes that first class; fungibility the second; credulous gulls the third.

So, with feeling:

  • Fungible: Individual securities comprising part of a single series (and having a the same ISIN are fungible with each other.
  • Not fungible: Securities from different series, even if issued by the same issuer, are not fungible with each other.
  • Non-fungible: Tokenised representations of meritless gobbets of intellectual property (no-longer-existent graffiti prints, memes, tweets etc.) that are created on a blockchain and are therefore uniquely unique, not to mention blockchain — and can be sold to uniquely credulous people.

See also