Fungible: Difference between revisions
Amwelladmin (talk | contribs) No edit summary |
Amwelladmin (talk | contribs) No edit summary |
||
| Line 3: | Line 3: | ||
*'''Not fungible''': Securities from different series, even if issued by the same issuer, are ''not'' fungible with each other. | *'''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. | There is a great divide in the bedeviling pedantry of law, the between things that are the ''same'' but somehow, over a period of time, ''different'', and things that are ''different'' but nonetheless at a given point in time, precisely the same. [[Amend]]ment describes that first class; [[fungibility]] the second. | ||
===Definition=== | ===Definition=== | ||
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. | 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. | ||
Revision as of 10:43, 20 July 2020
|
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.
- 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.
There is a great divide in the bedeviling pedantry of law, the between things that are the same but somehow, over a period of time, different, and things that are different but nonetheless at a given point in time, precisely the same. Amendment describes that first class; fungibility the second.
Definition
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.