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===Fungible securities=== | ===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. | 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=== | ===“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”. | 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”. | ||