KASE to introduce new accrued interest estimation methodology for MEOKAM issued after April 02

/IRBIS, May 18, 01/ - Kazakhstan Stock Exchanges (KASE) informs that from May 21 it enforces new method of accrued interest estimation for deals over MEOKAM issued after April 02. Changes in the methods are made in accordance to requests of the professional participants of the financial market and government resolution #437 dated April 02, 2001. As it had been informed, the Ministry of Finance (MOF) changed settlement basis over its securities from actual/364 to actual/365. After this modification, the KASE introduced new methodology of accrued interest estimation. On this basis, annual interest rate of MEOKAM is halved, then, resulted interest rate is used in estimation of interest payment amount fixed to given coupon. Finally, this amount is used to estimate accrued interest at each day. According to the new methodology, accrued interest, transferable from the seller to buyer, is defined as quotient of division of the annual coupon interest over MEOKAM by 365 with consequent multiplication on number of days passed from last coupon payment (or interest accrual date of security) to date of deal's conclusion. It should be noted that planned introductions reflect only beginning of "problem 365" solving at KASE that arose from MOF introduction of new estimation basis. For instance, new methodology means that amount of daily accrued interest for different coupon period will be also different (odd coupon period - 182 days, even period - 183 days). This could be hardly accepted. Nevertheless, the KASE agreed that such methodology is better than methods stipulating constant daily accrued interest at different amount of interest payments over even and odd coupons. However, "Friday problem" is still unsolved. This problem arises when date of coupon payment (first "odd" period 182 days, second "even" - 183 days) falls on Saturday. In this case, according to the MOF's methodology, coupon payment is made day before, i.e. on Friday. As a result, over the deal concluded on Friday, i.e. the actual day of coupon payment, the KASE transfers accrued interest to buyer. In fact, there is a day before payment date. Presently, KASE intends to propose MOF to coordinate all problems arising with MEOKAM issued after April 02 and to put accrued interest estimation methodology to full compliance with actual servicing schedule of the MOF bonds.