Key legal issues in English law in debt capital markets—fungibility
Published by a LexisNexis Banking & Finance expert
Practice notesKey legal issues in English law in debt capital markets—fungibility
Published by a LexisNexis Banking & Finance expert
Practice notesWhat does this Practice Note cover?
This Practice Note explains the concept of fungibility and its practical relevance to additional issuances of debt securities.
When are debt securities fungible?
Debt securities and other assets are fungible if they are substantially indistinguishable from one another and are interchangeable for trading purposes.
Fungibility is a basic characteristic of debt securities issued on the same date and forming a single series. They will invariably be issued on identical terms and interchangeable for all purposes. When the securities are traded, the seller can settle the trade by delivering the traded nominal amount of the securities, without any requirement to deliver any particular individual securities. If this were not the case, trading the securities would be practically impossible.
For information on trading debt securities, see Practice Note: UK Debt securities—trading, settlement and custody.
Fungibility was a significant question for securities issued on the same date and forming a single series in the past, when debt securities were issued in definitive bearer form—each security was an
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