Magister Operis · Financial Knowledgebase

New Issue vs. Seasoned Paper

How freshly issued instruments differ from seasoned paper — evidencing ownership, how each is priced, and why the distinction matters to a transaction.

Typically if a seller is looking for POF upfront before evidencing ownership of anything…the same purported seller historically doesn’t own anything however firmly they or their brokers insist otherwise.

SEASONED/REGISTERED/ISSUED PAPER

A legitimate seller of issued/registered paper shouldn’t have any problems evidencing ownership of the amount of paper the seller says they own and have a right to sell.

Evidence of ownership can often be as simple as evidence of one and/or a combination of the following:

  • Current titlepage screenshots
  • Current custodial account statements
  • Statements of attestation under credible notarization

NEW ISSUE PAPER

A new issue seller/provider that says they possess a commitment(s) to have issued fresh cut (FC) paper should be able to easily evidence such a commitment to issue such paper from the issuing bank in order for the seller to be taken seriously …right? Evidencing a commitment(s) can be as simple as an issuer issuing a letter stating that the issuer is prepared to issue paper as per whatever is agreed between the issuer and the provider/applicant/(seller).

Anybody that says they have a commitment(s) and and cannot evidence such facts...most likely has no actual commitment from any issuer no matter how many "sellside" brokers are misinformed to advertise otherwise. Stands to reason.

ARBITRAGE

A "seller" that insists on seeing POF before POP or evidencing their ability to deliver should be categorized as a party trying to commit what is known within the industry as “arbitrage”.

That said …Magister Operis™ can actually work with sellers that don’t own anything IF/WHEN the seller's organization can professionally evidence their ability to deliver the paper predictably as agreed.

Every engagement is governed by the firm’s Method and Disclaimer; intermediaries should also review Broker 101 and the firm’s Due Diligence standards.