Identifier: C2T7L1 | Revision: 2026-10-26

Decision and objectives

A portfolio recommendation is incomplete if the investor cannot buy its proposed amount or cannot withdraw sale proceeds on time. Convert a dealer indication into a reproducible order budget: security identity, side, nominal, clean/dirty basis, value date, currency, costs and cash credit timing. Executable size and custody arrangement can matter as much as model yield.

Objectives: Calculate implementable purchase size; Reconcile a dealer confirmation; Budget exit and custody costs.

Prerequisites: C2T6L5.

Mechanics

Minimum denomination is the smallest legal holding or transfer unit under the issue; the dealer can impose an additional order minimum or increment. A quoted price can apply only to a stated size. The ask is paid to buy and the bid received to sell. A narrow displayed spread does not prove the whole desired size can trade there.

Custody describes where rights are recorded and through which intermediaries payments and transfers pass. Domestic book-entry instruments are in MKK's relevant system scope; internationally issued debt may involve an international custody chain and intermediary records. Do not promise every foreign issue appears in an identical holder-level view. Reconcile the chain and statements for the actual account.

Price and return drivers

Total debit = nominal × dirty ask / 100 + entry fees + funded conversion/transfer charges. A round-trip loss at unchanged mid-market can equal the spread plus fees. Annual custody may use nominal, market value, a minimum charge or another contractual base; read the tariff. Settlement credit and withdrawable cash are separate operational milestones.

Worked case

Hypothetical USD bond order: minimum face USD 10,000 and increments USD 1,000 thereafter; dirty ask 101.20, dirty bid 100.40; entry fee USD 25; sale fee USD 25; one-year custody USD 30 fixed. Cash budget USD 12,000; no tax, financing or FX conversion. Maximum face consistent with the increment is USD 11,000: debit = 11,000×1.012 + 25 = USD 11,157. USD 12,000 face would cost USD 12,169 and exceeds budget. Retained cash after purchase = USD 843.

Immediate same-date sale at bid gives 11,000×1.004−25 = USD 11,019. Loss relative to debit = USD 138: price spread 11,000×0.008 = USD 88 plus USD 50 commissions. The annual custody is not charged to an immediate exit in this supplied tariff; for a year-long holding it is an additional USD 30.

Adverse case

If the executable bid for the entire position is only 98.00, net sale cash = 11,000×0.98−25 = USD 10,755; loss = USD 402 before any already incurred custody. If the sale settles after the liability deadline, even that cash is unavailable on time. A valuation statement at 100.40 does not guarantee the dealer will buy USD 11,000 at that price under stress.

Practical use

Request a written quote including validity, minimum/increment, size, all-in cash, value date and payment instructions. Check transfer-out fees and whether another custodian accepts the denomination before purchase. Retain a confirmation with ISIN and accrued amount, then reconcile holdings and coupon credits against statements. Tax records need acquisition date, clean and dirty components, fees and income-date FX evidence. Costs shown here are hypothetical tariffs, not current market fees.

Decision boundaries

Use a direct issue when legal size, funding, custody and exit terms fit the objective. A fund can offer smaller units but changes redemption and price risks. Decline an otherwise attractive issue when its minimum debit consumes emergency cash or when no operational path meets the deadline. Never round nominal upward simply to meet a broker's minimum without recalculating issuer concentration and cash buffers.

Practice and references

Exercise: hypothetical minimum USD 5,000, increments 1,000; dirty ask 99.40; purchase fee 20; budget 7,000. Answer: USD 7,000 face costs 6,958+20 = USD 6,978 and fits; USD 8,000 costs 7,952+20 = USD 7,972 and does not. Remaining cash after the permitted 7,000-face purchase is USD 22. No tax, conversion or custody is included in this entry-only exercise.

Takeaway: implement the recommendation using permitted nominal increments and actual settlement cash.

Reference guide: turkish-eurobond, debt-portfolio, dirty-price, debt-execution-cash, Denomination, Bid-ask spread, Settlement date.

Next: C2T7L2. Topic test: C2T7.

Primary sources (checked 2026-10-26; changing terms require a publication recheck): Debt Securities Market data reporting and acceptance formats — Fields 29–36; MKK Borsa Istanbul Debt Securities Market — Instrument list and member transfer/settlement processes.

Shared reference guide