Callable Securities Procedures
When a security is subject to a partial redemption by the issuer, the issuer notifies Raymond James, via a central industry depository, of the number of units for the specific security to be redeemed.
Upon receipt of the issuer’s notification, Raymond James determines the favorability of the redemption based on the current market price versus the call price. When the redemption of the callable security is made on terms that are favorable to the called parties, Raymond James does not include any firm inventory accounts or employee-related accounts in the pool of securities eligible to be called until all other customers' positions in such securities have been called. When the redemption is made on terms that are unfavorable to the called parties, Raymond James does not exclude firm inventory accounts or employee-related accounts from the pool of the securities eligible to be called.
Once the favorability of the redemption has been determined, systematic, random lottery processes occur to impartially select called shares for the partial redemption. When completed, Raymond James notifies each financial advisor of the number of shares that have been called in his or her clients' accounts for redemption. In a partial redemption, it is possible that Raymond James will not receive any allocation for redemption. A particular Raymond James client account could receive a full, partial, or no redemption. Results depend on the percentage of outstanding shares being redeemed and the allocation results at that time.
Strict regulatory guidelines are followed and extensive internal procedures are performed to ensure partial call redemptions are completed fairly and consistently.
Should you not wish to be subject to this random selection process, you must instruct your financial advisor to have Raymond James deliver your securities to you. Delivery will be effected provided, of course, that your position is unencumbered or had not already been called by the issuer as described, prior to receipt of your instructions. The probability of one of your securities being called is the same whether they are held by you or by Raymond James for you.
More about Callable Securities and Holding Securities in Street Name
The terms of many bonds allow the issuer to partially redeem or “call” the issue prior to maturity date. Certain preferred stocks are also subject to being called by the issuer. View Callable Fixed Income Securities for more information about these securities and their associated risks.
Securities that are held for your account in “street name,” or held by a securities depository, are commingled with the same securities being held by Raymond James for other clients. Your ownership of these securities is reflected in our records. You have the right at any time to require delivery to you of any such securities that are fully paid for or are in excess of margin requirements.