Posted in Finance, Accounting and Economics Terms, Total Reads: 244
Definition: Broken Date
Broken dates, more popularly called “Odd Dates” are referred to in case of unusual delivery dates. A forwards contract in 26 days in the future can be regarded as a broken date. We hear of 1 month, 3 month, 6 months etc fairly frequently – which are sort of standard dates of delivery for a wide range of contracts.
To state an example, assume a forwards contract for shares of a company called aE – 3 months long and is issued on June 1. Typically, the maturity date would be 3 months from June 1 i.e.September 1. In case of forwards contracts with an odd date or a broken date, it might mature on, say August 28.
A contract with a broken date requires extra care from the other financial services firms and investors who hold these securities. This is because most algorithms are designed for typical maturity dates like 3 months etc.