What is a Broken Date?
How Does the Broken Date Work?
For example, let's assume that a futures contract for shares of Company XYZ is three months long and is issued on April 1. The regular maturity date would be 90 days later on July 1. However, if the contract has a broken date, it might mature on, June 28 or July 2. Likewise, its maturity could be in, say, 5 weeks when the typical date is 12 weeks.
Why Does the Broken Date Matter?
The finance world relies on standardized maturities for specific contract types. This results in consistent recordkeeping and reporting for investors and the rest of the financial world, making trading easier and less costly. When a contract has broken date, it is something of a 'rogue' investment and requires extra care from the implicated financial services firms and investors who hold the securities.