Setting a new valuation (NAV) for the token

The first part of this article outlines the primary use cases for the Set Valuation functionality (open-ended and close-ended subscription), which is available to Issuers through the Token dashboard.

In the subsequent section, you'll discover a step-by-step guide on setting the valuation of your token. Additionally, there's a detailed explanation of how the set token valuation influences pending subscription and redemption orders.

Primary use cases for the Set Valuation functionality

Closed-Ended Subscriptions

In closed-end subscriptions, the price per security token is determined by the Issuer for the entire subscription period(s), and investors subscribe with a predefined Net Asset Value (NAV). For instance, if the price per security token is set at 100 EUR, and the minimum investment defined by the issuer is 1000 EUR, the investor commits to paying 1000 EUR and, in return, receives 10 tokens.

Issuers with active closed-ended subscriptions can leverage the 'Set Valuation' functionality, primarily once the tokens become available on the secondary market and their prices start to fluctuate. By manually 'Setting the valuation' of the token to align it with the real-time NAV of the secondary market, the token's value is updated on both the Issuer's and Investor's dashboards, providing them with an accurate estimate of their current holdings.

However, it's important to note that the valuation price in closed-ended subscriptions serves as purely informative and may differ from the subscription price. If the Issuer wishes to align the NAV with the subscription price, the subscription price must be updated with the same frequency as the NAV. Please don't hesitate to contact our team at support@tokeny.com if you require assistance with adjusting the token price.

Open-Ended Subscription

In the context of open-ended subscriptions, the price per token aligns with the Net Asset Value (NAV), typically computed at the close of each trading day based on the closing market prices of the portfolio's securities.

Differing from closed-ended subscriptions, where investors can determine the number of tokens for a specified subscription amount, those participating in open-ended subscriptions commit and remit their intended investment amount without knowing the exact token price. The exact token price, and consequently the number of tokens acquired, become apparent only after the NAV calculation. The NAV for the day is applied to subscription orders created within the cutoff times.

As an illustration, let’s consider a fund with a 5 PM CET cutoff time and a minimum investment per investor set at 1000 EUR. Suppose an investor places an order on Wednesday at 2 PM CET, committing to invest 1000 EUR. The issuer calculates the NAV, and then updates it via the Issuer Servicing portal by inputting the calculated token price, date, and time. Once the token valuation is established (e.g. at 113 EUR), pending orders awaiting pricing are automatically updated, and the investor's token quantity is computed accordingly (8,85 tokens for 1000 EUR investment in our example).

How can I set the valuation of my token?

This short interactive guide below offers a brief overview of the steps needed to set the valuation of your token.

Here are steps to follow to set/update the valuation of your token:

1. From the Servicing portal, begin by clicking on the 'Set Valuation' button.
2. Next, proceed to input the token price (NAV).
3. Then, adjust the cut-off date & time as/if necessary.
4. Finally, click 'Submit' to confirm the new token valuation.

How is the token price/NAV applied to the pending orders?

Orders created by investors before the designated cut-off times will have the Token price for the subsequent cut-off time applied once the Token price/NAV has been established.

For instance, if the Issuer sets the cut-off time at 5 PM every business day (updating the token price of the open-ended subscription at 5 PM daily), orders placed between two cut-off times (e.g., between Monday 5:01 PM and Tuesday 4:59 PM) will adopt the valuation/NAV of Tuesday.

How do I apply the NAV to the pending orders created before the cut-off time?

This detailed step-by-step guide illustrates how the valuation you've set is applied to pending orders created before the cut-off time. It also outlines the process for confirming received payments and consequently confirming the subscription or redemption order.

1. From the Servicing portal, navigate to ‘Primary Market' tab,
2. Click on 'Subscription order'.
3. Click the ‘Eye' icon to view your Investor’s open-ended subscription/redemption details.
4. As you can see, the 'Token Price' and 'Token Price Time' are waiting for the Net Asset Value (NAV) to be applied.
5. Navigate to the 'Dashboard' to update your token price (NAV).
6. Click 'Set Valuation' to set your token price (NAV).
7. Type in your token price (NAV) in the provided field.
8. Adjust the date and time of your NAV calculation if necessary.
9. Click 'Submit' to submit your updated Token price.
10. Caution! Once you submit the new NAV, any mistakes cannot be corrected via the Servicing Portal. Therefore, we strongly recommend exercising utmost care before confirming the submission of a new price. Submitting the price initiates a complex workflow, including applying the price to all pending orders, token calculations, and sending email notifications. Any corrections will require manual intervention by the Tokeny technical team and may incur additional costs.
11. Click, 'Yes, set valuation' to confirm your choice.
12. Check the dashboard to see that your token valuation was updated successfully.
13. To further manage your Investors' orders, click on the ‘Primary Market’ tab.
14. Next, select ‘Subscription Orders/Redemption Orders’.
15. Click the 'Eye' icon to view specific order details.
16. The token price you've set is now applied to the order.
17. If payment was received and you wish to confirm the order now, click 'Confirm Order'.
18. Enter the amount of funds you received from the investor.
19. Up next, click 'Confirm order'.
20. Click the 'Eye' icon to view the confirmed order details.
21. You can observe the quantity of tokens invested by the investor is calculated once the receipt of funds has been confirmed.
22. With the latest NAV applied to the pending order and the recipient of funds confirmed, you may proceed with minting the tokens if desired.

I've made an error in updating the token price/NAV. Can I rectify it?

If you've set an incorrect price, it cannot be corrected from the Servicing portal. The price setting initiates a complex workflow (including the application of the price to all pending orders, token calculation, and email notification sending) that can only be manually rectified by the Tokeny technical team and is subject to additional cost.

As the price cannot be corrected from the Servicing portal, we highly recommend exercising extreme caution before submitting any new price.

How can I automate the NAV?

If you have a recurring NAV (Net Asset Value) calculation, such as a daily NAV, it can be highly beneficial to automate the process to save time and reduce errors. In such cases, you can take advantage of Tokeny's API to streamline and fully automate the NAV reporting workflows, ensuring efficiency and accuracy in your operations.