What does 'Modified Following' mean

A modified following is a contractual feature in an exchange involving the implied automatic change of one or more set dates within the arrangement, such as the payment date. Modified following is used to streamline the exchange process.

BREAKING DOWN 'Modified Following'

An example of modified following is the business day convention. This implied rule states that if the payment date on a swap or other contractual transaction does not fall on a banking day, then the modified following date will be the next banking day unless that banking day extends into a new month, in which case the banking day that precedes the payment date is used.

RELATED TERMS
  1. Dated Date

    The date at which interest begins to accrue on a fixed-income ...
  2. Payment Date

    The date on which a declared stock dividend is scheduled to be ...
  3. Trade Date

    The month, day and year that an order is executed in the market. ...
  4. Modified Sharpe Ratio

    A ratio used to calculate the risk-adjusted performance of an ...
  5. Transaction Date

    The date upon which a security or other financial instrument ...
  6. Declaration Date

    1. The date on which the next dividend payment is announced by ...
Related Articles
  1. Investing

    What's a Maturity Date?

    Maturity date is the final date when any remaining principal and any unpaid interest are due on a debt.
  2. Investing

    What is a Settlement Date?

    A settlement date is the day a security trade must be settled.
  3. Financial Advisor

    5 Ways to Date on a Budget

    Dating on a budget doesn't have to be boring. Try these 5 tips to find the best dates on a budget.
  4. Investing

    What is a Record Date?

    The date established by an issuer of a security for the purpose of determining the holders who are entitled to receive a dividend or distribution.
  5. Trading

    Understanding How Dividends Affect Option Prices

    Learn how the distribution of dividends on stocks impacts the price of call and put options, and understand how the ex-dividend date affects options.
  6. Investing

    Target Date Funds: More Popular, Cheaper Than Ever

    How target date funds can help investors weather volatility when it comes to saving for retirement.
  7. Investing

    How Does a Modified Gross Lease Work?

    A modified gross lease is a rental agreement where, in addition to their rent, tenants pay a share of other costs associated with the property.
  8. Financial Advisor

    Target Date Funds Can Be Customized: Here's How

    Target date funds will likely become a permanent fixture in the marketplace for the retirement plan sector. Here's how they have recently improved.
  9. Investing

    Dissecting Declarations, Ex-Dividends and Record Dates

    Understanding the dates of the dividend payout process can be tricky. We clear up the confusion.
  10. Retirement

    Who Actually Benefits From Target Date Funds?

    This pre-packaged retirement investment option could be the perfect fit for some investors and a downfall for others. Which are you?
RELATED FAQS
  1. For what financial instruments is a modified duration relevant?

    Find out about modified duration, financial instruments the modified duration is used for and how to calculate the modified ... Read Answer >>
  2. Do I own a stock as of the trade date or the settlement date?

    When it comes to buying shares, there are two key dates involved in the transaction. The first date is the trade date, which ... Read Answer >>
  3. How do I calculate a modified duration using Matlab?

    Learn how to calculate a modified duration in Matlab with various inputs including bond yield or price, settlement date and ... Read Answer >>
  4. How can I find out what date(s) I am supposed to be entitled to ex-dividends?

    Understand the various dates associated with payment of stock dividends and specifically how the determining ex-dividend ... Read Answer >>
  5. What level of return on equity is average for companies in the chemicals sector?

    Learn more about the modified duration in fixed income securities and how to calculate a bond's modified Macaulay duration ... Read Answer >>
Hot Definitions
  1. Cover Letter

    A written document submitted with a job application explaining the applicant's credentials and interest in the open position. ...
  2. 403(b) Plan

    A retirement plan for certain employees of public schools, tax-exempt organizations and certain ministers. Generally, retirement ...
  3. Master Of Business Administration - MBA

    A graduate degree achieved at a university or college that provides theoretical and practical training to help graduates ...
  4. Liquidity Event

    An event that allows initial investors in a company to cash out some or all of their ownership shares and is considered an ...
  5. Job Market

    A market in which employers search for employees and employees search for jobs. The job market is not a physical place as ...
  6. Yuppie

    Yuppie is a slang term denoting the market segment of young urban professionals. A yuppie is often characterized by youth, ...
Trading Center