DEFINITION of 'Ex Coupon'
Excoupon is a bond or preferred stock that does not include the interest payment or dividend when purchased or sold. A bond that is ex coupon is sold or bought with the knowledge that the investor will not receive the next coupon payment from the bond. The lack of interest payments should be taken into account when purchasing the bond and discounted accordingly.
Excoupon is also referred to as exinterest.
BREAKING DOWN 'Ex Coupon'
The period when coupon payments are made to bondholders is disclosed in the bond indenture at the time of issuance. Some bonds pay interest payments annually, others do so semiannually, quarterly, or monthly. The coupon interest is paid to the bondholder of record. If an investor purchases a bond sometime between the last coupon payment and the next coupon payment, s/he will receive the interest as s/he will be the bondholder of record. The amount of interest over this period that will be credited to the buyer is called the accrued interest.
However, since the buyer does not earn all of the interest accrued over this period, s/he must pay the bond seller the portion of interest that the seller earned before selling the bond. For example, assume a bond has a fixed coupon that is to be paid semiannually on June 1 and December 1 every year. If a bondholder sells this bond on October 1, the buyer receives the coupon payment on the next scheduled coupon date, December 1. In this case, the buyer must pay the seller the interest accrued from June 1 to October 1. This interest is embedded in the purchase price of the bond.
The purchase price of the bond can take two forms – cumcoupon and excoupon. In the United States, bonds always trade cumcoupon, that is, with coupon. The price for a bond trading cumcoupon is referred to as the full or dirty price, which is the agreed purchase price plus accrued interest. Some bond markets outside of the U.S. trade excoupon, that is, without coupon. Buyers of these bonds only pay the agreed purchase price for the bond (the clean price) and forego the next coupon payment. The seller collects and keeps the next interest due after the sale since s/he is registered as the holder of the bond at that date. However, since the buyer will own the bond during a small fraction of the coupon period, the seller must pay him the interest that accrues during that brief period.
The excoupon date can be defined as the date by which the trade must occur if the buyer is to receive the upcoming coupon. The excoupon date is the first day the bond starts trading without the coupon attached to it. If the debt security is purchased on or after the ex coupon date, the seller retains the right to receive the next due interest payment and no coupon is included with the bond. Therefore, the investor must buy or sell the asset before the ex coupon date in order to get it with a coupon linked to it.

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