## Annex 11. Data by Partner Economy

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---

### A. Introduction — purpose and scope
- Annex 11 updates Section F.2, Chapter 4, BPM6 and addresses data on positions and transactions with nonresidents broken down by individual partner economies or groups of economies.
- Partner data scope:
  - Can be provided for the balance of payments or IIP as a whole, or for particular components such as goods, services, direct investment, or portfolio investment.
- Uses and importance identified by Annex 11:
  - Support for bilateral comparisons and identification of data problems.
  - Essential input to the IMF’s Coordinated Portfolio Investment Survey and Coordinated Direct Investment Survey and to the BIS’s international banking statistics.
  - Assistance in consolidation of member-state data into currency union or economic union aggregates.
- Recommended practices:
  - Follow standard lists of economies and regions (e.g., United Nations or IMF lists).
  - Aggregate partner data where necessary for confidentiality or to avoid minimal-value categories.
- Principal attribution approaches:
  - Basic principle: economy of residence of the counterparty.
  - Current account: transactor approach (allocate to economy of residence of the nonresident counterparty).
  - Financial instruments and investment income: transactor approach is basic; debtor-creditor approach is possible but must be clearly specified when presented.

### A.3 Residence determination and special cases
- Practical application often difficult because counterparty residence may not be known to the resident reporter.
- Compilers should:
  - Note divergences from preferred bases.
  - Assess significance and determine whether adjustments are needed.
- Bilateral balance of payments may not balance in practice (see paragraph A3.73).

### A11.5–A11.7: Agents, nominees/custodians, and quasi-corporations
- Agents (A11.5):
  - Transactions arranged by an agent on behalf of a principal should be attributed to the principal, not the agent.
  - Fees payable to agents for agency services are recorded as nonfinancial intermediation service and attributed to the economy of the agent.
- Nominee accounts and custodians (A11.6):
  - Assets held in nominee accounts should be attributed to the economic (beneficial) owner, not the nominee.
  - Identifying the economic owner may be difficult when nominees or custodians in a third economy are used.
- Quasi-corporations and split entities (A11.7):
  - Splits (joint administration zones, branches, notional resident units, multiterritory enterprises) should be applied consistently in partner data for counterparties’ statistics.

### B. Compilation of cross-border transactions and positions data by partner economy — overview
- Covers compilation by partner economy for specific balance of payments components (goods, services, direct investment) and financial instruments, and associated issues.

### 1. Goods and services — general points
- Partner-by-partner trade statistics provide insights into global trends, regional patterns, interdependencies, and inform policy and investment decisions.
- Mirror data can be used to fill gaps and measure bilateral asymmetries.
- Goods trade by partner economy often available in high detail from source data; services trade by partner economy may require ITRS records or company-level questionnaires.

#### 1.1 Goods — partner attribution approaches and challenges
- Typical source: IMTS data.
- IMTS recommendations:
  - For imports: record country of origin.
  - For exports: record country of last known destination economy.
- Definitions:
  - Country of origin: economy of production or manufacture; origin determined as the place of last substantial transformation.
  - Country of last known destination: last country to which goods are to be delivered, irrespective of intermediate dispatches or transactions.
  - Country of consignment: country from which goods are dispatched to the reporting country (imports) or to which goods are dispatched from the reporting country (exports); symmetric treatment for imports and exports.
- Practical guidance:
  - Compilers using IMTS source data are recommended to use country of consignment from customs-based data whenever available.
  - For exports, if country of consignment is unavailable, country of last known destination is a practical alternative.
- Key mismatches and special arrangements:
  - Partner in external accounts can differ from country of origin or last known destination (e.g., change of ownership in transit).
  - Merchanting, inverse merchanting, goods for processing, and factoryless goods production can cause IMTS-based partner attributions to diverge from balance of payments partner attributions.
  - Compilers must adjust IMTS source data where movements of goods are not matched with changes of ownership or vice versa.

- Example (Box A11.1 — Merchanting):
  - Merchant resident in Economy A acquires goods from producer resident in Economy B for 10.
  - Goods are sold to resident in Economy C for 17, without goods passing through Economy A.
  - Balance of payments flows illustrated:
    - Reporting Economy: Economy A — Partner Economy: Economy B — Exports: -10
    - Reporting Economy: Economy A — Partner Economy: Economy C — Exports: 17
    - Reporting Economy: Economy B — Partner Economy: Economy A — Imports: 10
    - Reporting Economy: Economy C — Partner Economy: Economy A — Imports: 17
    - Global trade in goods: Exports 17, Imports 17
  - Observations:
    - In the ESS, Economy A records -10 exports (goods acquired under merchanting) with Economy B; Economy B records +10 exports with Economy A.
    - Conceptual asymmetry arises between exports from Economy B and imports to Economy A because of merchant treatment in the economy of the merchant.
    - No asymmetry in net trade or the balance of the goods account between the two economies.

- Goods for processing and factoryless goods production:
  - Goods for processing: processor does not take ownership; goods entering and leaving processor’s economy owned by principal are not shown in processor’s goods account but will be recorded in IMTS.
  - Material inputs may be purchased by principal from third economies without entering principal’s economy; partner attributions in balance of payments follow change of ownership, not IMTS physical flows.
  - Factoryless goods production: contractor sells finished goods to principal; contractor records exports to principal; final buyer records imports from principal. This is not merchanting.

#### 1.2 Services — collection, granularity, and partner attribution challenges
- Services statistics often depend on surveys and estimation techniques; many countries do not report bilateral services trade statistics.
- Annex 11 strongly recommends collecting and compiling international trade in services on an individual trading partner basis, prioritizing main trading partners.
- Practical complexities:
  - Resource intensity, incomplete information, survey design challenges, sampling and estimation methods, and confidentiality concerns.
  - Partner economy of service provision usually straightforward because most services are traded at time of production; exceptions include intellectual property and knowledge-capturing products traded separately from production.
- Specific challenges identified:
  - CIF-to-FOB adjustments for transport and insurance may misallocate payments and partner attribution because some costs recorded as importing-economy costs may be paid by exporting economy.
  - Package tours should be separated into transport, accommodation, other services, tour-operator services, and travel-agency fees; estimating partner economy of each component is challenging given source-data limits.
  - Fees charged by service providers to investment funds are considered provided directly to shareholders; partner economy information may be difficult to obtain, especially for funds not based in the compiling economy (see paragraphs [11.125-1 and 12.38a]).
  - Digital intermediation fees require understanding payment arrangements and location of the intermediation platform (see paragraphs [16.xx to 16.yy]).
  - Crypto assets designed as a general medium of exchange without corresponding liability (CAWLM):
    - Partner attribution of implicit fee (newly released CAWLM) receivable by miners for validating transactions is challenging because the implicit fee is assumed to be collectively consumed by existing holders of crypto assets, and identifying these holders is difficult to implement.
    - Explicit fees in crypto assets are payable by the transaction initiator and can be identified with effort.
    - See Box 11.5 for discussion on recording validation services of crypto asset transactions.
  - Other services derived from implicit measurement or conceptual models (implicit financial services on loans and deposits, life insurance services) present estimation and partner-attribution challenges because services recorded in the balance of payments do not fully capture explicitly rendered and paid-for services between economies.
- Recommended compiler actions for services:
  - Be cognizant of conceptual complexities and compilation difficulties.
  - Implement best practices to assign partner economies for trade in services effectively.
  - Give priority to deriving partner-by-partner data for main trading partners.

### 2. Remittances (based on Chapter 6, Remittances Guide)
- Remittances are often closely related to migration between two economies; remittance flows by partner economies are analytically useful (A11.30).
- Coverage and compilation guidance:
  - Data by partner economies do not need to include all partner economies; focus on major remittance corridors—pairs of economies with large flows (A11.30).
  - For most economies, a small number of corridors are likely to cover most remittance flows; remittance flows to and from major partner economies may be provided on a supplementary basis, especially for major corridors (A11.30).
  - Compiling remittances by partner often requires estimation even when aggregate data are measured directly, because reporting systems or money transfer operator reports may identify an international settlement center rather than the true partner economy (A11.31).
  - Compilers should adjust such data adequately, including basing bilateral flow estimations partly on demographic indicators and using migration and employment statistics to help attribute remittances by country (A11.31).

### Financial instruments — partner attribution principles and issues
- Partner data on asset positions are classified to the partner economy according to the residence of the issuer; partner data on liability positions are classified according to the residence of the holders (A11.32).
- Identification challenges:
  - Issuers may not be aware of current holders of securities.
  - Transactors in securities markets may not be aware of the identity of the counterparty.
  - Security holders may be unaware that income on securities may be payable by a financial intermediary that created a “short” or reverse position rather than by the issuer (A11.32).
- Classification by partner for BOP transactions:
  - Transactor approach — parties to the transaction (buyer and seller).
  - Debtor-creditor approach — residence of the issuer for assets owned.
- It is acceptable to adopt a convention for partner attribution of assets owned based on residence of either the counterparty to the transaction or the issuer; both debtor-creditor and transactor bases can be of analytical interest (A11.34).

#### Securities — issuer residence, ISINs, depository receipts, and Eurobonds
- Partner attribution of a liability position or issue is based on the residence of the issuer; special attention needed when a security is issued in a market other than where the issuer is resident (A11.35).
- Coding systems:
  - For equity securities, the first two digits of the ISIN can sometimes identify the country of the issuer, but this cannot be generalized and does not apply to debt securities (A11.36).
  - ISIN country codes may reflect the depository that issued a depository receipt rather than the issuer of the underlying security; depository receipts should be recorded to “look through” to the issuer of the underlying securities (A11.36).
  - For debt securities, ISIN codes identify the depository (national numbering agency) rather than the residence of the issuer (A11.36).
  - Eurobonds have ISINs beginning with XS and the residence of issuer cannot be linked to ISIN (A11.36).
- See Coordinated Portfolio Investment Survey Guide references for additional details as noted (A11.36).

#### Stripped securities
- Strips may be treated as the liability of the original issuer if no new security is created, or of the party creating the stripped securities if a new security is created (A11.37).
- If strips are issued by an entity in its own name, the residence of the issuer is that of the entity that issued the strips; that issuing entity should report holdings of the existing securities issued by nonresidents (A11.37).
- If strips are created from a nonresident security and remain the direct obligation of the original issuer, the residence of the issuer remains the same as for the original security (A11.37).
- Potential for double counting arises when strips have replaced the original security while the original remains “dormant” in settlement or clearing systems until reconstituted or redeemed (A11.38).

#### Repos and short positions
- Securities under reverse transactions (repos) are regarded as still being owned by the security-providing party because there is no change in economic ownership (A11.39).
- Short positions occur when a security subject to a repurchase agreement is sold outright by the security-receiving party; the party with the short position records a negative value for the holding of the asset (A11.40).
- Recording negative positions helps avoid double counting at the global level but can create consistency issues when allocating by partner economy (A11.40).
- Compilers collecting data from custodians should ensure resident custodians can separately identify securities held under repo or reverse repo agreements when reporting clients’ holdings (A11.41).
- National compilers may consult counterparts in foreign economies where issuers are resident to ensure consistent cross-border treatment of repos (A11.41).
- Consistency within an economy is especially important for repos of nonresident-issued securities; inconsistent respondent reporting could cause substantial over- or underestimation of claims on the issuing economy (A11.42).

#### Depository receipts, gold, and SDRs
- Depository receipts represent ownership of underlying securities issued by nonresidents and held by a resident depository; the economy of issue of the underlying securities differs from the economy in which the depository receipts are issued (A11.43).
- Depository receipts are treated as a claim on the issuer of the underlying security, not on the issuer of the depository receipt (A11.43).
- Gold bullion that has no counterpart liability is shown as unallocated in position data on assets by counterpart; for partner transactions, if a convention based on issuer is adopted the transaction can be assigned to an unallocated or residual partner economy (A11.44).
- SDRs are based on a cooperative arrangement among SDR Department participants; claims on and liabilities to members in the SDR system are attributed on a cooperative basis, and an unallocated or residual partner category is used as the counterparty to SDR holdings and SDR allocations (A11.45).

### Direct investment — immediate vs ultimate partner economy
- Direct investment chains can involve multiple layers:
  - Immediate host or investing economy is the economy of immediate ownership (e.g., Economy B in a chain A → B → C) (A11.46).
  - Ultimate investing economy is the economy of the ultimate parent (e.g., Economy A) (A11.46).
- Basic principle: direct investment transactions and positions by partner economy should be reported according to the immediate host or investing economy, based on direct relationships between the parties rather than the residence of ultimate partners (A11.47).
- Partner allocation is based on the economy of the debtor (for transactions in securities, the economy of the issuer) rather than that of the counterpart transactor (A11.47).
- A resident and a nonresident must engage in a transaction for the transaction to be included in the balance of payments (A11.47).
- Supplementary data:
  - May be prepared according to ultimate source and host economy:
    - In original source economies, data on the basis of the ultimate host economy.
    - In final recipient economies, data on the basis of the ultimate investing economy or ultimate controlling parent.
    - In intermediate economies, data with pass-through funds excluded (A11.48).
  - In round tripping the ultimate investing economy and ultimate host economy are the same (A11.49).

### Examples illustrating short positions and potential double counting (Table A11.1)
- Example 1 (Economy X and nonresident Economy Y):
  - Setup:
    - A resident of Economy X owns a nonresident Economy Y-issued debt security: Asset = 100 (A11.1 table, row 1).
  - Repo transaction:
    - B (nonresident) receives the security under a repo with A; cash provided assumed 95; transaction recorded as a loan:
      - Other Investment-loans: 95 (A11.1 table, row 2)
      - Reserve Assets (RA): 95; corresponding opposite entry -95 (row 2)
  - Outright sale:
    - B sells the security outright to C (resident of Economy X):
      - Portfolio Investment-debt securities: -95 for B, +95 for C (row 3)
      - Reserve Assets and Other Investment-loans entries reflect 95 and -95 as recorded
  - Aggregate numbers reported:
    - For Economy X residents A and C combined: Assets 195, Liabilities 95; Net position 100 (table summary).
  - Key observation:
    - Net position for Economy X shows no double counting; at global level no double counting of debt securities is observed. However, external assets in debt securities for Economy X are double counted (100+95) (A11.1 commentary).

- Example 2 (Economy X and nonresidents A and C):
  - Setup:
    - A nonresident owns a debt security issued by Economy X: Asset 100 for A; Liability 100 for Economy X (table row 1).
  - Repo transaction:
    - B (resident of Economy X) receives the security under a repo with A; cash provided assumed 95; transaction recorded as a loan:
      - Other Investment-loans: 95; Reserve Assets 95 with corresponding -95 entries (row 2).
  - Outright sale:
    - B sells the security outright to nonresident C:
      - Portfolio Investment-debt securities: 95 for C; Other Investment-loans and Reserve Assets entries reflect 95 and -95 (row 3).
  - Aggregate numbers reported:
    - A nonresident: Assets 195, Liabilities 95
    - B resident (Economy X): Assets 95, Liabilities 195
    - C nonresident: Assets 95, Liabilities 195
    - Net position for Economy X: 100 (table summary).
  - Key observation:
    - External liabilities in debt securities for Economy X are double counted as assets of A and C (100+95) (A11.1 commentary).

*Draft BPM7 Annex 11: Data by Partner Economy — excerpts and guidance as summarized above.*

### Annex 11. Data by Partner Economy

### Annex 11. Data by Partner Economy

### A. Introduction — purpose and scope
- Annex 11 updates Section F.2, Chapter 4, BPM6 and addresses data on positions and transactions with nonresidents broken down by individual partner economies or groups of economies.
- Partner data can be provided for the balance of payments or IIP as a whole, or for particular components such as goods, services, direct investment, or portfolio investment.
- Uses and importance identified by Annex 11:
  - Support for bilateral comparisons and identification of data problems.
  - Essential input to the IMF’s Coordinated Portfolio Investment Survey and Coordinated Direct Investment Survey and to the BIS’s international banking statistics.
  - Assistance in consolidation of member-state data into currency union or economic union aggregates.
- Recommended practices:
  - Follow standard lists of economies and regions (e.g., United Nations or IMF lists).
  - Aggregate partner data where necessary for confidentiality or to avoid minimal-value categories.
- Principal attribution approaches:
  - Basic principle: economy of residence of the counterparty.
  - Current account: transactor approach (allocate to economy of residence of the nonresident counterparty).
  - Financial instruments and investment income: transactor approach is basic; debtor-creditor approach is possible but must be clearly specified when presented.

### A.3 Residence determination and special cases
- The same residence principles in Section A.3 of Chapter 4 apply; however, practical application is often more difficult because information on the counterparty’s residence may not be known to the resident reporter.
- Compilers should note divergences from preferred bases, assess significance, and determine whether adjustments are needed.
- Bilateral balance of payments may not balance in practice (see paragraph A3.73).

### A11.5–A11.7: Agents, nominees/custodians, and quasi-corporations
- Agents (A11.5):
  - Transactions arranged by an agent on behalf of a principal should be attributed to the principal, not the agent.
  - Fees payable to agents for agency services are recorded as nonfinancial intermediation service and attributed to the economy of the agent.
  - See paragraph 11.150-1 for details on nonfinancial intermediation services.
- Nominee accounts and custodians (A11.6):
  - Assets held in nominee accounts should be attributed to the economic (beneficial) owner, not the nominee.
  - Identifying the economic owner may be difficult when nominees or custodians in a third economy are used.
- Quasi-corporations and split entities (A11.7):
  - When entities are split into separate institutional units (joint administration zones, branches, notional resident units, multiterritory enterprises), splits should be applied consistently in partner data for counterparties’ statistics.

### B. Compilation of cross-border transactions and positions data by partner economy — overview
- Section covers compilation by partner economy for specific balance of payments components (goods, services, direct investment) and financial instruments, and associated issues.

### 1. Goods and services — general points
- Partner-by-partner trade statistics provide insights into global trends, regional patterns, interdependencies, and inform policy and investment decisions.
- Mirror data can be used to fill gaps and measure bilateral asymmetries.
- Goods trade by partner economy can often be obtained in high detail from source data; services trade by partner economy may require ITRS records or company-level questionnaires.

#### 1.1 Goods — partner attribution approaches and challenges
- Typical source: IMTS data.
- IMTS recommendations:
  - For imports: record country of origin.
  - For exports: record country of last known destination economy.
- Definitions:
  - Country of origin: economy of production or manufacture; IMTS determines origin as the place of last substantial transformation.
  - Country of last known destination: last country to which goods are to be delivered, irrespective of intermediate dispatches or transactions.
  - Country of consignment: country from which goods are dispatched to the reporting country (imports) or to which goods are dispatched from the reporting country (exports); symmetric treatment for imports and exports.
- Practical guidance:
  - Compilers using IMTS source data are recommended to use country of consignment from customs-based data whenever available.
  - For exports, if country of consignment is unavailable, country of last known destination is a practical alternative.
- Key mismatches and special arrangements:
  - Cases where partner in external accounts differs from country of origin or country of last known destination (e.g., change of ownership in transit).
  - Merchanting, inverse merchanting, goods for processing, and factoryless goods production can cause IMTS-based partner attributions to diverge from balance of payments partner attributions.
  - Compilers must adjust source IMTS data where movements of goods are not matched with changes of ownership or vice versa.

- Example (Box A11.1 — Merchanting) — flows and assertions:
  - Merchant resident in Economy A acquires goods from producer resident in Economy B for 10.
  - Goods are sold to resident in Economy C for 17, without goods passing through Economy A.
  - Balance of payments flows illustrated in the Box:
    - Reporting Economy: Economy A — Partner Economy: Economy B — Exports: -10
    - Reporting Economy: Economy A — Partner Economy: Economy C — Exports: 17
    - Reporting Economy: Economy B — Partner Economy: Economy A — Imports: 10
    - Reporting Economy: Economy C — Partner Economy: Economy A — Imports: 17
    - Global trade in goods: Exports 17, Imports 17
  - Observations:
    - In the ESS, Economy A records -10 exports (goods acquired under merchanting) with Economy B; Economy B records +10 exports with Economy A.
    - Conceptual asymmetry arises between exports from Economy B and imports to Economy A because of merchant treatment in the economy of the merchant.
    - There is no asymmetry in net trade or the balance of the goods account between the two economies.

- Goods for processing and factoryless goods production:
  - Goods for processing: processor does not take ownership; goods entering and leaving processor’s economy owned by principal are not shown in processor’s goods account but will be recorded in IMTS.
  - Material inputs may be purchased by principal from third economies without entering principal’s economy; partner attributions in balance of payments follow change of ownership, not IMTS physical flows.
  - Factoryless goods production: contractor sells finished goods to principal; principal may sell to contractor’s economy or third economy without goods passing through principal’s economy. This is not merchanting; contractor records exports to principal; final buyer records imports from principal.

#### 1.2 Services — collection, granularity, and partner attribution challenges
- Services statistics often depend on surveys and estimation techniques; many countries do not report bilateral services trade statistics.
- Annex 11 strongly recommends collecting and compiling international trade in services on an individual trading partner basis, prioritizing main trading partners.
- Practical complexities:
  - Resource intensity, incomplete information, survey design challenges, sampling and estimation methods, and confidentiality concerns.
  - Partner economy of service provision is usually straightforward because most services are traded at time of production; exceptions exist for intellectual property and knowledge-capturing products traded separately from production.
- Specific challenges identified:
  - CIF-to-FOB adjustments for transport and insurance may misallocate payments and partner attribution because some costs recorded as importing-economy costs may be paid by exporting economy.
  - Package tours should be separated into transport, accommodation, other services, tour-operator services, and travel-agency fees; estimating partner economy of each component is challenging given source-data limits.
  - Fees charged by service providers to investment funds are considered provided directly to shareholders; for compilers, partner economy information may be difficult to obtain, especially for funds not based in the compiling economy (see paragraphs [11.125-1 and 12.38a]).
  - Digital intermediation fees require understanding payment arrangements and location of the intermediation platform (see paragraphs [16.xx to 16.yy]).
  - Crypto assets designed as a general medium of exchange without corresponding liability (CAWLM):
    - Partner attribution of implicit fee (newly released CAWLM) receivable by miners for validating transactions is challenging because the implicit fee is assumed to be collectively consumed by existing holders of crypto assets, and identifying these holders is difficult to implement.
    - Explicit fees in crypto assets are payable by the transaction initiator and can be identified with effort.
    - See Box 11.5 for discussion on recording validation services of crypto asset transactions.
  - Other services derived from implicit measurement or conceptual models (implicit financial services on loans and deposits, life insurance services) present estimation and partner-attribution challenges because services recorded in the balance of payments do not fully capture explicitly rendered and paid-for services between economies.

- Recommended compiler actions for services:
  - Be cognizant of conceptual complexities and compilation difficulties.
  - Implement best practices to assign partner economies for trade in services effectively.
  - Give priority to deriving partner-by-partner data for main trading partners.

*Annex 11. Data by Partner Economy (Update to Section F.2, Chapter 4, BPM6)*

### 2. Remittances (based on Chapter 6, Remittances Guide)

### 2. Remittances (based on Chapter 6, Remittances Guide)

### Remittances by partner economies — coverage and compilation
- Remittances are often closely related to migration between two economies; remittance flows by partner economies are analytically useful (A11.30).
- Data by partner economies do not need to include all partner economies; focus should be on major remittance corridors—pairs of economies with large flows (A11.30).
- For most economies, a small number of corridors are likely to cover most remittance flows; remittance flows to and from major partner economies may be provided on a supplementary basis, especially for major corridors (A11.30).
- Compiling remittances by partner often requires estimation even when aggregate data are measured directly, because reporting systems or money transfer operator reports may identify an international settlement center rather than the true partner economy (A11.31).
- Compilers should adjust such data adequately, including basing bilateral flow estimations partly on demographic indicators and using migration and employment statistics to help attribute remittances by country (A11.31).

### Financial instruments — partner attribution principles and issues
- Partner data on asset positions are classified to the partner economy according to the residence of the issuer; partner data on liability positions are classified according to the residence of the holders (A11.32).
- Identification of counterparties for securities positions, income, and transactions is difficult because:
  - the issuer may not be aware of current holders of securities;
  - transactors in securities markets may not be aware of the identity of the counterparty;
  - security holders may be unaware that income on securities may be payable by a financial intermediary that created a “short” or reverse position rather than by the issuer (A11.32).
- Classification by partner for BOP transactions raises additional issues when an existing instrument is sold by a holder to another party: such transactions involve only an exchange of assets, unlike initial issuance which creates a new liability (A11.33).
- For balance of payments transactions, partner attribution may be made on:
  - the transactor approach — parties to the transaction (buyer and seller); or
  - the debtor-creditor approach — residence of the issuer for assets owned.
- It is acceptable to adopt a convention for partner attribution of assets owned based on residence of either the counterparty to the transaction or the issuer; both debtor-creditor and transactor bases can be of analytical interest (A11.34).

### Securities — issuer residence, ISINs, depository receipts, and Eurobonds
- Partner attribution of a liability position or issue of a liability is made on the basis of the residence of the issuer; special attention is needed when a security is issued in a market other than where the issuer is resident (A11.35).
- Coding systems can help with geographic attribution:
  - For equity securities, the first two digits of the International Securities Identification Number (ISIN) can sometimes be used to identify the country of the issuer, but this cannot be generalized to all equity securities and does not apply to debt securities (A11.36).
  - Compilers should exercise caution when securities are issued in foreign markets using depository receipts (DRs); ISIN country codes may reflect the depository that issued the receipt rather than the issuer of the underlying security (A11.36).
  - Depository receipts should be recorded to “look through” the depository: the holder of the receipts is considered to have a claim on the issuer of the underlying securities (A11.36).
  - For debt securities, ISIN codes identify the depository (national numbering agency) rather than the residence of the issuer (A11.36).
  - Securities issued by international organizations may be assigned codes based on currency of denomination; Eurobonds have ISINs beginning with XS and the residence of issuer cannot be linked to ISIN (A11.36).
- See Coordinated Portfolio Investment Survey Guide references for additional details as noted (A11.36).

### Stripped securities
- Stripped securities (strips) may be treated as the liability of the original issuer if no new security is created, or of the party creating the stripped securities if a new security is created (A11.37).
- If strips are issued by an entity in its own name, the residence of the issuer is that of the entity that issued the strips; that issuing entity should report holdings of the existing securities issued by nonresidents (A11.37).
- If strips are created from a nonresident security and remain the direct obligation of the original issuer, the residence of the issuer remains the same as for the original security (A11.37).
- Potential for double counting arises when strips have replaced the original security while the original remains “dormant” in settlement or clearing systems until reconstituted or redeemed (A11.38).

### Securities repurchase agreements, repos, and short positions
- Securities under reverse transactions (repos) are regarded as still being owned by the security-providing party because there is no change in economic ownership (A11.39).
- Short positions occur when a security subject to a repurchase agreement is sold outright by the security-receiving party; the party with the short position records a negative value for the holding of the asset (A11.40).
- Recording negative positions helps avoid double counting at the global level but can create consistency issues when allocating by partner economy (A11.40).
- Compilers collecting data from custodians should ensure resident custodians can separately identify securities held under repo or reverse repo agreements when reporting clients’ holdings (A11.41).
- National compilers may consult counterparts in foreign economies where issuers are resident to ensure consistent cross-border treatment of repos (A11.41).
- Consistency within an economy is especially important for repos of nonresident-issued securities; inconsistent respondent reporting (some as collateralized loans/deposits, others as transactions in securities) could cause substantial over- or underestimation of claims on the issuing economy (A11.42).

### Depository receipts, gold, and SDRs
- Depository receipts represent ownership of underlying securities issued by nonresidents and held by a resident depository; the economy of issue of the underlying securities differs from the economy in which the depository receipts are issued (A11.43).
- Depository receipts are treated as a claim on the issuer of the underlying security (equity or debt), not on the issuer of the depository receipt (A11.43).
- Gold bullion that has no counterpart liability is shown as unallocated in position data on assets by counterpart; for partner transactions, if a convention based on issuer is adopted the transaction can be assigned to an unallocated or residual partner economy (A11.44).
- Special Drawing Rights (SDRs) are based on a cooperative arrangement among SDR Department participants; claims on and liabilities to members in the SDR system are attributed on a cooperative basis, and an unallocated or residual partner category is used as the counterparty to SDR holdings and SDR allocations (A11.45).

### Direct investment — immediate vs ultimate partner economy
- Direct investment chains can involve multiple layers; for direct investment in Economy C where a direct investor in Economy A has a subsidiary in Economy B that holds the investment in C:
  - the economy of immediate ownership is Economy B; and
  - the ultimate investing economy is Economy A (A11.46).
- Basic principle: direct investment transactions and positions by partner economy should be reported according to the immediate host or investing economy, based on direct relationships between the parties rather than the residence of ultimate partners (A11.47).
- Partner allocation is based on the economy of the debtor (for transactions in securities, the economy of the issuer) rather than that of the counterpart transactor (A11.47).
- A resident and a nonresident must engage in a transaction for the transaction to be included in the balance of payments (A11.47).
- Supplementary data on direct investment positions may be prepared according to ultimate source and host economy:
  - in original source economies, data on the basis of the ultimate host economy;
  - in final recipient economies, data on the basis of the ultimate investing economy or ultimate controlling parent;
  - in intermediate economies, data with pass-through funds excluded (A11.48).
- Annex 6 provides additional details on these supplementary items; in round tripping the ultimate investing economy and ultimate host economy are the same (A11.49).

### Examples illustrating recording of short positions and potential double counting (Table A11.1)
Example 1 (Economy X and nonresident Economy Y):
- Setup:
  - A resident of Economy X owns a nonresident Economy Y-issued debt security: Asset = 100 (A11.1 table, row 1).
- Repo transaction:
  - B (nonresident) receives the security under a repo with A; cash provided assumed 95; transaction recorded as a loan:
    - Other Investment-loans: 95 (A11.1 table, row 2)
    - Reserve Assets (RA): 95; corresponding opposite entry -95 (row 2)
- Outright sale:
  - B sells the security outright to C (resident of Economy X):
    - Portfolio Investment-debt securities: -95 for B, +95 for C (row 3)
    - Reserve Assets and Other Investment-loans entries reflect 95 and -95 as recorded
- Aggregate numbers reported in the example:
  - For Economy X residents A and C combined: Assets 195, Liabilities 95; Net position 100 (table summary).
- Key observation: Net position for Economy X shows no double counting; at global level no double counting of debt securities is observed. However, external assets in debt securities for Economy X are double counted (100+95) (A11.1 commentary).

Example 2 (Economy X and nonresidents A and C):
- Setup:
  - A nonresident owns a debt security issued by Economy X: Asset 100 for A; Liability 100 for Economy X (table row 1).
- Repo transaction:
  - B (resident of Economy X) receives the security under a repo with A; cash provided assumed 95; transaction recorded as a loan:
    - Other Investment-loans: 95; Reserve Assets 95 with corresponding -95 entries (row 2).
- Outright sale:
  - B sells the security outright to nonresident C:
    - Portfolio Investment-debt securities: 95 for C; Other Investment-loans and Reserve Assets entries reflect 95 and -95 (row 3).
- Aggregate numbers reported in the example:
  - A nonresident: Assets 195, Liabilities 95
  - B resident (Economy X): Assets 95, Liabilities 195
  - C nonresident: Assets 95, Liabilities 195
  - Net position for Economy X: 100 (table summary).
- Key observation: External liabilities in debt securities for Economy X are double counted as assets of A and C (100+95) (A11.1 commentary).

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_Source: https://www.imf.org/-/media/files/data/statistics/bmp7/draft-chapters/draft-bpm7-annex-11-v7-data-by-partner-economygc.pdf_