Open offer processing is the work custodians, brokers and registrars carry out when a company makes an open offer: an invitation for existing shareholders to subscribe for new shares in proportion to their holdings, usually at a discount. Unlike the rights in a rights issue, the entitlement cannot be sold nil-paid in the market, so a holder who does not take it up receives nothing for it.
The process starts with capture of the terms and calculation of each client's entitlement from holdings at the record date using the entitlement ratio. Entitlements are credited as a separate, non-tradable line in the depository. Custodians notify clients, collect each corporate action election, check that funds are available and instruct before the market deadline. Positions bought with the entitlement but settled late are corrected through market claims. Payment and delivery are covered under open offer settlement; compare rights issue processing.