Does amortization of bond start accumulating on trade date or settlement date?

Question

I am sorry if this is not appropriate here. We are building a wealth management system and I really would like to know whether amortization of bond start accumulating on trade date or settlement date according to common accounting standard. Thanks!

Answer 1

Global Investment Performance Standards state that bond amortization performance evaluation starts on trade date rather than settlement date.

On the attached see 1.A.5 which states:

1.A.5 For periods beginning on or after 1 January 2005, FIRMS MUST use TRADE DATE ACCOUNTING.

1.A.6 ACCRUAL ACCOUNTING MUST be used for fixed-income securities and all other investments that earn interest income. The value of fixed-income securities MUST include accrued income.