Denomination increment

The denomination increment refers to the specific amount by which the bond's nominal value can be increased or decreased when buying or selling additional units of the bond. It represents the incremental change in the bond's face value when trading in quantities larger than the minimum denomination.

For example, if a bond has a denomination increment of $1.000 and a minimum denomination of $2.000. That means investors can purchase the bond in multiples of $1.000, but not less than $2.000. Thus they can buy $2.000, $3.000, $4.000, and so on. The denomination increment sets the standard size for trading the bond and ensures that transactions are conducted in specified multiples.

The denomination increment is an important factor for investors to consider when trading bonds, as it determines the granularity of the investment amounts and the liquidity of the bond in the market. Bonds with smaller denomination increments may attract a broader range of investors, while bonds with larger denomination increments may have more limited accessibility.