The Rationale for the BUS/252 Business-Day Accrual Convention

Summary

The document explains the BUS/252 convention, which measures accrual over a period by counting business days and dividing by 252. It clarifies that the relevant business days are weekdays after excluding holidays according to the applicable settlement calendar. This means the count is tied to a defined calendar rather than simply assuming that every weekday is a business day.

The responses describe 252 as a practical annual average, not an exact count for every year or jurisdiction. One gives a rough derivation: assume a thirty-day month with two nonbusiness days each week, yielding about twenty-one business days per month and 252 over twelve months. This is an approximation; actual calendar counts vary with weekends, holidays, and the settlement calendar in force. The document provides a basic rationale but does not specify Brazil’s full holiday rules or identify an authoritative calendar source.

Key ideas

• BUS/252 accrual divides the number of relevant business days in a period by 252.
• Business days are weekdays excluding holidays under the applicable settlement calendar.
• The denominator is an approximate annual average, not the exact number of business days in each year.
• A rough derivation assumes about twenty-one business days per month across twelve months.
• Actual day counts depend on weekends, holidays, and the calendar used.

Tags

# BUS/252 accrual - why 252?


# BUS/252 accrual - why 252?












I've recently found out about the BUS/252 accrual method used in Brazil, where, to calculate how much of the yearly accrual falls on a given period by calculating the number of business days during that period and then dividing by 252.

Assuming a week has 5 business days we get at least 260, at most 262 business days during a calendar year. What is the reason for 252 being used - is average number of weekday bank holidays in Brazil during calendar year 9? Is there any place online where I can read more on what exactly is considered "business days" for this accrual method?

## Answer by LocalVolatility (score 7, accepted)

https://quant.stackexchange.com/a/32916

Business days are all weekdays excluding holidays under the respective settlement calendar. The "252 business days per year" rule of thumb is quite common not only in Brazil - see e.g. here. The reason is, as you suspected, that the average number of business days over a year are often around 252.

## Answer by fmarques (score 5)

https://quant.stackexchange.com/a/43974

The rationale for 252 business days is the following:

- 30 days / month;

- 2 non business days / week;

- 4.5 weeks / month, on average;

- 2 * 4.5 = 9 non business days / month;

- 30 - 9 = 21 business days / month;

- 21 * 12 months = 252 business days / year

Shown in full with attribution under the source's licence. Licence: CC BY-SA 4.0 (Stack Exchange)

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.