Increased Cost of Hedging - Equity Derivatives Provision: Difference between revisions
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===Excluding own credit deterioration=== | ===Excluding own credit deterioration=== | ||
{{eqderivprov|Increased Cost of Hedging}} excludes costs | {{eqderivprov|Increased Cost of Hedging}} excludes costs a {{eqderivprov|Hedging Party}} incurs through the deterioration of its own credit — so it will tend to capture market wide cost increases, and exclude those that are personal to the {{eqderivprov|Hedging Party}}. Assiduous sell-side [[broker|brokers]] will try to cut out the “deterioration of own credit” wording. Muscular [[asset manager]]s will tell them where to go. | ||
{{triplecocktail}} | {{triplecocktail}} | ||
Revision as of 12:38, 4 March 2019
Template:EqderivanatTemplate:Eqderivanat Compare with Increased Cost of Stock Borrow, the equivalent provision where the Hedging Party is short.
Part of the famed “triple cocktail” of protections against unexpected problems hedging and risk managing Transactions, together with Hedging Disruption and Change in Law. Note also references to Hedging Party.
Excluding own credit deterioration
Increased Cost of Hedging excludes costs a Hedging Party incurs through the deterioration of its own credit — so it will tend to capture market wide cost increases, and exclude those that are personal to the Hedging Party. Assiduous sell-side brokers will try to cut out the “deterioration of own credit” wording. Muscular asset managers will tell them where to go.
See also
- Consequences of an Additional Disruption Event in particular 12.9(b)(vi).