Final Price - Equity Derivatives Provision: Difference between revisions

Final Price - Equity Derivatives Provision (view source)

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 Where you are doing [[synthetic equity swap]]s, the {{eqderivprov|Final Price}} on the {{eqderivprov|Termination Date}} — the very one which gives your [[Tax lawyer|tax guy]] the heebie-jeebies — is mainly of academic interest, as it will only be a jowl-slappingly fortuitous coincidence if a client happens to go off risk at exactly the scheduled {{eqderivprov|Termination Date}}.
-In fact, a [[synthetic equity swap]] is an indefinite arrangement — it is replicating cash [[prime brokerage]], remember, where a fellow holds (or shorts) a security at {{sex|her}} own pleasure, so to speak — so the client can terminate at any time, and if it doesn’t terminate by the scheduled {{eqderivprov|Termination Date}} she will typically want to roll the position (if she can<ref>There are complicated [[US Tax]] rules at play here) without realising a gain or loss. Thus the {{eqderivprov|Termination Date}} is fairly arbitrary, existing really only to avoid syntax errors in a booking system which will insist on you inputting one, or to resolve the unspoken anguish of your financial reporting folk who may otherwise fear you have an undated exposure to the underlying security<ref>Not, in fact true, as the [[broker-dealer]] will almost certainly have a right to terminate on (a month or more’s) notice, but do not expect this to placate a [[Financial reporting|financial controller]].</ref>.
+In fact, a [[synthetic equity swap]] is an indefinite arrangement — it is replicating cash [[prime brokerage]], remember, where a fellow holds (or shorts) a security at {{sex|her}} own pleasure, so to speak — so the client can terminate at any time, and if it doesn’t terminate by the scheduled {{eqderivprov|Termination Date}} she will typically want to roll the position (if she can<ref>There are complicated [[US Tax]] rules at play here</ref>) without realising a gain or loss. Thus the {{eqderivprov|Termination Date}} is fairly arbitrary, existing really only to avoid syntax errors in a booking system which will insist on you inputting one, or to resolve the unspoken anguish of your financial reporting folk who may otherwise fear you have an undated exposure to the underlying security<ref>Not, in fact true, as the [[broker-dealer]] will almost certainly have a right to terminate on (a month or more’s) notice, but do not expect this to placate a [[Financial reporting|financial controller]].</ref>.
 {{Equity swaps versus forwards‎}}
 {{vwapadjustment}}