Template:M summ Equity Derivatives 11.1: Difference between revisions

Template:M summ Equity Derivatives 11.1 (view source)

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→‎Likely elections

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 ===Likely elections===
-*'''{{eqderivprov|Index Cancellation}}''': This one, we humbly submit, is likely to be {{eqderivprov|Cancellation and Payment}}, seeing as
+*'''{{eqderivprov|Index Cancellation}}''': This one, we humbly submit, is likely to be {{eqderivprov|Cancellation and Payment}}, seeing as there is nothing left to modify or, really, negotiate about.
-*'''{{eqderivprov|Index Modification}}''': Here {{eqderivprov|Calculation Agent Adjustment}} doesn’t really make sense (as it implies a one-off adjustment),  which falls to Negotiated Close-out, which is really a wishy-washy way of saying {{eqderivprov|Cancellation and Payment}}, which, for {{eqderivprov|Index Modification}}s, gives both parties the ''option'' to cancel the trade, but not the obligation to.
+*'''{{eqderivprov|Index Modification}}''': Here {{eqderivprov|Calculation Agent Adjustment}} doesn’t really make sense (as it implies a one-off adjustment),  which falls to {{eqderivprov|Negotiated Close-out}}, which is really a wishy-washy way of saying {{eqderivprov|Cancellation and Payment}}, which, for {{eqderivprov|Index Modification}}s, gives both parties the ''option'' to cancel the trade, but not the obligation to.
-*'''{{eqderivprov|Index Disruption}}''': Index disruiption is likely to be transitory — just a temporary failure to publish an index level — and seeing as the {{eqderivprov|Calculation Agent}}<ref>In its guise as {{eqderivprov|Hedging Party}}, of course.</ref> will be ''hedging'' by transacting in the underliers of the Index, so it ought to be able to calculate, near enough, an estimated Index level by reference to the closing prices of the constituents. Here, expect Calculation Agent Adjustment.
+*'''{{eqderivprov|Index Disruption}}''': Index disruption is likely to be transitory — just a temporary failure to publish an index level — and seeing as the {{eqderivprov|Calculation Agent}}<ref>In its guise as {{eqderivprov|Hedging Party}}, of course.</ref> will be ''hedging'' by transacting in the underliers of the Index, so it ought to be able to calculate, near enough, an estimated Index level by reference to the closing prices of the constituents. Here, expect {{eqderivprov|Calculation Agent Adjustment}}. Should things become permanent, it is likely to be an Index Calculation or Index Modification, so the disruption terms no longer would be in play.
 In all cases, remember: generally the [[swap dealer]] (who is {{eqderivprov|Calculation Agent}}) ''does not have a dog in the fight''. It will accommodate its customer’s wishes as far as it can — that is only good business — as long as those wishes reflect genuinely hedgeable positions. If the dealer can hedge, it will, and will pass on those economics. If it can’t, it won’t, and will account for the liquidation value of its hedges.