Template:M summ Equity Derivatives 12.9(a)(viii): Difference between revisions
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[[12.9(a)(viii) - Equity Derivatives Provision| | [[12.9(a)(viii) - Equity Derivatives Provision|A]] gentler provision than Loss of Stock Borrow — wherein the non-hedging party has to either find a stock borrow for the Hedging Party to execute, or be closed out of its position like that, under an {{eqderivprov|Increased Cost of Stock Borrow}}, if the {{eqderivprov|Hedging Party}} notifies an {{eqderivprov|Increased Cost of Stock Borrow}}, specifying a proposed {{eqderivprov|Price Adjustment}}, the non-{{eqderivprov|Hedging Party}} has three options: | ||
*Accept the {{eqderivprov|Price Adjustment}} | *Accept the {{eqderivprov|Price Adjustment}}, the {{eqderivprov|Transaction}} is amended and carries on as repriced; | ||
*Make a one-off payment of the determined {{eqderivprov|Price Adjustment}}; or | *Make a one-off payment of the determined {{eqderivprov|Price Adjustment}}; or | ||
* | *Allow the [[dealer]]<ref>The dealer will ''always'' be the Hedging Party, though you may on occasion have trouble persuading [[buy-side counsel]] of this patently obvious fact.</ref> to terminate the {{eqderivprov|Transaction}} on the second {{eqderivprov|Scheduled Trading Day}}. | ||
Only if the {{eqderivprov|Non-Hedging Party}} has failed to give any such election by the end of the second {{eqderivprov|Scheduled Trading Day}} can the {{eqderivprov|Hedging Party}} terminate the {{eqderivprov|Transaction}}. The {{eqderivprov|Non-Hedging Party}} can lend the {{eqderivprov|Hedging Party}} the relevant {{eqderivprov|Shares}} in the intervening period to mitigate its loss. | Only if the {{eqderivprov|Non-Hedging Party}} has failed to give any such election by the end of the second {{eqderivprov|Scheduled Trading Day}} can the {{eqderivprov|Hedging Party}} terminate the {{eqderivprov|Transaction}}. The {{eqderivprov|Non-Hedging Party}} can lend the {{eqderivprov|Hedging Party}} the relevant {{eqderivprov|Shares}} in the intervening period to mitigate its loss. | ||
Latest revision as of 13:26, 9 May 2022
A gentler provision than Loss of Stock Borrow — wherein the non-hedging party has to either find a stock borrow for the Hedging Party to execute, or be closed out of its position like that, under an Increased Cost of Stock Borrow, if the Hedging Party notifies an Increased Cost of Stock Borrow, specifying a proposed Price Adjustment, the non-Hedging Party has three options:
- Accept the Price Adjustment, the Transaction is amended and carries on as repriced;
- Make a one-off payment of the determined Price Adjustment; or
- Allow the dealer[1] to terminate the Transaction on the second Scheduled Trading Day.
Only if the Non-Hedging Party has failed to give any such election by the end of the second Scheduled Trading Day can the Hedging Party terminate the Transaction. The Non-Hedging Party can lend the Hedging Party the relevant Shares in the intervening period to mitigate its loss.
- ↑ The dealer will always be the Hedging Party, though you may on occasion have trouble persuading buy-side counsel of this patently obvious fact.