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| {{eqderivanat|11.2(e)}}
| | #REDIRECT [[Adjustments to Share Transactions and Share Basket Transactions - Equity Derivatives Provision]] |
| {{2002 ISDA Equity Derivatives Definitions Section 11.2 TOC}}
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| Corporate adjustments that may dilute or concentrate the theoretical value of the {{eqderivprov|Shares}}.
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| ===Retrospective adjustments===
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| Now what might happen under a [[total return swap]] if such a {{eqderivprov|Potential Adjustment Event}} happens retrospectively, after a Transaction has been terminated (or has matured)? This does happen from time to time. For example:
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| :''A total return swap transaction is traded on 1 January. It matures and is settled on 1 June. On 1 September, following an accounting error coming to light, the Issuer declares an {{eqderivprov|Extraordinary Dividend}} to all holders of record on 1 March. It pays this dividend on 1 December.
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| First thing: just because the {{isdaprov|Transaction}} has passed its term, doesn't mean it winks out of existence, white rabbits and no returns. Payment obligations which were due under the term remain due and payable afterward - see the commentary to {{isdadefsprov|Termination Date}} in the {{isdadefs}}.
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| So the question is which is the material date: the date on which the {{eqderivprov|Potential Adjustment Event}} happened, or the date on which is was stipulated to have effect?
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| {{seealso}}
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| *{{eqderivprov|Extraordinary Dividend}}
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Latest revision as of 11:32, 12 May 2022