Template:Nutshell Equity Derivatives 12.9(b)(ii): Difference between revisions

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::{{eqderivprov|12.9(b)(ii)}} If “'''{{eqderivprov|Failure to Deliver}}'''” applies to a {{eqderivprov|Transaction}}, then it will not be an {{isdaprov|Event of Default}} under the {{isdama}}, but if it happens, the “'''{{eqderivprov|Delivering Party}}'''” must:  
::{{eqderivprov|12.9(b)(ii)}} If “'''{{eqderivprov|Failure to Deliver}}'''” applies, then a {{eqderivprov|Failure to Deliver}} will not be an {{isdaprov|Event of Default}} but the “'''{{eqderivprov|Delivering Party}}'''” must:  
:::(A) notify the “'''{{eqderivprov|Receiving Party}}'''” that a {{eqderivprov|Failure to Deliver}} has occurred within one {{eqderivprov|Clearance System Business Day}} of the relevant {{eqderivprov|Exercise Date}} in the case of an {{eqderivprov|Option Transaction}} and at least one {{eqderivprov|Settlement Cycle}} prior to the {{eqderivprov|Settlement Date}} in the case of a {{eqderivprov|Forward Transaction}} or {{eqderivprov|Equity Swap Transaction}} and  
:::(A) notify the “'''{{eqderivprov|Receiving Party}}'''” that the  {{eqderivprov|Failure to Deliver}} has occurred within one {{eqderivprov|Clearance System Business Day}} of the {{eqderivprov|Exercise Date}} (for {{eqderivprov|Option Transaction}}s) and at least one {{eqderivprov|Settlement Cycle}} prior to the {{eqderivprov|Settlement Date}} (for {{eqderivprov|Forward Transaction}}s and {{eqderivprov|Equity Swap Transaction}}s; and  
:::(B) deliver to the {{eqderivprov|Receiving Party}} on the {{eqderivprov|Settlement Date}} those {{eqderivprov|Shares}} that it can deliver on such date;  
:::(B) deliver to the {{eqderivprov|Receiving Party}} on the {{eqderivprov|Settlement Date}} the {{eqderivprov|Shares}} that it can deliver on such date;  
and the {{eqderivprov|Receiving Party}}’s corresponding payment or delivery obligation to the {{eqderivprov|Delivering Party}} will be proportionately reduced.  
::and the {{eqderivprov|Receiving Party}}’s corresponding payment or delivery obligation to the {{eqderivprov|Delivering Party}} will be proportionately reduced.  
 
::Thereafter:
'''For {{eqderivprov|European Option}}s and {{eqderivprov|Forward Transaction}}s''': The {{eqderivprov|Receiving Party}} may terminate the {{eqderivprov|Transaction}} effective immediately by notifying the {{eqderivprov|Delivering Party}} and must (as {{eqderivprov|Determining Party}}) determine the {{eqderivprov|Cancellation Amount}} (after consideration of any partial delivery).
:::(I) '''For {{eqderivprov|European Option}}s and {{eqderivprov|Forward Transaction}}s''': The {{eqderivprov|Receiving Party}} may terminate the remaining {{eqderivprov|Transaction}} effective immediately by notice to the {{eqderivprov|Delivering Party}} and must (as {{eqderivprov|Determining Party}}) determine the related {{eqderivprov|Cancellation Amount}};
 
:::(II) '''For {{eqderivprov|American Option}}s and {{eqderivprov|Bermuda Option}}s''': The {{eqderivprov|Receiving Party}} may terminate that part of the {{eqderivprov|Transaction}} comprising the exercised but not settled {{eqderivprov|Option}}s effective immediately by notice to the {{eqderivprov|Delivering Party}} and must (as {{eqderivprov|Determining Party}}) determine the related {{eqderivprov|Cancellation Amount}};
'''For {{eqderivprov|American Option}}s and {{eqderivprov|Bermuda Option}}s''': The {{eqderivprov|Receiving Party}} may terminate that part of the {{eqderivprov|Transaction}} comprising the exercised {{eqderivprov|Option}}s effective immediately by notifying the {{eqderivprov|Delivering Party}} and must (as {{eqderivprov|Determining Party}}) determine the {{eqderivprov|Cancellation Amount}} payable in relation to such terminated {{eqderivprov|Transaction}} (after consideration of any partial delivery).
:::(III) '''For {{eqderivprov|Equity Swap Transaction}}s''': The {{eqderivprov|Receiving Party}} may  terminate that part of the {{eqderivprov|Transaction}} consisting of the unsettled deliveries effective immediately by notice to the {{eqderivprov|Delivering Party}} and must (as {{eqderivprov|Determining Party}}) determine the {{eqderivprov|Cancellation Amount}};
 
:::(IV) '''For unexercised {{eqderivprov|American Option}}s and {{eqderivprov|Bermuda Option}}s to which {{eqderivprov|Multiple Exercise}} applies, and for {{eqderivprov|Equity Swap Transaction}}s where a {{eqderivprov|Settlement Date}} has not occurred''': The {{eqderivprov|Receiving Party}} may elect within one {{eqderivprov|Settlement Cycle}} of the affected {{eqderivprov|Settlement Date}} to terminate the remainder of the {{eqderivprov|Transaction}} upon two {{eqderivprov|Scheduled Trading Day}}s’ notice, and must (as {{eqderivprov|Determining Party}}) determine the {{eqderivprov|Cancellation Amount}}. <br>
'''For {{eqderivprov|Equity Swap Transaction}}s''': The {{eqderivprov|Receiving Party}} may  terminate that part of the {{eqderivprov|Transaction}} consisting of the {{eqderivprov|Number of Shares to be Delivered}} or {{eqderivprov|Number of Baskets to be Delivered}} on that {{eqderivprov|Settlement Date}} effective immediately by notifying the {{eqderivprov|Delivering Party}} and must (as {{eqderivprov|Determining Party}} determine the {{eqderivprov|Cancellation Amount}} (after consideration of any partial delivery).
 
For unexercised {{eqderivprov|American Option}}s and {{eqderivprov|Bermuda Option}}s to which {{eqderivprov|Multiple Exercise}} applies, and for {{eqderivprov|Equity Swap Transaction}}s where a {{eqderivprov|Settlement Date}} has not occurred, the {{eqderivprov|Receiving Party}} may elect within one {{eqderivprov|Settlement Cycle}} of the {{eqderivprov|Settlement Date}} on which the {{eqderivprov|Transaction}} was partially terminated to terminate the remainder of the {{eqderivprov|Transaction}} upon two {{eqderivprov|Scheduled Trading Day}}s’ notice to the {{eqderivprov|Delivering Party}}, and the {{eqderivprov|Receiving Party}} must (as {{eqderivprov|Determining Party}}) determine the {{eqderivprov|Cancellation Amount}} for the terminated {{eqderivprov|Transaction}}. <br>

Latest revision as of 13:54, 28 February 2022

12.9(b)(ii) If “Failure to Deliver” applies, then a Failure to Deliver will not be an Event of Default but the “Delivering Party” must:
(A) notify the “Receiving Party” that the Failure to Deliver has occurred within one Clearance System Business Day of the Exercise Date (for Option Transactions) and at least one Settlement Cycle prior to the Settlement Date (for Forward Transactions and Equity Swap Transactions; and
(B) deliver to the Receiving Party on the Settlement Date the Shares that it can deliver on such date;
and the Receiving Party’s corresponding payment or delivery obligation to the Delivering Party will be proportionately reduced.
Thereafter:
(I) For European Options and Forward Transactions: The Receiving Party may terminate the remaining Transaction effective immediately by notice to the Delivering Party and must (as Determining Party) determine the related Cancellation Amount;
(II) For American Options and Bermuda Options: The Receiving Party may terminate that part of the Transaction comprising the exercised but not settled Options effective immediately by notice to the Delivering Party and must (as Determining Party) determine the related Cancellation Amount;
(III) For Equity Swap Transactions: The Receiving Party may terminate that part of the Transaction consisting of the unsettled deliveries effective immediately by notice to the Delivering Party and must (as Determining Party) determine the Cancellation Amount;
(IV) For unexercised American Options and Bermuda Options to which Multiple Exercise applies, and for Equity Swap Transactions where a Settlement Date has not occurred: The Receiving Party may elect within one Settlement Cycle of the affected Settlement Date to terminate the remainder of the Transaction upon two Scheduled Trading Days’ notice, and must (as Determining Party) determine the Cancellation Amount.
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