Template:Cancellation amount UG: Difference between revisions
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In calculating a {{eqderivprov|Cancellation Amount}}, a {{eqderivprov|Determining Party}} is required to act [[in good faith]] and to use [[commercially reasonable]] procedures. It should be noted that [[Quotes|quotations]] are not necessarily required, as depending on the {{eqderivprov|Transaction}} in question, the cost of liquidating [[hedge]]s may be a more appropriate basis for determining a {{eqderivprov|Cancellation Amount}} than soliciting quotations.<ref>“''May'' be”. You think?</ref> | In calculating a {{eqderivprov|Cancellation Amount}}, a {{eqderivprov|Determining Party}} is required to act [[in good faith]] and to use [[commercially reasonable]] procedures. It should be noted that [[Quotes|quotations]] are not necessarily required, as depending on the {{eqderivprov|Transaction}} in question, the cost of liquidating [[hedge]]s may be a more appropriate basis for determining a {{eqderivprov|Cancellation Amount}} than soliciting quotations.<ref>“''May'' be”. You think?</ref> | ||
Parties should note that the {{eqderivprov|Determining Party}} is the party that will be calculating its own cost of replacing or providing the economic equivalent of a terminated {{eqderivprov|Transaction}}. The {{eqderivprov|Calculation Agent}} may be a party to the {{eqderivprov|Transaction}}, but when performing its duties as {{eqderivprov|Calculation Agent}} it is acting as a neutral party. The {{eqderivprov|Calculation Agent}} ''as such'' will not have a replacement cost or economic equivalent and therefore should not be designated as the {{eqderivprov|Determining Party}}. | Parties should note that the {{eqderivprov|Determining Party}} is the party that will be calculating its own cost of replacing or providing the economic equivalent of a terminated {{eqderivprov|Transaction}}. The {{eqderivprov|Calculation Agent}} may be a party to the {{eqderivprov|Transaction}}, but when performing its duties as {{eqderivprov|Calculation Agent}} it is acting as a neutral party. The {{eqderivprov|Calculation Agent}} ''as such'' will not have a replacement cost or economic equivalent and therefore should not be designated as the {{eqderivprov|Determining Party}}.<ref>Emphasis added.</ref> | ||
Latest revision as of 19:42, 11 January 2022
In calculating a Cancellation Amount, a Determining Party is required to act in good faith and to use commercially reasonable procedures. It should be noted that quotations are not necessarily required, as depending on the Transaction in question, the cost of liquidating hedges may be a more appropriate basis for determining a Cancellation Amount than soliciting quotations.[1]
Parties should note that the Determining Party is the party that will be calculating its own cost of replacing or providing the economic equivalent of a terminated Transaction. The Calculation Agent may be a party to the Transaction, but when performing its duties as Calculation Agent it is acting as a neutral party. The Calculation Agent as such will not have a replacement cost or economic equivalent and therefore should not be designated as the Determining Party.[2]