Template:M summ Equity Derivatives 5: Difference between revisions

Jump to navigation Jump to search
No edit summary
No edit summary
 
Line 22: Line 22:


In fact, a [[synthetic equity swap]] is an indefinite arrangement — it is replicating cash [[prime brokerage]], remember, where a fellow holds (or shorts) a security at {{sex|her}} own pleasure, so to speak — so the client can terminate at any time, and if it doesn’t terminate by the scheduled {{isdadefsprov|Termination Date}} she will typically want to roll the position (if she can<ref>There are complicated [[US Tax]] rules at play here</ref>) without realising a gain or loss. Thus the {{isdadefsprov|Termination Date}} is fairly arbitrary, existing really only to avoid syntax errors in a booking system which will insist on you inputting one, or to resolve the unspoken anguish of your financial reporting folk who may otherwise fear you have an undated exposure to the underlying security<ref>Not, in fact true, as the [[broker-dealer]] will almost certainly have a right to terminate on (a month or more’s) notice, but do not expect this to placate a [[Financial reporting|financial controller]].</ref>.
In fact, a [[synthetic equity swap]] is an indefinite arrangement — it is replicating cash [[prime brokerage]], remember, where a fellow holds (or shorts) a security at {{sex|her}} own pleasure, so to speak — so the client can terminate at any time, and if it doesn’t terminate by the scheduled {{isdadefsprov|Termination Date}} she will typically want to roll the position (if she can<ref>There are complicated [[US Tax]] rules at play here</ref>) without realising a gain or loss. Thus the {{isdadefsprov|Termination Date}} is fairly arbitrary, existing really only to avoid syntax errors in a booking system which will insist on you inputting one, or to resolve the unspoken anguish of your financial reporting folk who may otherwise fear you have an undated exposure to the underlying security<ref>Not, in fact true, as the [[broker-dealer]] will almost certainly have a right to terminate on (a month or more’s) notice, but do not expect this to placate a [[Financial reporting|financial controller]].</ref>.
'''{{eqderivprov|Equity Notional Reset}}''': The {{eqderivprov|Equity Notional Reset}} is a feature for automatically restriking the {{eqderivprov|Equity Notional Amount}} on a periodic basis to its prevailing value.  It has the effect of converting posted [[collateral]] — which for financial institutions may suffer a punitive [[Regulatory capital|capital treatment]] — into realised profit and loss; and therefore no longer contingent liabilities to pay cash amounts.
Am equity swap will reset automatically on each [[Cash Settlement Payment Date - Equity Derivatives Provision|Cash Settlement Payment Date]], (i.e., usually a {{eqderivprov|Settlement Cycle}} after each {{eqderivprov|Valuation Date}}).
Retrieved from "https://jollycontrarian.com/index.php?title=Template:M_summ_Equity_Derivatives_5"