Hedging Party - Equity Derivatives Provision

Commentary

Relevant in the context of Additional Disruption Events and hedging disruption as the entity which is actually carrying out the hedging activity, if it isn't the party itself (where not specified, it defaults to the parties themselves.

Now, if hedging against the street is carried out out of another group entity such that the counerparty is entirely economically "flat" you potentially lose the benefit of hedging disruption unless the entity that is actually "on risk" is designated as a Hedging Party, unless the inter-company hedging arrangement somehow pass the hedging disruption risk back to the direct counterparty, to the extent there are valid hedging disruption events. Which is a little circular.

Note also that "Non-Hedging Party" definition somewhat assumes that the Hedging Party will indeed be the actual counterparty to the Transaction.

the conceptual confusion caused by phyiscal hedging not being done by the counterparty in person

See also

See, for example, definitions:

• Non-Hedging Party,
• Hedging Disruption,
• Increased Cost of Hedging,
• Loss of Stock Borrow,
• Increased Cost of Stock Borrow,
• Hedging Shares,
• Lending Party.

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