Hedging Disruption - Equity Derivatives Provision: Difference between revisions
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Expect to see some amendments to this clause, chiefly to appease [[Mediocre lawyer|fastidious counsel]]. For example: | Expect to see some amendments to this clause, chiefly to appease [[Mediocre lawyer|fastidious counsel]]. For example: | ||
* You may see some tinkering with “transaction(s) or asset(s) it deems necessary to hedge the equity price risk of entering into and performing its obligations with respect to the relevant Transaction” — perhaps to refer to “[[Hedge Positions]]” instead of “transaction(s) or asset(s)”<ref>It is always sad to see an {{tag|ISDA}} drafting committee pass up the opportunity to use [[and/or]], by the way.</ref>, and to broaden equity price risk to “market risk ([[including but not limited to]] equity price risk, [[foreign exchange]] risk and [[interest rate]] risk)” | * You may see some tinkering with “transaction(s) or asset(s) it deems necessary to hedge the equity price risk of entering into and performing its obligations with respect to the relevant Transaction” — perhaps to refer to “[[Hedge Positions]]” instead of “transaction(s) or asset(s)”<ref>It is always sad to see an {{tag|ISDA}} drafting committee pass up the opportunity to use [[and/or]], by the way.</ref>, and to broaden equity price risk to “market risk ([[including but not limited to]] equity price risk, [[foreign exchange]] risk and [[interest rate]] risk)” | ||
*Some counsel may wish to add to limb (B) “convert into the Settlement | *Some counsel may wish to add to limb (B) “convert into the {{eqderivprov|Settlement Currency}}” and upgrade “remit the proceeds of ''[[and/or]] collateral posted with respect to'' any such {{eqderivprov|Hedge Positions}}”, just in case it might be thought that collateral didn’t count as proceeds of a hedge. | ||
*The {{eqderivprov|Hedging Party}} may only be allowed to terminate any {{eqderivprov|transaction}} ''[[pro rata]]'' with the actual {{eqderivprov|Hedging Disruption}} | *The {{eqderivprov|Hedging Party}} may only be allowed to terminate any {{eqderivprov|transaction}} ''[[pro rata]]'' with the actual {{eqderivprov|Hedging Disruption}} | ||
Revision as of 08:37, 19 October 2016
Commentary
Pernickety amendments
Expect to see some amendments to this clause, chiefly to appease fastidious counsel. For example:
- You may see some tinkering with “transaction(s) or asset(s) it deems necessary to hedge the equity price risk of entering into and performing its obligations with respect to the relevant Transaction” — perhaps to refer to “Hedge Positions” instead of “transaction(s) or asset(s)”[1], and to broaden equity price risk to “market risk (including but not limited to equity price risk, foreign exchange risk and interest rate risk)”
- Some counsel may wish to add to limb (B) “convert into the Settlement Currency” and upgrade “remit the proceeds of and/or collateral posted with respect to any such Hedge Positions”, just in case it might be thought that collateral didn’t count as proceeds of a hedge.
- The Hedging Party may only be allowed to terminate any transaction pro rata with the actual Hedging Disruption
See also
Consequences of Hedging Disruption
Consequences of an Additional Disruption Event in particular 12.9(b)(iii) and, where Loss of Stock Borrow intersects with Hedging Disruption, 12.9(b)(vii):
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