Liquidation of hedges - Equity Derivatives Provision

Equity Derivatives Anatomy™ →Go uptown 12.8(e) Without duplication of amounts calculated based on information described in Section 12.8(c)(i), 12.8(c)(ii) or 12.8(c)(iii) above, or other relevant information, and when it is commercially reasonable to do so, the Determining Party may in addition consider in calculating a Cancellation Amount any loss or cost incurred in connection with its terminating, liquidating or re-establishing any hedge related to such Transaction (or any gain resulting from any of them). (view template) Resources About the Equity Derivatives Definitions | (full wikitext) | (nutshell wikitext) | Equity v credit derivatives showdown Hot topics Synthetic Prime Brokerage Anatomy | The Triple Cocktail | Cancellation and Payment | Calculation Agent TOC | 1 General Definitions | 2 Option Transactions | 3 Exercise of Options | 4 Forward Transactions | 5 Equity Swap Transactions | 6 Valuation | 7 Settlement | 8 Cash Settlement | 9 Physical Settlement | 10 Dividends | 11 Adjustments and Modifications | 12 Extraordinary Events · 12.8 Cancellation Amount · 12.9 Additional Disruption Events · 12.9 List of ADEs · 12.9(b) Consequences of ADEs | 13 Miscellaneous Index: Click ᐅ to expand: Equity Derivatives - Premium Synthetic Prime Brokerage Tell me more Sign up for our newsletter — or just get in touch: for ½ a weekly 🍺 you get to consult JC. Ask about it here.

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12.8(e) in a Nutshell™ _{(Equity Derivatives edition)}

12.8(e): Without duplication and when it is commercially reasonable to do so, when calculating a Cancellation Amount the Determining Party may consider any loss or cost (or gain) incurred in terminating, liquidating or re-establishing any hedge.

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This makes it clear that on a Hedging Disruption, for example, the Determining Party can pass on at least the market risk of replacing any disrupted hedge. (And probably the credit risk too, though where the hedge is a cash trade settling DVP there would be no credit exposure). Section 12.8. Cancellation Amount

12.8(a) “Cancellation Amount”

12.8(b) “Means of determination”

12.8(c) “Determination”

12.8(d) “Quotations”

12.8(e) “Liquidation of hedges”

12.8(f) “Determining Party”

12.8(g) “Commercially reasonable procedures”