Change in Law - Equity Derivatives Provision: Difference between revisions
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{{ | {{eqderivanat|12.9(a)(ii)}} | ||
==={{eqderivprov|Shares}} versus {{eqderivprov|Hedge Positions}}=== | ==={{eqderivprov|Shares}} versus {{eqderivprov|Hedge Positions}}=== | ||
Common to see references in (x) to “{{eqderivprov|Shares}}” replaced by the slightly wider “{{eqderivprov|Hedge Positions}}”. Not objectionable. Uber pedants may also try to argue that there should be some obligation on the {{eqderivprov|Hedging Party}} to take reasonable steps to avoid a change of law. This is silly, [[Chicken Licken]] behaviour. I mean what are you meant to do? Lobby congress? (Remember “{{eqderivprov|Hedge Positions}}” is wider and more generic than “any particular hedge position that you happen to have on” at the time the law changes. If you can change your hedging strategy, you are not subject to a {{eqderivprov|Change in Law}}. So resist this drafting, but [[I'm not going to die in a ditch about it|don’t die in a ditch about it]]. | Common to see references in (x) to “{{eqderivprov|Shares}}” replaced by the slightly wider “{{eqderivprov|Hedge Positions}}”. Not objectionable. Uber pedants may also try to argue that there should be some obligation on the {{eqderivprov|Hedging Party}} to take reasonable steps to avoid a change of law. This is silly, [[Chicken Licken]] behaviour. I mean what are you meant to do? Lobby congress? (Remember “{{eqderivprov|Hedge Positions}}” is wider and more generic than “any particular hedge position that you happen to have on” at the time the law changes. If you can change your hedging strategy, you are not subject to a {{eqderivprov|Change in Law}}. So resist this drafting, but [[I'm not going to die in a ditch about it|don’t die in a ditch about it]]. | ||
Revision as of 12:05, 10 January 2019
Common to see references in (x) to “Shares” replaced by the slightly wider “Hedge Positions”. Not objectionable. Uber pedants may also try to argue that there should be some obligation on the Hedging Party to take reasonable steps to avoid a change of law. This is silly, Chicken Licken behaviour. I mean what are you meant to do? Lobby congress? (Remember “Hedge Positions” is wider and more generic than “any particular hedge position that you happen to have on” at the time the law changes. If you can change your hedging strategy, you are not subject to a Change in Law. So resist this drafting, but don’t die in a ditch about it.
Omission of “Prong Y”: The “material increase in costs” limb
The industry has generally moved to omit the “Increased Cost of Hedging” aspects of this definition (because it is dealt with there).
But, if you were splitting hairs about it, you might say that not all “materially increased” costs a party may incur “in performing its obligations under such Transaction” will necessarily relate to hedging, so a Hedging Party (and, when it comes to it, a non-Hedging Party) should stand its ground on omitting “Prong Y”.
Those who do not have the stomach for this fight may see this expressed as: "Applicable, provided that Section 12.9(a)(ii)(Y) of the Equity Definitions does not apply."
See also, for example, the 2007 European Master Equity Derivatives Confirmation Agreement, which provides the following:
Consequences
The consequences of a Change in Law (or an Insolvency Filing are set out in 12.9(b)(i): Template:Eqderivsnap