Section 871(m) amendment - ISDA Provision: Difference between revisions
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===Beware of {{tag|Greeks}}=== | ===Beware of {{tag|Greeks}}=== | ||
... [[delta]] (see what I did there?) against the underlying stock is .08 or greater. (Pro tip: a delta of 1 gives a one-for-one correlation with the delta on the [[underlying]]. A delta of -1.0 does the exact opposite of what the underlyer is doing. a delta of 0 means the two products are correlated at random | ... [[delta]] (see what I did there?) against the underlying stock is .08 or greater. (Pro tip: a delta of 1 gives a one-for-one correlation with the delta on the [[underlying]]. A delta of -1.0 does the exact opposite of what the underlyer is doing. a delta of 0 means the two products are correlated at random). | ||
The calculation is cumulative so even if the delta threshold isn’t met in one transaction, it may be as a result a connected transaction. | The calculation is cumulative so even if the delta threshold isn’t met in one transaction, it may be as a result a connected transaction. | ||
Revision as of 16:21, 28 September 2016
Section 871(m) of the Internal Revenue Code clamps down on foreigners avoiding withholding tax for dividends on US equities.
The new regulations will establish up to a 30% withholding tax on foreign investors on dividend-equivalent payments under equity derivatives. There are a wide range of products that fall into this camp including swaps, options, futures, convertible debt, structured notes and other customised derivative where the ...
===Beware of Greeks=== ... delta (see what I did there?) against the underlying stock is .08 or greater. (Pro tip: a delta of 1 gives a one-for-one correlation with the delta on the underlying. A delta of -1.0 does the exact opposite of what the underlyer is doing. a delta of 0 means the two products are correlated at random).
The calculation is cumulative so even if the delta threshold isn’t met in one transaction, it may be as a result a connected transaction.
It applies from 1 January 2017.