Agreements and Acknowledgments Regarding Hedging Activities - Equity Derivatives Provision: Difference between revisions
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{{fullanat|eqderiv|13.2(a)|}} | {{fullanat|eqderiv|13.2(a)|}} | ||
An enormous wodge of text which states the bleeding obvious, well meaningly intended to disarm paranoid tax lawyers who | An enormous wodge of text which states the bleeding obvious, well-meaningly intended to disarm paranoid tax lawyers who worry that an [[equity derivative]] (especially a [[delta-one]] [[synthetic prime brokerage]] transaction) might look like a wheeze to do the taxman out of stamp duty or other transaction tax attaching to a cash equity trade. This acknowledgment is meant to encourage the taxman not to [[recharacterisation|recharacterise]] the derivative as a cash equity order in disguise. | ||
It has, as the Bard put it, a “methinks the lady doth protest too much” feel about it, but you will see it applied in the synthetic PB space. Though it would be an odd hedge about which these characteristics did not apply. | It has, as the Bard put it, a “methinks the lady doth protest too much” feel about it, but you will see it applied in the synthetic PB space. Though it would be an odd hedge about which these characteristics did not apply. | ||
{{nuts|Equity Derivatives|13.2(a)}} | {{nuts|Equity Derivatives|13.2(a)}} |
Revision as of 08:36, 3 August 2017
Equity Derivatives Anatomy™
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An enormous wodge of text which states the bleeding obvious, well-meaningly intended to disarm paranoid tax lawyers who worry that an equity derivative (especially a delta-one synthetic prime brokerage transaction) might look like a wheeze to do the taxman out of stamp duty or other transaction tax attaching to a cash equity trade. This acknowledgment is meant to encourage the taxman not to recharacterise the derivative as a cash equity order in disguise.
It has, as the Bard put it, a “methinks the lady doth protest too much” feel about it, but you will see it applied in the synthetic PB space. Though it would be an odd hedge about which these characteristics did not apply.
13.2(a) in a Nutshell™ (Equity Derivatives edition)
- 13.2(a) If “Agreements and Acknowledgments Regarding Hedging Activities” applies each party agrees that:
- (i) neither party is relying on
- (A) the manner or method in which the other party hedges
- (B) any communication about the other party's hedging, or
- (C) any statement made by such party about its hedging
- and that
- (ii)
- (A) each party may, but doesn't have to, hedge;
- (B) any hedges are the hedging party’s proprietary positions;
- (C) neither party holds its Hedge Positions for the other party, and the other party has no interest in its Hedge Positions; and
- (D) each party may hedge or not in its sole discretion.
- (i) neither party is relying on