Potential Adjustment Event - Equity Derivatives Provision: Difference between revisions
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===Retrospective adjustments=== | ===Retrospective adjustments=== | ||
Now what might happen under a [[total return swap]] if such a Potential Adjustment Event happens retrospectively, after a Transaction has been terminated (or has matured)? This does happen from time to time. For example: | Now what might happen under a [[total return swap]] if such a {{eqderivprov|Potential Adjustment Event}} happens retrospectively, after a Transaction has been terminated (or has matured)? This does happen from time to time. For example: | ||
:''A total return swap transaction is traded on 1 January. It matures and is settled on 1 June. On 1 September, following an accounting error coming to light, the Issuer declares an {{eqderivprov|Extraordinary Dividend}} to all holders of record on 1 March. It pays this dividend on 1 December. | :''A total return swap transaction is traded on 1 January. It matures and is settled on 1 June. On 1 September, following an accounting error coming to light, the Issuer declares an {{eqderivprov|Extraordinary Dividend}} to all holders of record on 1 March. It pays this dividend on 1 December. | ||
{{seealso}} | |||
*{{eqderivprov|Extraordinary Dividend}} | |||
Revision as of 13:36, 3 September 2018
Template:Eqderivanat Corporate adjustments that may have a diluting or concentrative effect on the theoretical value of the relevant Shares.
Retrospective adjustments
Now what might happen under a total return swap if such a Potential Adjustment Event happens retrospectively, after a Transaction has been terminated (or has matured)? This does happen from time to time. For example:
- A total return swap transaction is traded on 1 January. It matures and is settled on 1 June. On 1 September, following an accounting error coming to light, the Issuer declares an Extraordinary Dividend to all holders of record on 1 March. It pays this dividend on 1 December.