Template:M gen Equity Derivatives 12.9(b)

Consequences of Change in Law or Insolvency Filing under Section 12.9(b)(i)

Your counterparties — or at any rate, their legal departments — may enjoy the intellectual challenge of jousting over the precise number of days’ notice one must give before decreeing and acting upon a Change in Law or Insolvency Filing. The practical reality here is that a sensible broker will be in touch with affected clients and will manage out of such a position by some kind of consent without reaching for a copy of the agreement, and a non-sensible broker won’t have clients for very long, but that is not how legal eagles are conditioned to think.

Consequences of Failure to Deliver under Section 12.9(b)(ii)

This is for [physical settlement]] only. A beast of a definition, even when nutshelled, but relevant only if physical settlement is your bag. If you cash settle your equity swaps — and in synthetic prime brokerage, that’s kinda the point, you know — you can keep on truckin’.

On that note: RIGHT HAND TURN, CLYDE.

Consequences of Hedging Disruption and Loss of Stock Borrow under 12.9(b)(vii)

If the same event could be a Hedging Disruption or a Loss of Stock Borrow, it will be treated as a Loss of Stock Borrow. The remedies for that are marginally less stentorian.