Basket - Equity Derivatives Provision

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2002 ISDA Equity Derivatives Definitions
A Jolly Contrarian owner’s manual™

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Resources About the Equity Derivatives Definitions | (full wikitext) | (nutshell wikitext) | Equity v credit derivatives showdown

Hot topics Synthetic Prime Brokerage Anatomy | The Triple Cocktail | Cancellation and Payment | Calculation Agent
Resources About the Equity Derivatives Definitions | (full wikitext) | (nutshell wikitext) | Equity v credit derivatives showdown
Hot topics Synthetic Prime Brokerage Anatomy | The Triple Cocktail | Cancellation and Payment | Calculation Agent
TOC | 1 General Definitions | 2 Option Transactions | 3 Exercise of Options | 4 Forward Transactions | 5 Equity Swap Transactions | 6 Valuation | 7 Settlement | 8 Cash Settlement | 9 Physical Settlement | 10 Dividends | 11 Adjustments and Modifications | 12 Extraordinary Events · 12.8 Cancellation Amount · 12.9 Additional Disruption Events · 12.9 List of ADEs · 12.9(b) Consequences of ADEs | 13 Miscellaneous

Index: Click to expand:

Section 1.15 in a Nutshell

Use at your own risk, campers!
1.15. “Basket” means a basket of Indexes or Shares in the relative proportions (or numbers of Shares per Issuer) specified in the Confirmation.

Full text of Section 1.15

Section 1.15. Basket. “Basket” means, in respect of an Index Basket Transaction, a basket composed of each Index specified in the related Confirmation in the relative proportions specified in the related Confirmation and, in respect of a Share Basket Transaction, a basket composed of Shares of each Issuer specified in the related Confirmation in the relative proportions or numbers of Shares of each Issuer specified in the related Confirmation.


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Content and comparisons

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Summary

Sort of like a mini-index, only static (but modifiable by agreement). In the context of delta-one equity derivatives, there’s little difference between a Basket and a collection of single Share Swap Transactions on the individual Issuers comprising the basket.

You might ask why bother even having them, but if you wanted to trade a fixed block, and keep a single UTI, it might make sense — for trading a modified version of a public index, for example.

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General discussion

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See also

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References