Template:Calculation agent versus determination agent
The difference between the Calculation Agent and the Determining Party
Why: The Equity Derivatives recognise that while most calculations could be performed by whoever is appointed Calculation Agent, determination of a Cancellation Amount is inextricably related to the hedge and —- especially where there is a disrupted market – this is best to be calculated by the one whose problem it is to unwinding that hedge: namely, the Hedging Party. In theory (though almost never in practice[1]) the Hedging Party might not be the Calculation Agent.
When: The Determining Party only ever has to determine a Cancellation Amount, Cancellation and Payment or Partial Cancellation and Payment under 12.8, and that will only happen in only when a Transaction terminates following an Extraordinary Event or an Additional Disruption Event.
Enter the lawyers: Nevertheless, this is all the opportunity my brethren in the legal professionneed to confect, and spray-hose all over your confirmation, language like “determination or calculation, as the case may be, made (respectively) by the Calculation Agent or Determining Party, as the case may be”.
- ↑ If Calculation Agent == Dealer, and Dealer == Hedging Party, and Hedging Party == Determining Party, then Calculation Agent == Determining Party.