Template:M summ Equity Derivatives 11.2

“...an event having a diluting or concentrative effect...”

And what might these events be? Where you reference Options Exchange Adjustment, they are not specified, it being supposed that the Options Exchange’s say so, as an independent party in the middle of the action but with no dog in the fight, ought to be good enough for everyone not to argue about it. But that doesn’t help explain what this provision is meant to do. But the corresponding text under 11.2(c) (Calculation Agent Adjustment) helps. The events and circumstances we are talking about are these (not a comprehensive list):

• Things that might dilute share value: Any unilateral action by an issuer that would mean existing holders are given more “stuff”, in whatever form: share subdivisions, distributions, convertibles, exchangeables, Extraordinary Dividends. Note this excludes anything that would count as a Merger Event, that event being dealt with elsewhere.
• Things that might concentrate share value: Any unilateral action by an issuer requiring a holder to pony up, or give up, anything: calls over partially-paid shares, for example.
• Things that could do either: So any significant buy back by the Issuer of its own shares (especially if not at prevailing market value.

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