Determining Party - Equity Derivatives Provision

And the difference between Calculation Agent and Determining Party is?

In drafting the equity derivative definitions ISDA was agnostic as to who would be Calculation Agent, but recognised that while some calculations could be performed by whoever was Calculation Agent, Cancellation Amount calculations were inextricably related to unwinding the hedge – usually in the case of a disruption – and this would naturally best be calculated by the Hedging Party – being the person unwinding the hedge. If that’s not the Calculation Agent, it needed to be treated differently.

But we would never allow the client to be either the Calculation Agent or the Determining Party so in the context of a PRT this is a purely academic point.

If Calculation Agent == Dealer, and Dealer == Hedging Party, and Hedging Party == Determining Party, then Calculation Agent == Determining Party.

The name of the game is to simplify to avoid language like “determination or calculation made by the Calculation Agent or Determining Party, as the case may be” throughout, which helps no one. Except my brethren in the legal profession.

Relevant only for the purposes of 12.8 (Cancellation Amount), which will come into play where Cancellation and Payment or Partial Cancellation and Payment are specified as the determination methods. This will generally happen in only two circumstances:

• termination of a transaction following an Extraordinary Event
• termination of a transaciton following an Additional Disruption Event.

Here a party who is not otherwise the Calculation Agent may wish to be in control of this determination (or at least have a say in it) which is why this provision is not necessarily handled by the Calculation Agent (the swap dealer who is hedging the trade will usually be sole Calculation Agent).