Failure to Deliver - Equity Derivatives Provision

2002 ISDA Equity Derivatives Definitions A Jolly Contrarian owner’s manual™ Resources and navigation 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 ᐅ to expand: Equity Derivatives - Premium Synthetic Prime Brokerage Section 12.9(a)(iii) in a Nutshell™ Use at your own risk, campers! 12.9(a)(iii) “Failure to Deliver” means a party’s failure to deliver Shares when due under a Transaction because of market illiquidity; view template Full text of Section 12.9(a)(iii) 12.9(a)(iii) “Failure to Deliver” means the failure of a party to deliver, when due, the relevant Shares under that Transaction, where such failure to deliver is due to illiquidity in the market for such Shares; view template Tell me more Sign up for our newsletter — or just get in touch: for ½ a weekly 🍺 you get to consult JC. Ask about it here.

Content and comparisons

Section 12.9(a): The actual Additional Disruption Events

12.9(a)(i) Additional Disruption Event

12.9(a)(ii) Change in Law

12.9(a)(iii) Failure to Deliver

12.9(a)(iv) Insolvency Filing

12.9(a)(v) Hedging Disruption

12.9(a)(vi) Increased Cost of Hedging

12.9(a)(vii) Loss of Stock Borrow

12.9(a)(viii) Increased Cost of Stock Borrow

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Summary

Not generally stipulated as an Additional Disruption Event because firstly it would only be relevant in a physically-settled equity swap, and for a host of reasons taking physical settlement at the conclusion of a synthetic transaction, whose point is partly to avoid a physical exposure, is a bit of a contradiction in terms. Now where you do, for reasons best known to yourself, elect physical settlement this provision allows the innocent party to buy-in and charge any cost differential to the failing party.

You may want to head over to Consequences of Failure to Deliver under 12.9(b)(ii), where you will discover that ISDA’s crack drafting squad™ have ploughed their own long, lonely, weird furrow about how to resolve settlement failures instead of copying what the cash equity markets and stock lending markets do. They’re fun like that, are the ’squad.

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See also

• Indemnification for Failure to Deliver
• Consequences of Failure to Deliver under 12.9(b)(ii)

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