Template:M summ Equity Derivatives 6.3(a)

In a classic piece of ISDA’s crack drafting squad™ over-engingeering, the operative term Market Disruption Event is broken down into three sub-definitions — “Trading Disruption”, “Exchange Disruption” and “Early Closure” — which don’t appear to have any independent claim on existence at least insofar as the pre-printed 2002 ISDA Equity Derivatives Definitions are concerned.

Note: there are separate disruption events relating to change, cancellation or non-publication of Indices. For that see Section 11.1(b) relating to Index Adjustment Events.

Trading Disruption

Where your Transaction is an Index Transaction or an Index Basket Transaction, the disruption relates to trading on Exchange for at least 20% of the Shares comprising the Index — because the Index doesn’t exist per se as an independently investable security, though it may do as an exchange traded derivative.

Exchange Disruption

See Market Disruption Event, for which this Exchange Disruption provision is relevant.

Where your trade is an Index Transaction, or an Index Basket Transaction, the disruption relates to transactions in the underlying Shares - because the Index doesn’t exist per se as an investable stock.

There are, however, separate disruption events relating to change, cancellation or non-publication of Indices.

Early Closure

Early closure of exchanges matters for brokers hedging Index and Share Transactions by reference to official closing prices and methodologies like VWAP that are dependent on formal venues being open for given periods during the trading day.