Calculation Agent - Equity Derivatives Provision

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2002 ISDA Equity Derivatives Definitions

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Calculation Agent in a Nutshell

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Original text

Section 1.40. Calculation Agent. “Calculation Agent” means the person or entity specified as such in the related Confirmation. Whenever a Calculation Agent is required to act or to exercise judgment in any way, it will do so in good faith and in a commercially reasonable manner. Furthermore, each party agrees that the Calculation Agent is not acting as a fiduciary for or as an advisor to such party in respect of its duties as Calculation Agent in connection with any Transaction.


12.8(f)Determining Party” means the party or parties specified as such in the related Confirmation.

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Comparisons

A JC-curated sub-division of the General Definitions section. We sub-group the Section 1 definitions into the following subgroups:

Basics

Note, distressingly, it doesn’t fall back to the Schedule if not defined in the Confirmation, which would have been a nice little accommodation. No doubt a legal eagle will tell you, you must therefore put a line in the Confirmation if there isn’t one there already.

Not a hill, if we were you, we would die on.

Calculation Agent and Determining Party

Negotiators of prime brokerage documentation will have great fun arguing the toss about the identity of the Calculation Agent, the Determination Agent and any dispute rights, challenges, fallbacks and other utterly pointless quibbles about whose job it is to come up with valuations. We discuss it in a bit more detail in the premium section, but in a nutshell, it is the dealer. Always. No exceptions. Even those who “win” this negotiation will learn that it is always the dealer.

Think about it this way: when you go to your favourite restaurant, do you take along your own menu?

You don’t, do you? Not even just in case the restaurateur happens to go bankrupt at the very moment she is meant to be bringing out the Crème Brulée with a sparkler on it.

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References