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Change in Law - Equity Derivatives Provision: Difference between revisions
Change in Law - Equity Derivatives Provision (view source)
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==={{eqderivprov|Shares}} versus {{eqderivprov|Hedge Positions}}=== | ==={{eqderivprov|Shares}} versus {{eqderivprov|Hedge Positions}}=== | ||
Common to see references in (x) to “{{eqderivprov|Shares}}” replaced by the slightly wider “{{eqderivprov|Hedge Positions}}”. Not objectionable, but not massively germane either. Ok, maybe your {{eqderivprov|Hedging Party}} is hedging with futures, or a derivative and not Shares directly. But even then, and someone else<ref>E.g., the {{eqderivprov|Hedging Party}}’s swap counterparty, right?</ref> therefore, is holding the {{eqderivprov|Shares}}. | Common to see references in (x) to “{{eqderivprov|Shares}}” replaced by the slightly wider “{{eqderivprov|Hedge Positions}}”. Not objectionable, but not massively germane either. Ok, maybe your {{eqderivprov|Hedging Party}} is hedging with futures, or a derivative and not {{eqderivprov|Shares}} directly. But even then, and someone else<ref>E.g., the {{eqderivprov|Hedging Party}}’s swap counterparty, right?</ref> therefore, is holding the {{eqderivprov|Shares}}. Note that {{eqderivprov|Hedge Position}}s is wide — it talks about “hedging the {{isdaprov|Transaction}}”, not just “the equity price risk of entering into and performing its obligations with respect to the relevant {{isdaprov|Transaction}}” as does, for example, {{eqderivprov|Increased Cost of Hedging}}. So it can save you quite a lot of anal drafting. | ||
But they can either continue to do that, and your {{eqderivprov|Hedging Party}} can continue to hold its future or swap — in which case what’s your disruption? — or they can’t, in which case you have a more general {{eqderivprov|Hedging Disruption}}. We don’t think it is so likely that it will somehow become illegal to hold a future or swap — one doesn’t tend to nationalise derivatives on the whole — but in these kooky political times anything is possible, I suppose. | But they can either continue to do that, and your {{eqderivprov|Hedging Party}} can continue to hold its future or swap — in which case what’s your disruption? — or they can’t, in which case you have a more general {{eqderivprov|Hedging Disruption}}. We don’t think it is so likely that it will somehow become illegal to hold a future or swap — one doesn’t tend to nationalise derivatives on the whole — but in these kooky political times anything is possible, I suppose. | ||