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Change in Law - Equity Derivatives Provision: Difference between revisions
Change in Law - Equity Derivatives Provision (view source)
Revision as of 14:42, 12 October 2017
, 12 October 2017→Omission of “material increase in costs” limb
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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. Uber pedants may also try to argue that there should be some obligation on the {{eqderivprov|Hedging Party}} to take reasonable steps to avoid a change of law. This is silly, [[Chicken Licken]] behaviour. I mean what are you meant to do? Lobby congress? (Remember “{{eqderivprov|Hedge Positions}}” is wider and more generic than “any particular hedge position that you happen to have on” at the time the law changes. If you can change your hedging strategy, you are not subject to a {{eqderivprov|Change in Law}}. So resist this drafting, but [[I'm not going to die in a ditch about it|don’t die in a ditch about it]]. | Common to see references in (x) to “{{eqderivprov|Shares}}” replaced by the slightly wider “{{eqderivprov|Hedge Positions}}”. Not objectionable. Uber pedants may also try to argue that there should be some obligation on the {{eqderivprov|Hedging Party}} to take reasonable steps to avoid a change of law. This is silly, [[Chicken Licken]] behaviour. I mean what are you meant to do? Lobby congress? (Remember “{{eqderivprov|Hedge Positions}}” is wider and more generic than “any particular hedge position that you happen to have on” at the time the law changes. If you can change your hedging strategy, you are not subject to a {{eqderivprov|Change in Law}}. So resist this drafting, but [[I'm not going to die in a ditch about it|don’t die in a ditch about it]]. | ||
===Omission of “material increase in costs” limb=== | ===Omission of “Prong Y”: The “material increase in costs” limb=== | ||
The industry has generally moved to omit the “{{eqderivprov|Increased Cost of Hedging}}” aspects of this definition (because it is dealt with there). | The industry has generally moved to omit the “{{eqderivprov|Increased Cost of Hedging}}” aspects of this definition (because it is dealt with there). | ||
But, if you were splitting hairs about it, you might say that not all “materially increased cost in performing its obligations under such Transaction” a party may incur will necessary relate to hedging, so a {{gmslaprov|Hedging Party}} (and, when it comes to it, a ''non-{{isdaprov|Hedging Party}}'')should stand its ground on omitting “Prong Y”. | |||
Those who do not have the stomach for this fight may see this expressed as: "Applicable, provided that Section {{eqderivprov|12.9(a)(ii)(Y)}} of the {{eqderivprov|Equity Definitions}} does not apply." | |||
See also, for example, the [[2007 European Master Equity Derivatives Confirmation Agreement]], which provides the following: | |||
{{eqderivsnap|Amended Change In Law}} | {{eqderivsnap|Amended Change In Law}} | ||