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Change in law: Difference between revisions
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{{a|contract|}}You might want, sometimes, to capture the effect of a [[change in law]] that has not yet happened, indeed ''might'' not happen, but ''could'' happen, and if it ''did'' happen, would — ''when'' it happened — verily bugger up the careful figures you constructed under your derivatives transaction. | {{a|contract|}}You might want, sometimes, to capture the effect of a [[change in law]] that has not yet happened, indeed ''might'' not happen, but ''could'' happen, and if it ''did'' happen, would — ''when'' it happened — verily bugger up the careful figures you constructed under your derivatives transaction. | ||
Examples that leap to mind: If you have a forward transaction to buy emissions allowances for April 2026, and the EU announces a plan to disestablish the EU ETS in April 2025 — meaning that you really want to get your hands on the Allowance and surrender them, or sell them to someone else who wants to surrender them, now. The closer you get to the day that becomes law, the less valuable the {{euaprov|Allowances}} are, as the need to surrender them falls. So that prospective change is important immediately — even before it has become official. | Examples that leap to mind: If you have a forward transaction to buy emissions allowances for April 2026, and the EU announces a plan to disestablish the EU ETS in April 2025 — meaning that you really want to get your hands on the Allowance and surrender them, or sell them to someone else who wants to surrender them, now. The closer you get to the day that becomes law, the less valuable the {{euaprov|Allowances}} are, as the need to surrender them falls. So that prospective change is important immediately — even before it has become official. You can imagine the same sort of thing happening as and when governments get around to properly regulating cryptocurrencies. | ||
The thing is that these kinds of regulations inevitably have some grace period: even sanctions imposed when Russia invades give people a small amount of time to divest their offending assets. | |||
So here is some language for that: | So here is some language for that: | ||