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Equity Notional Reset - Equity Derivatives Provision: Difference between revisions
Equity Notional Reset - Equity Derivatives Provision (view source)
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{{eqderivanat|5.10}} | {{eqderivanat|5.10}} | ||
The {{eqderivprov|Equity Notional Reset}} is a feature for automatically restriking the Equity Notional Amount on a periodic basis to the prevailing value of the Equity Notional Amount. It has the effect of converting posted collateral - which for financial institutions may suffer a punitive capital treatment - into absolutely paid amounts. | The {{eqderivprov|Equity Notional Reset}} is a feature for automatically restriking the Equity Notional Amount on a periodic basis to the prevailing value of the Equity Notional Amount. It has the effect of converting posted collateral - which for financial institutions may suffer a punitive capital treatment - into absolutely paid amounts. | ||
The swap will reset automatically on each [[Cash Settlement Payment Date - Equity Derivatives Provision|Cash Settlement Payment Date]], (i.e., usually a {{eqderivprov|Settlement Cycle}} after each {{eqderivprov|Valuation Date}}). | The swap will reset automatically on each [[Cash Settlement Payment Date - Equity Derivatives Provision|Cash Settlement Payment Date]], (i.e., usually a {{eqderivprov|Settlement Cycle}} after each {{eqderivprov|Valuation Date}}). | ||
{{how Equity Notional Reset works}} | |||
====Example==== | ====Example==== | ||
{{quote|1='''Let's say''': | {{quote|1='''Let's say''': | ||