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Extraordinary Dividend - Equity Derivatives Provision: Difference between revisions
Extraordinary Dividend - Equity Derivatives Provision (view source)
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{{eqderivsnap|10.6}} | {{eqderivsnap|10.6}} | ||
You would be forgiven for thinking this definition a little circular, especially if you haven't specified what an {{eqderivprov|Extraordinary Dividend}} will be in the {{isdaprov|Confirmation}}. | You would be forgiven for thinking this definition a little circular, especially if you haven't specified what an {{eqderivprov|Extraordinary Dividend}} will be in the {{isdaprov|Confirmation}}. This is because the ISDA drafting committee felt it was all a bit hard. “Because,” said they, “of the difficulties of determining in advance in any formulaic way what would constitute an {{eqderivprov|Extraordinary Dividend}}, the details of this are left to parties to state in their {{isdaprov|Confirmation}}s.” | ||
Of course, the point about an {{eqderivprov|Extraordinary Dividend}} is that it is ''extraordinary''. Out of the ordinary; off the beaten track; beyond the mortal comprehension, and powers of prediction, not just of the sainted ISDA drafting committee, but of those poor saps, too, sequestered in some mice-invested operations depot in surburban Almaty, who are grinding out your equity derivative trade confirms. How are they supposed to know what an Extraordinary Dividend is? | |||
Anyway, the definition boils down, as best as I can fathom, to this: | |||
“An {{eqderivprov|Extraordinary Dividend}} is whatever the {{eqderivprov|Calculation Agent}} jolly well says it is.” | |||
Which, in its way, is fine, especially if you happen to be acting for the {{eqderivprov|Calculation Agent}}, but if you ''are'' the {{eqderivprov|Calculation Agent}} and the question before you is “is this really weird thing that’s just happened to the voting stock of some obscure trucking company in Panama an {{eqderivprov|Extraordinary Dividend}} or not?” you might feel anchored a little high up the beach as the tide goes out. | Which, in its way, is fine, especially if you happen to be acting for the {{eqderivprov|Calculation Agent}}, but if you ''are'' the {{eqderivprov|Calculation Agent}} and the question before you is “is this really weird thing that’s just happened to the voting stock of some obscure trucking company in Panama an {{eqderivprov|Extraordinary Dividend}} or not?” you might feel anchored a little high up the beach as the tide goes out. | ||
Look, I don’t make the rules, folks. | Look, I don’t make the rules, folks. | ||