Hedge Position Adjustments - Equity Derivatives Provision: Difference between revisions

{{a|pb|{{hedge position adjustment}}}}Hedge Position Adjustments are a flourish you might see in a [[synthetic prime brokerage]] master confirmation, as a gloss to the other terms in the {{eqdefs}} about {{eqderivprov|Final Price}} and so on. As the sample in the box suggests they allow the dealer to pass through ''extraordinary'' costs of providing synthetic exposure to its clients. These chiefly take three forms: unexpected costs of hedging, the most  obvious of which are [[Stamp duty|stamp duties]], financial transaction taxes and other costs imposed on the dealer who hedges its obligations by transacting in the underliers; outright failures of the hedge (because hedge counterparties go bust before settling), and unexpected conversion costs.