82,891
edits
Hedging Party - Equity Derivatives Provision: Difference between revisions
Hedging Party - Equity Derivatives Provision (view source)
Revision as of 14:37, 21 August 2017
, 21 August 2017no edit summary
Amwelladmin (talk | contribs) No edit summary |
Amwelladmin (talk | contribs) No edit summary |
||
| Line 1: | Line 1: | ||
{{fullanat|eqderiv|12.9(a)(ix)|}} | {{fullanat|eqderiv|12.9(a)(ix)|}} | ||
[[File:Hedging_Party.PNG|600px|thumb|right| | [[File:Hedging_Party.PNG|600px|thumb|right|The conceptual confusion caused by physical hedging not being done by the counterparty in person]] | ||
Relevant in the context of {{eqderivprov|Additional Disruption Events}} and hedging disruption | Relevant in the context of {{eqderivprov|Additional Disruption Events}} and [[Hedging Disruption - Equity Derivatives Provision|hedging disruption]], the {{eqderivprov|Hedging Party}} will be the entity actually carrying out the [[hedging]] activity, if it isn't the party to the {{isdama}} itself. If no Hedging Party is specified, it defaults to the parties themselves. | ||
Note also the related concept of the {{eqderivprov|Determining Party}}, who is the person calculating the [[replacement cost]] of the {{eqderivprov|Transaction}} following an Extraordinary Event (e.g. termination following a {{eqderivprov|Hedging Disruption}}, {{eqderivprov|Change in Law}} or {{eqderivprov|Increased Cost of Hedging}}). | |||
In this case there will be a string of intermediate hedging contracts - usually derivatives - but these may not behave in exactly the way that a real underlier would (in terms of market disruption, tax events, liquidity etc). and what the Equity Derivatives Definitions are meant to do is pass on the risk associated with the actual underlier. | In this case there will be a string of intermediate hedging contracts - usually derivatives - but these may not behave in exactly the way that a real underlier would (in terms of market disruption, tax events, liquidity etc). and what the Equity Derivatives Definitions are meant to do is pass on the risk associated with the actual underlier. | ||