Hedging Party - Equity Derivatives Provision: Difference between revisions

Hedging Party - Equity Derivatives Provision (view source)

319 bytes added , 31 October 2012

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 Relevant in the context of {{eqderivprov|Additional Disruption Events}} and hedging disruption as the entity which is actually carrying out the hedging activity, if it isn't the party itself (where not specified, it defaults to the parties themselves.
-Now, even if hedging against the street is carried out out of another group entity, there would be an inter-company risk transfer so arguable a bit otiose). Note also that "{{eqderivprov|Non-Hedging Party}}" definition somewhat assumes that the {{eqderivprov|Hedging Party}} will indeed be the actual counterparty to the {{isdaprov|Transaction}}.
+Now, if hedging against the street is carried out out of another group entity such that the counerparty is entirely economically "flat" you potentially lose the benefit of hedging disruption unless the entity that is actually "on risk" is designated as a Hedging Party, unless the inter-company hedging arrangement somehow pass the hedging disruption risk back to the direct counterparty, to the extent there are valid hedging disruption events. Which is a little circular.
+Note also that "{{eqderivprov|Non-Hedging Party}}" definition somewhat assumes that the {{eqderivprov|Hedging Party}} will indeed be the actual counterparty to the {{isdaprov|Transaction}}.
 ====See also====