Increased Cost of Stock Borrow - Equity Derivatives Provision: Difference between revisions

Increased Cost of Stock Borrow - Equity Derivatives Provision (view source)

1,162 bytes added , 19 June 2014

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 {{eqderivsnap|12.9(b)(v)}}
 ====Commentary====
-'''Summary''':
+'''Summary''': When the Hedging Party notifies an {{eqderivprov|Increased Cost of Stock Borrow}}, specifiying a proposed {{eqderivprov|Price Adjustment}}, the non-Hedging Party has three options:
+#Accept the {{eqderivprov|Price Adjustment}} and the {{eqderivprov|Transaction}} is amended accordingly;
+#Make a one-off payment of the determined {{eqderivprov|Price Adjustment}}; or
+#Terminate the {{eqderivprov|Transaction}} on the second {{eqderivprov|Scheduled Trading Day}}.
+Only if the {{eqderivprov|Non-Hedging Party}} has failed to give any such election by the end of the second {{eqderivprov|Scheduled Trading Day}} can the {{eqderivprov|Hedging Party}} terminate the {{eqderivprov|Transaction}}. The {{eqderivprov|Non-Hedging Party}} can lend the {{eqderivprov|Hedging Party}} the relevant {{eqderivprov|Shares}} in the intervening period to mitigate its loss.
+Compare and Contrast with {{eqderivprov|Loss of Stock Borrow}}, where the Non-Hedging Party has a bit less flexibility in what it does - it either has to pony up (or procure) a stock borrow within 2 Scheduled Trading Days itself, or Hedging Party can terminate. Therefore Increased Cost of Stock Borrow is the "gentler" provision from the Non-Hedging Party's perspective.
-Compare and Contrast with {{eqderivprov|Loss of Stock Borrow}}.
 ====Related Provisions====
 {{eqderivanatomy}}