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Potential Adjustment Event - Equity Derivatives Provision: Difference between revisions
Potential Adjustment Event - Equity Derivatives Provision (view source)
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:''A total return swap transaction is traded on 1 January. It matures and is settled on 1 June. On 1 September, following an accounting error coming to light, the Issuer declares an {{eqderivprov|Extraordinary Dividend}} to all holders of record on 1 March. It pays this dividend on 1 December. | :''A total return swap transaction is traded on 1 January. It matures and is settled on 1 June. On 1 September, following an accounting error coming to light, the Issuer declares an {{eqderivprov|Extraordinary Dividend}} to all holders of record on 1 March. It pays this dividend on 1 December. | ||
First thing: just because the {{isdaprov|Transaction}} has passed its term, doesn't mean it winks out of existence, white rabbits and no returns. Payment obligations which were due under the term remain due and payable afterward - see the commentary to {{isdadefsprov|Termination Date}} in the {{isdadefs}}. | |||
So the question is which is the material date: the date on which the {{eqderivprov|Potential Adjustment Event}} happened, or the date on which is was stipulated to have effect? | |||
{{seealso}} | {{seealso}} | ||
*{{eqderivprov|Extraordinary Dividend}} | *{{eqderivprov|Extraordinary Dividend}} | ||