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.
-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}}.
+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 [[2006 ISDA Definitions]].
-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?
+So the question is ''which is the material date'' the date on which the {{eqderivprov|Potential Adjustment Event}} happened (in the above, 1 September, outside the term of the trade), the date on which it was settled (1 December, also outside the term of the trade) or the date on which was deemed to be effective (being 1 March, during the transaction)?
 {{seealso}}
 *{{eqderivprov|Extraordinary Dividend}}