Potential Adjustment Event - Equity Derivatives Provision

Template:Eqderivanat Corporate adjustments that may have a diluting or concentrative effect on the theoretical value of the relevant Shares.

Retrospective adjustments

Now what might happen under a total return swap if such a Potential Adjustment Event happens retrospectively, after a Transaction has been terminated (or has matured)? This does happen from time to time. For example:

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 Extraordinary Dividend to all holders of record on 1 March. It pays this dividend on 1 December.