Additional Disruption Events - Equity Derivatives Provision: Difference between revisions

{{2002 ISDA Equity Derivatives Definitions Section 12.9 TOC}}

===From the User’s Guide===

Unlike the consequences related to {{eqderivprov|Extraordinary Events}}, the parties can elect as many {{eqderivprov|Additional Disruption Events}} as are agreed to. The {{eqderivprov|Additional Disruption Events}} are elective, so none of them apply automatically. There may be overlap between {{eqderivprov|Change in Law}} and {{eqderivprov|Hedging Disruption}}. Given that {{eqderivprov|Change in Law}} contains no cure period and {{eqderivprov|Hedging Disruption}} contains a two {{eqderivprov|Scheduled Trading Days}}’ cure period, parties should consider specifying a priority between the two {{eqderivprov|Additional Disruption Events}} in the related {{eqderivprov|Confirmation}}. If parties select more than one {{eqderivprov|Additional Disruption Event}} to apply to their {{eqderivprov|Transaction}}, they should consider whether certain events would constitute more than one {{eqderivprov|Additional Disruption Event}}, and whether the consequences of each {{eqderivprov|Additional Disruption Event}} are different (e.g., {{eqderivprov|Increased Cost of Hedging}} and {{eqderivprov|Increased Cost of Stock Borrow}}).  In such cases parties should add a provision to the {{eqderivprov|Confirmation}} that states which provision should be followed if there is a conflict. The only conflict addressed by the 2002 Definitions is between {{eqderivprov|Hedging Disruption}} and {{eqderivprov|Loss of Stock Borrow}}. If both events are specified as applicable in a {{eqderivprov|Confirmation}} and an event occurs that could qualify under either elective, then such event will be treated as a {{eqderivprov|Loss of Stock Borrow}}, pursuant to Section {{eqderivprov|12.9(b)(vii)}}. Lastly, any of the {{eqderivprov|Additional Disruption Events}} can apply to any type of {{eqderivprov|Transaction}}, except that {{eqderivprov|Failure to Deliver}} (discussed below) applies only to {{eqderivprov|Physically-settled Transactions}}.

===Commentary===

*See: {{eqderivprov|Triple Cocktail}} for the famous triumvirate of {{eqderivprov|Change in Law}}, {{eqderivprov|Increased Cost of Hedging}} and {{eqderivprov|Hedging Disruption}}.

{{eqderivanatomy}}