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Template:M summ Equity Derivatives 8.7: Difference between revisions
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Template:M summ Equity Derivatives 8.7 (view source)
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So much so uncontroversial. But then there are flexi-transactions: in these modern times of [[high-frequency trading]], [[unique transaction identifier]]s and [[Trade reporting|trade]] and [[transaction reporting]], [[dealer]]s and their clients are increasingly interested in consolidating the multiple trade impulses they have on the same underlyer into single positions and single transactions: this makes reconciling reporting far easier, and also means you don’t have to be assigning thousands of [[UTI]]s every day — at a couple of bucks a throw — to what is effectively a single stock position. | So much so uncontroversial. But then there are flexi-transactions: in these modern times of [[high-frequency trading]], [[unique transaction identifier]]s and [[Trade reporting|trade]] and [[transaction reporting]], [[dealer]]s and their clients are increasingly interested in consolidating the multiple trade impulses they have on the same underlyer into single positions and single transactions: this makes reconciling reporting far easier, and also means you don’t have to be assigning thousands of [[UTI]]s every day — at a couple of bucks a throw — to what is effectively a single stock position. | ||
What does this have to do with {{eqderivprov|Equity Notional Amount}}s? Well, the {{eqderivprov|Equity Notional Amount}} of that single “position” transaction is now a moving target. A ''short'' trade impulse on a (larger) existing long position will reduce the {{eqderivprov|Equity Notional Amount}}, but it won’t necessarily change who is the {{eqderivprov|Equity Amount Payer}}, ''unless the total notional of the position flips from positive to negative. Then it will. This is kind of weird if you stand back and look at it from a stuffy, theoretical point of view, but once you slip into that warm negligee of pragmatism in which almost all [[legal eagles]] love to drape themselves, you get over it. | What does this have to do with {{eqderivprov|Equity Notional Amount}}s? Well, the {{eqderivprov|Equity Notional Amount}} of that single “position” transaction is now a moving target. A ''short'' trade impulse on a (larger) existing long position will reduce the {{eqderivprov|Equity Notional Amount}}, but it won’t necessarily change who is the {{eqderivprov|Equity Amount Payer}}, ''unless the total notional of the position flips from positive to negative''. Then it will. This is kind of weird if you stand back and look at it from a stuffy, theoretical point of view, but once you slip into that warm negligee of pragmatism in which almost all [[legal eagles]] love to drape themselves, you get over it. | ||
Well, I did, anyway. | |||