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Running a synthetic equity business is mainly boring, often fraught, and on the odd occasion [[Archegos|terrifying]] job. Calculating {{eqderivprov|Cancellation Amount}}s upon market disruption counts, at least, as fraught. If the {{eqderivprov|Hedging Party}} can’t match its hedge executions with its client pricing, it will lose money. It occasionally escapes the buyside community, but this is not the idea. The dealer is does not expect to profit, or lose, from movements in the underlier: the point is to pass those onto the client, who has specifically signed up for them. | Running a synthetic equity business is mainly boring, often fraught, and on the odd occasion [[Archegos|terrifying]] job. Calculating {{eqderivprov|Cancellation Amount}}s upon market disruption counts, at least, as fraught. If the {{eqderivprov|Hedging Party}} can’t match its hedge executions with its client pricing, it will lose money. It occasionally escapes the buyside community, but this is not the idea. The dealer is does not expect to profit, or lose, from movements in the underlier: the point is to pass those onto the client, who has specifically signed up for them. | ||
The [[dealer]] will, tersely, say, “I am sure you have a great relationship with [[Wickliffe Hampton]] and everything, but I could not care a row of buttons where ''they'' see the notional value of ''my'' hedge. ''They'' don’t have to sell it. ''I'' do. The price ''I'' see is X. Now, if your buddies at [[Wickliffe Hampton]] are prepared to make ''me'' a [[firm bid]] at Y to buy my actual hedge, from me, then I am listening. Otherwise, the price I see is X.” | The [[dealer]] will, tersely, say, “I am sure you have a great relationship with [[Wickliffe Hampton]] and everything, but I could not care a row of buttons where ''they'' see the notional value of ''my'' hedge. ''They'' don’t have to sell it. ''I'' do. The price ''I'' see is X. Now, if your buddies at [[Wickliffe Hampton]] are prepared to make ''me'' a [[firm bid]] at Y to buy my actual hedge, from me, then I am listening. Otherwise, the price I see is X.” |