Template:Nutshell Commodity Definitions Change in Law: Difference between revisions

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“'''{{commoddefprov|Change in Law}}'''” means that due to any change in any Rule, or any Regulator promulgating or changing its interpretation of any Rule, after the Trade Date, the {{commoddefprov|Hedging Party}} determines [[in good faith]] that it is not permitted by such Rule to hold, acquire or dispose of its {{commoddefprov|Hedge Positions}}, including where such change the {{commoddefprov|Hedging Party}}’s {{commoddefprov|Hedge Positions}} would exceed of any permitted position limits on any exchange or trading facility (it being within the {{commoddefprov|Hedging Party}}’s sole discretion to determine which of its positions count towards any such limit).
“'''{{commoddefprov|Change in Law}}'''” means that due to any change in any Rule, or any Regulator promulgating or changing its interpretation of any Rule, after the Trade Date, the {{commoddefprov|Hedging Party}} determines [[in good faith]] that it is not permitted by such Rule to hold, acquire or dispose of its {{commoddefprov|Hedge Positions}}, including where such change the {{commoddefprov|Hedging Party}}’s {{commoddefprov|Hedge Positions}} would exceed of any permitted position limits on any exchange or trading facility (it being within the {{commoddefprov|Hedging Party}}’s sole discretion to determine which of its positions count towards any such limit).


If “'''{{commoddefprov|Change in Law}}'''” applies and a {{commoddefprov|Change in Law}} occurs, the {{commoddefprov|Hedging Party}} may terminate the {{commoddefprov|Transaction}} upon at least two {{commoddefprov|Business Day}}s’ notice to the other party specifying the date of such termination (or such lesser notice as may be required to comply with the {{commoddefprov|Change in Law}}), and the {{commoddefprov|Transaction}} will terminate and the {{commoddefprov|Hedging Party}} will determine the {{commoddefprov|Cancellation Amount}} payable by one party to the other. <br>
If “'''{{commoddefprov|Change in Law}}'''” applies and a {{commoddefprov|Change in Law}} occurs, the {{commoddefprov|Hedging Party}} may terminate the {{commoddefprov|Transaction}} upon at least two {{commoddefprov|Business Day}}s’ notice to the other party specifying the date of such termination (or such lesser notice as may be required to comply with the {{commoddefprov|Change in Law}}), and the {{commoddefprov|Transaction}} will terminate and the {{commoddefprov|Hedging Party}} will determine the Cancellation Amount payable by one party to the other in good faith using commercially reasonable procedures as of the date the {{commoddefprov|Transaction}} was terminated (or such other dates as would be [[commercially reasonable]]), which may include {{commoddefprov|Hedging Party}}’s pricing and valuation models for similar transactions with third parties which may differ depending on the type, complexity or size of the {{commoddefprov|Transaction}}. <br>


Any {{commoddefprov|Cancellation Amount}} will be determined by the {{commoddefprov|Determining Party}} in good faith using {{commoddefprov|commercially reasonable procedures}} as of the date the {{commoddefprov|Transaction}} was terminated (or such other dates as would be [[commercially reasonable]]). <br>
In determining a Cancellation Amount, the {{commoddefprov|Hedging Party}} may consider:
::(i) '''[[Dealer]] quotations''': [[dealer]] quotations for replacement transactions
::(ii) '''Market data''': market data; and
::(iii) '''Internal valuations''': similar material from internal sources and {{commoddefprov|Affiliates}} where they are regularly used by the {{commoddefprov|Hedging Party}} in its business for similar valuations.<br>
 
In this section:


“'''Rule'''” means any applicable law, regulation or rule binding on the hedging Party, including the rules of any Exchange.
“'''Rule'''” means any applicable law, regulation or rule binding on the hedging Party, including the rules of any Exchange.
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“'''Hedge Positions'''” means any positions in commodities, exchange-traded commodity derivatives or over-the-counter commodity derivatives entered into in order to hedge the {{commoddefprov|Hedging Party}}’s obligations under this {{commoddefprov|Transaction}}.
“'''Hedge Positions'''” means any positions in commodities, exchange-traded commodity derivatives or over-the-counter commodity derivatives entered into in order to hedge the {{commoddefprov|Hedging Party}}’s obligations under this {{commoddefprov|Transaction}}.


“'''{{commoddefprov|Cancellation Amount}}'''” means the gains or losses the {{commoddefprov|Hedging Party}} would incur under prevailing circumstances in replacing (i) the material terms of the {{commoddefprov|Transaction}}, including payments and deliveries that would, but for the {{commoddefprov|Change in Law}}, have been required after termination and (ii) the parties’ option rights under the {{commoddefprov|Transaction}}. <br>
“'''Cancellation Amount'''” means the gains or losses the {{commoddefprov|Hedging Party}} would incur under prevailing circumstances in replacing (i) the material terms of the {{commoddefprov|Transaction}}, including payments and deliveries that would, but for the {{commoddefprov|Change in Law}}, have been required after termination and (ii) the parties’ option rights under the {{commoddefprov|Transaction}}. <br>

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