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Increased Cost of Hedging - Equity Derivatives Provision: Difference between revisions
Increased Cost of Hedging - Equity Derivatives Provision (view source)
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{{eqderivanat|12.9(a)(vi)}} | {{eqderivanat|12.9(a)(vi)}}{{eqderivanat|12.9(b)(vi)}} | ||
{{eqderivanat|12.9(b)(vi)}} | |||
''Compare with {{eqderivprov|Increased Cost of Stock Borrow}}, the equivalent provision where the {{eqderivprov|Hedging Party}} is [[short]]. | ''Compare with {{eqderivprov|Increased Cost of Stock Borrow}}, the equivalent provision where the {{eqderivprov|Hedging Party}} is [[short]]. | ||
Part of the famed “[[triple cocktail]]” of protections against unexpected problems hedging and risk managing {{isdaprov|Transaction}}s, together with {{eqderivprov|Hedging Disruption}} and {{eqderivprov|Change in Law}}. Note also references to {{eqderivprov|Hedging Party}}. | Part of the famed “[[triple cocktail]]” of protections against unexpected problems hedging and risk managing {{isdaprov|Transaction}}s, together with {{eqderivprov|Hedging Disruption}} and {{eqderivprov|Change in Law}}. Note also references to {{eqderivprov|Hedging Party}}. | ||
===Counterparty credit deterioration=== | |||
{{gmlsaprov|Increased Cost of Hedging}} excludes costs arising from the deterioration of its own credit — so it will tend to caputre market wide cost increases, not ones that a are personal to the {{gmslaprov|Hedging Party}}. Assiduous sell-side [[broker|brokers]] will try to cut out the “deterioration of own credit” wording. | |||
{{triplecocktail}} | {{triplecocktail}} | ||
{{seealso}} | {{seealso}} | ||
*Consequences of an {{eqderivprov|Additional Disruption Event}} in particular {{eqderivprov|12.9(b)(vi)}}. | *Consequences of an {{eqderivprov|Additional Disruption Event}} in particular {{eqderivprov|12.9(b)(vi)}}. | ||
{{ref}} | {{ref}} | ||