Change in Law - Equity Derivatives Provision: Difference between revisions

Change in Law - Equity Derivatives Provision (view source)

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 ==={{eqderivprov|Shares}} versus {{eqderivprov|Hedge Positions}}===
-Common to see references in (x) to “{{eqderivprov|Shares}}” replaced by the slightly wider “{{eqderivprov|Hedge Positions}}”. Not objectionable, but not massively germane either. Ok, maybe your Hedging Party is hedging with futures, or a derivative - and someone else, therefore, is holding the Shares. But they can either continue to do that, and you can continue to hold your future or swap — in which case what’s your disruption? — or they can’t, in which case you have a more general {{eqderivprov|Hedging Disruption}}. Not so likely that it will somehow become illegal to hold a future or swap — but not impossible, I suppose.
+Common to see references in (x) to “{{eqderivprov|Shares}}” replaced by the slightly wider “{{eqderivprov|Hedge Positions}}”. Not objectionable, but not massively germane either. Ok, maybe your {{eqderivprov|Hedging Party}} is hedging with futures, or a derivative and not Shares directly. But even then, and someone else<ref>E.g., the {{eqderivprov|Hedging Party}}’s swap counterparty, right?</ref> therefore, is holding the {{eqderivprov|Shares}}.
+But they can either continue to do that, and your {{eqderivprov|Hedging Party}} can continue to hold its future or swap — in which case what’s your disruption? — or they can’t, in which case you have a more general {{eqderivprov|Hedging Disruption}}. We don’t think it is so likely that it will somehow become illegal to hold a future or swap — one doesn’t tend to nationalise derivatives on the whole — but in these kooky political times anything is possible, I suppose.
 ===[[Reasonable man|Reasonable]] steps to avoid?===
 Uber pedants may also try to argue that there should be some obligation on the {{eqderivprov|Hedging Party}} to take [[reasonable]] steps to avoid a [[Change in law - Equity Derivatives Provision|change in law]]. This is silly, [[Chicken Licken]]ish behaviour. I mean, what are you meant to do? Lobby Congress? Remember, “{{eqderivprov|Hedge Positions}}” is wider and more generic than “any particular hedge position that you happen to have on” at the time the law changes. If you can change your hedging strategy, you are not subject to a {{eqderivprov|Change in Law}}. So resist this drafting, but [[I'm not going to die in a ditch about it|don’t die in a ditch about it]].