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Template:M summ Equity Derivatives 10: Difference between revisions
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Note how [[coronavirus|an unexpected cessation of all non-essential economic activity in the western world]] has threatened to reveal embedded [[snafu]] drafting in the Equity Derivatives Definitions. See the “For completists” section below for more. | Note how [[coronavirus|an unexpected cessation of all non-essential economic activity in the western world]] has threatened to reveal embedded [[snafu]] drafting in the Equity Derivatives Definitions. See the “For completists” section below for more. | ||
=== Section {{eqderivprov|10.1(c)}} === | |||
The {{eqderivprov|Paid Amount}} problem. So we have ''two'' problems: what to do if the [[record date]] for a {{eqderivprov|Dividend Amount}} falls ''before'' the [[trade date]] for a {{eqderivprov|Transaction}}, and what to do if the [[dividend payment date]] falls ''after'' the {{eqderivprov|Transaction}} terminates. | |||
Neither of these contingencies, predictable though they seem to be, is addressed in the {{eqdefs}}. But help is at hand: the [[JC]] — errors and omissions excepted, all usual [[disclaimer]]s applying — humbly offers the following corrective for your [[Master Confirmation Agreement]]: | |||
:“{{eqderivprov|Paid Amount}}” will apply, provided that: | |||
::(a) where the {{eqderivprov|Share}} was trading “[[ex-dividend]]” as of the {{isdadefsprov|Effective Date}}, the {{eqderivprov|Paid Amount}} will be zero; and | |||
::(b) where the {{isdaprov|Transaction}} terminates ''after'' the {{eqderivprov|Share}} commenced trading “[[ex-dividend]]” but ''before'' the scheduled {{eqderivprov|Dividend Payment Date}}, the {{eqderivprov|Equity Amount Payer}} will pay any {{eqderivprov|Paid Amount}} one [[settlement cycle]] following payment of the corresponding dividend by the {{eqderivprov|Issuer}} to holders of record of the {{eqderivprov|Share}}. | |||