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The basic nuts and bolts of an equity derivative: the Equity Derivatives Definitions handles the “equity” side of the Transaction; the 2006 ISDA Definitions (or the 2021 ISDA Interest Rate Derivatives Definitions if you’re an early-adopter type) handles the “floating” side, which is what the customer pays to its swap dealer for its exposure: basically, the financing rate.

Financing rate ... you mean like, loan?

Sure. An equity swap bears the same relation to a margin loan as does a Pringle to a crisp.

So do not let anyone tell you that an equity derivative is not a financing tool. It is.

Transaction types

This is the Transactions section: the first eleven paragraphs of the Equity Derivatives Definitions — twelve, if you include the Confirmations definition which doesn’t really belong anywhere else —set out all the types of Transaction you can have. These break down into:

• Option Transactions
• Forward Transactions
• Equity Swap Transactions
• Index Swap Transactions

And can be on a single Index or Share or a Basket of Indices or Shares. All are documented under Confirmations, though with the onset of Master Confirmation Agreements, synthetic prime brokerage and so on, these are no longer the old-fashioned epistles they once were.