Template:M summ Equity Derivatives 6.4

Equity derivatives, being a delta-one product provided by swap dealers on the presumption that they take no market risk and hedge out all risks in the physical market, depends on the venues for that physical market being open as usual, and throughout the trading session (especially where Transactions are priced on volume-weighted average prices.

An Exchange, therefore, being such a place, can really bugger things up for the market if it is unexpectedly not operating at any time an equity derivative needs to be hedged — given the way swap dealers hedge their delta-one books, on a macro basis across the portfolio, that means every day).