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Template:Calculation agent dispute: Difference between revisions
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*[[Dealer]]s are bad, venal people. They have blackened hearts and will stop at nothing to rip their [[client]]s’ faces off. We need some check on their unfettered and sure-to-be outrageously exercised discretion. (''A matter of debate and, to be sure, recent history has not looked kindly on the goings on in some dealers, but if that’s your starting point a far better question is “why are you doing business with such a [[Non mentula esse|vassal]] in the first place”?'') | *[[Dealer]]s are bad, venal people. They have blackened hearts and will stop at nothing to rip their [[client]]s’ faces off. We need some check on their unfettered and sure-to-be outrageously exercised discretion. (''A matter of debate and, to be sure, recent history has not looked kindly on the goings on in some dealers, but if that’s your starting point a far better question is “why are you doing business with such a [[Non mentula esse|vassal]] in the first place”?'') | ||
'''The [[Dealer]]’s lawyer''': Look, dudes you seem to be missing the point. When we hedge, we are [[delta]] neutral. That means if our [[hedge]] pays 50, we pay you 50. So firstly, we can’t rip your face off. | '''The [[Dealer]]’s lawyer''': Look, dudes you seem to be missing the point. | ||
*Firstly, This is [[synthetic prime brokerage]]. It isn't an arm’s length trading arrangement. It is business facilitation for you. When we hedge, we are ''[[delta]] neutral''. That means if our [[hedge]] pays 50, we pay you 50. So firstly, we can’t rip your face off. | |||
*Secondly, we are owe you [[best execution]]<ref>Admittedly this only holds if the [[Dealer]] ''does'' owe best execution, but if it is {{tag|MiFID}}-regulated and you are a [[professional client]], it will.</ref> | *Secondly, we are owe you [[best execution]]<ref>Admittedly this only holds if the [[Dealer]] ''does'' owe best execution, but if it is {{tag|MiFID}}-regulated and you are a [[professional client]], it will.</ref> | ||
*Thirdly, because we delta-one]] hedge, we come up with our {{eqderivprov|Determination Agent}} “determination” by actually selling the right number of shares. It isn’t like we confect some hypothetical valuation based on a model some geek in correlation trading built in [[excel]]. We don't go ask some stooge dealers for a soft estimate, and promise them champagne in the mail. We ''actually sell the stock''. Our own money out the door. We can't get it back. What you are asking is to second guess that actual transaction by ''you'' being able to appoint some stooge dealer for a soft estimate. | *Thirdly, because we delta-one]] hedge, we come up with our {{eqderivprov|Determination Agent}} “determination” by actually selling the right number of shares. It isn’t like we confect some hypothetical valuation based on a model some geek in correlation trading built in [[excel]]. We don't go ask some stooge dealers for a soft estimate, and promise them champagne in the mail. We ''actually sell the stock''. Our own money out the door. We can't get it back. What you are asking is to second guess that actual transaction by ''you'' being able to appoint some stooge dealer for a soft estimate. | ||