Template:Calculation agent versus determination agent: Difference between revisions

Template:Calculation agent versus determination agent (view source)

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-===The difference between the {{eqderivprov|Calculation Agent}} and the {{eqderivprov|Determining Party}}===
+==={{eqderivprov|Calculation Agent}} vs. {{eqderivprov|Determining Party}}===
-'''Why''': The {{eqderiv}} recognise that while most calculations could be performed by whoever is appointed {{eqderivprov|Calculation Agent}}, determination of a {{eqderivprov|Cancellation Amount}} is inextricably related to the [[hedge]] and —- especially where there is a [[Market Disruption Event - Equity Derivatives Provision|disrupted market]] – this is best to be calculated by the one whose problem it is to unwinding that hedge: namely, the {{eqderivprov|Hedging Party}}. In theory (though almost never in practice<ref>If ''{{eqderivprov|Calculation Agent}} == [[Dealer]]'', and ''[[Dealer]] == {{eqderivprov|Hedging Party}}'', and ''{{eqderivprov|Hedging Party}} == {{eqderivprov|Determining Party}}'', then ''{{eqderivprov|Calculation Agent}} == {{eqderivprov|Determining Party}}''.</ref>) the {{eqderivprov|Hedging Party}} might not be the {{eqderivprov|Calculation Agent}}.
+'''Why''': The {{eqderiv}} recognise that while most calculations could be performed by whoever is appointed {{eqderivprov|Calculation Agent}}, determination of a {{eqderivprov|Cancellation Amount}} is inextricably related to the [[hedge]] and — especially where there is a [[Market Disruption Event - Equity Derivatives Provision|disrupted market]] – this is best to be calculated by the one whose problem it is to unwind that hedge: namely, the {{eqderivprov|Hedging Party}}.
+In theory (though almost never in practice<ref>If ''{{eqderivprov|Calculation Agent}} == [[Dealer]]'', and ''[[Dealer]] == {{eqderivprov|Hedging Party}}'', and ''{{eqderivprov|Hedging Party}} == {{eqderivprov|Determining Party}}'', then ''{{eqderivprov|Calculation Agent}} == {{eqderivprov|Determining Party}}''.</ref>) the {{eqderivprov|Hedging Party}} might not be the {{eqderivprov|Calculation Agent}}.
+In theory, too, the {{eqderivprov|Hedging Party}} might not be named the {{eqderivprov|Determining Party}}. Which is kind of awkward, since the Cancellation Amount is couched in terms of the cost to the determining Party of unwinding, liquidating or re-establishing its hedge — which it would only do if it was, like, ''[[hedging]]''.
+Lastly, note that if your investment bank is as left-handedly configured as some [[Amwell J]] has come across<ref>AND WHO SHALL REMAIN NAMELESS.</ref>, the group entity writing the equity swaps might not be the same as the one doing the physical hedging of those swap obligations (with a back-to-back trade between them, for example), so the Hedging Party/Determining Party might not be either party to the actual {{isdama}} at all.
+''So'' confusing.
 '''When''': The {{eqderivprov|Determining Party}} only ever has to determine a {{eqderivprov|Cancellation Amount}}, {{eqderivprov|Cancellation and Payment}} or {{eqderivprov|Partial Cancellation and Payment}} under {{eqderivprov|12.8}}, and that will only happen in only when a Transaction terminates following an {{eqderivprov|Extraordinary Event}} or an {{eqderivprov|Additional Disruption Event}}.
 '''Enter the lawyers''': Nevertheless, this is all the opportunity my brethren in the [[Mediocre lawyer|legal profession]]need  to confect, and spray-hose all over your confirmation, language like ''“determination or calculation, [[as the case may be]], made (respectively) by the Calculation Agent or Determining Party, [[as the case may be]]”''.