Template:Calculation agent versus determination agent: Difference between revisions

Template:Calculation agent versus determination agent (view source)

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 ===The User’s Guide===
-We have noted elsewhere that the User’s Guide is less forthcoming than one might like it to be on what the Determining Party is for, and when there might be two. But it does say this:
+We have noted elsewhere that the User’s Guide is less forthcoming than one might like it to be on what the Determining Party is for, and when (or why) there might ever be ''two''. But it does say this:
-{{Quote|“In calculating a {{eqderivprov|Cancellation Amount}}, a {{eqderivprov|Determining Party}} is required to act [[in good faith]] and to use [[commercially reasonable]] procedures. It should be noted that [[Quotes|quotations]] are not necessarily required, as depending on the {{eqderivprov|Transaction}} in question, the cost of liquidating [[hedge]]s may be a more appropriate basis for determining a {{eqderivprov|Cancellation Amount}} than soliciting quotations.<ref>“''May'' be”. You think?</ref>
+{{cancellation amount UG}}
-Parties should note that the {{eqderivprov|Determining Party}} is the party that will be calculating its own cost of replacing or providing the economic equivalent of a terminated {{eqderivprov|Transaction}}. The {{eqderivprov|Calculation Agent}} may be a party to the {{eqderivprov|Transaction}}, but when performing its duties as {{eqderivprov|Calculation Agent}} it is acting as a neutral party. The {{eqderivprov|Calculation Agent}} ''as such'' will not have a replacement cost or economic equivalent and therefore should not be designated as the {{eqderivprov|Determining Party}}.”<ref>Emphasis added.</ref>}}
 If this is meant to help, it singularly fails to, except to recognise that the {{eqderivprov|Determining Party}} is acting ''in its capacity as a {{eqderivprov|Hedging Party}}'', and not in its gnomic, wise, dispassionate role as impartial determiner of abstract values. This explains, maybe, why {{icds}} thought it worthwhile to have distinct roles of {{eqderivprov|Calculation Agent}} and {{eqderivprov|Determining Party}} — it is not saying (as far as we can tell) that the party who is {{eqderivprov|Calculation Agent}} cannot ''be'' {{eqderivprov|Determining Party}} at all, but only that when it ''is'' being a {{eqderivprov|Determining Party}} it  is ''not'' being {{eqderivprov|Calculation Agent}}: the two roles wear different trousers, so to speak.
-But what it does confirm is that the Determining Party is meant to refer to the person who is actually hedging the trade, and that what they will be doing is liquidating hedges to get prices.
+But what it ''does'' confirm is that the {{eqderivprov|Determining Party}} is meant to refer to the person who is actually hedging the trade, and that what they will be doing is liquidating hedges to get prices.