Template:Ex amount and coronavirus: Difference between revisions

You are a counterparty to an [[equity derivative]] {{eqderivprov|Transaction}} papered under the {{eqdefs}}. Hard to imagine, I know, but just go with me. So what happens if you have selected “{{eqderivprov|Ex Amount}}” as your {{eqderivprov|Dividend Amount}} payment method, and the {{eqderivprov|Issuer}} has duly ''declared'' a {{eqderivprov|Dividend}}, the {{eqderivprov|Record Date}} has passed as expected, the {{eqderivprov|Share}} has started trading [[ex-dividend]] (as by rights it ''should'' do) and ''then'' something unexpected and properly epochal happens — like ''[[Coronavirus|the world basically ceasing to rotate on its axis for a prolonged and indeterminate time]]'', prompting said issuer to ''cancel'' its dividend. What ''then''?

Judged by the lights of its basic metaphysical premise, the intention of a [[derivative]] is to, well, be ''derivative'': to replicate as closely as possible the performance of the underlying {{isdaprov|Share}}. No equity derivative counterparty has it in its head that it is underwriting, or [[guarantee]]ing, an {{eqderivprov|Issuer}}’s commitment to pay a dividend that the {{eqderivprov|Issuer}} itself does not ultimately carry though — even if the {{eqderivprov|Issuer}} ''were'' legally obliged to perform that obligation, whereas in fact it tends not to be (however unconventional not doing so might be). So, you would think, it would be odd to find a {{eqderivprov|Transaction}} obliging an {{eqderivprov|Equity Amount Payer}} to pay a {{eqderivprov|Dividend Amount}} notwithstanding cancellation of the actual dividend on the underlying {{eqderivprov|Share}}.