Template:M summ Equity Derivatives 12.7: Difference between revisions

====“Equity vs Equity” swaps, maybe? Don’t think so.====

What could be going on? One thought we had — and it is a feeble, half-thought, so pay it little mind other than to dismiss it — is that this is meant to address a {{eqderivprov|Transaction}} where ''both'' parties are hedging separate equity risks: rather than the usual equity swap, which pays an {{eqderivprov|Equity Amount}} return against a {{isdadefsprov|Floating Amount}} return, the {{eqderivprov|Transaction}} is structured as two offsetting {{eqderivprov|Equity Amount}}s. This would at least justify there being two {{eqderivprov|Determining Parties}}, and it would also justify them using the ''difference'' between the values, rather than their ''average'' — but not ''half'' the difference between the values.  

This is, of course, not what Section 12.7(c) says at all. As we have noted, it says, “... an amount will be payable equal to one-half of the '''difference''' between the Cancellation Amount of the party with the higher Cancellation Amount (“X”) and the Cancellation Amount of the party with the lower Cancellation Amount (“Y”) ... ”