Template:M summ Equity Derivatives 12.9(a)(viii) and 12.9(b)(v): Difference between revisions

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Revision as of 13:20, 9 May 2022

A gentler provision than Loss of Stock Borrow — wherein the non-hedging party has to either find a stock borrow for the Hedging Party to execute, or be closed out of its position like that, under an Increased Cost of Stock Borrow, if the Hedging Party notifies an Increased Cost of Stock Borrow, specifying a proposed Price Adjustment, the non-Hedging Party has three options:

Only if the Non-Hedging Party has failed to give any such election by the end of the second Scheduled Trading Day can the Hedging Party terminate the Transaction. The Non-Hedging Party can lend the Hedging Party the relevant Shares in the intervening period to mitigate its loss.

  1. The dealer will always be the Hedging Party, though you may on occasion have trouble persuading buy-side counsel of this patently obvious fact.