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Template:M summ Equity Derivatives 13: Difference between revisions
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It has, as the Bard put it, a “methinks the lady doth protest too much” feel about it, but you will see it applied in the synthetic PB space. Though it would be an odd hedge about which these characteristics did not apply. | It has, as the Bard put it, a “methinks the lady doth protest too much” feel about it, but you will see it applied in the synthetic PB space. Though it would be an odd hedge about which these characteristics did not apply. | ||
In the actual {{eqderivdefs}}, “{{eqderivprov|Hedge Positions}}” is really used only for that “what me guv no i never” acknowledgement about {{eqderivprov|Hedging Activities}} in Section {{eqderivprov|13.2(a)}}. However, many users co-opt it more fully into their master confirmations. | |||
Now. Would a {{eqderivprov|Hedge Position}} include any [[FX]] transactions required to convert positions and proceeds of hedge disposal into the {{eqderivprov|Settlement Currency}}? You may find assiduous fellows that would find it prudent to clarify. Not this one, however: [[FX]] risk seems to this commentator to be a natural consequence of Section {{eqderivprov|13.2(b)}}, so no such [[Anal paradox|anality]] required. | |||
===Whither the {{eqderivprov|Hedging Party}}?=== | |||
A more careful draftsperson might have mentioned that the {{eqderivprov|Hedging Party}} might not necessarily be one of the counterparties, but might be an [[affiliate]], and this wording might have more clearly captured that. | |||
A lover of [[fair, large and liberal]] interpretations of [[tiresome]] legal agreements might wonder whether it would be much of a stretch to extend reference to the “arrangements (howsoever described) by a party in order to hedge” to include affiliates and hedging agents of course. Especially where, as they will, they will pass the costs of those hedges on to the direct party (since — ahh — otherwise ''they wouldn’t be [[hedge|hedges]]''. | |||