Equity Derivatives: A Practitioner s Guide to the ISDA Equity Derivatives Documentation

Equity derivatives are financial instruments whose value is based on underlying equity securities, such as stocks or stock market indices. They allow market participants to transfer risks associated with the underlying securities or to gain exposure to those securities without the need to actually buying them. In practice, the complexity of equity derivative instruments and the number of different uses for which they are employed are limited only by the imagination of market participants. With the greatest volatility in equity markets seen in a generation, investors hedging themselves against or trading volatility, shareholders monetising holdings and corporates involved in M&A activity have been among those fuelling a boom in equity derivatives markets. The market of over-the-counter (OTC) equity derivatives is massive by any standards, and soon volumes of centrally cleared equity derivatives will rocket. Equity derivative products are the finest example of the finance industry s complexity. In the financial regime emerging from the financial crisis, regulators have demanded greater transparency, standardisation and certainty, as well as a much stronger infrastructure. For any user or regulator, a thorough understanding of how the documentation platform for OTC and centrally cleared derivatives work is essential. Equity Derivatives: A Practitioner s Guide to the ISDA Equity Derivatives Documentation examines the full spectrum of equity derivative transactions and their documentation. This accessible title concentrates on explaining, in simple language and with worked examples, the older, but still popular 2002 ISDA Equity Derivatives Definitions; but it also provides an overview of the newer, but neglected 2011 ISDA Equity Derivatives Definitions.