Derivatives & Underlying Security
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What is a Derivative |
A derivative is an instrument that derives its value from another security. Two categories of derivatives are used on SEDI:
1. “Issuer derivatives” are securities issued by the issuer. Issuer derivatives would include options, warrants, rights and special warrants issued by an issuer. The issuer designates these securities in its issuer profile supplement. 2. “Third party derivatives” are securities issued by a person or company other than the issuer. The price of third party derivatives is based on an underlying interest (such as common shares) issued by the issuer as the underlying security. Third party derivatives include exchange-traded call or put options, over-the-counter (OTC) call or put options (including private options to purchase or sell), equity swaps (long or short positions), forward purchases or sales and futures contracts (long or short positions). The insider, not the issuer, must define these securities in their insider profile. |