- December 17, 2020
- Posted by: samdenis
Fund structures are often complex, with multiple entities, each of which can use an index in a slightly different way. In addition, an infringement on the part of the supplier may result in a loss to another company in the structure. Regardless of which organization is executing the documentation, it is important to ensure that each relevant entity in the structure has the necessary rights to the contract. Since the beginning of the structural products sector, issuers and sub-organizations have entered into licensing agreements with index sponsors. These agreements allow the parties to the offer to use the index and its levels in relation to the supply of these products. Because index licensing agreements are often based on the standard supplier`s terms, they tend to reflect the supplier`s appetite for risk. It is relatively common for such agreements to include compensation to the supplier for third-party claims resulting from the customer`s use of the index. The purpose of this compensation is to reallocate to the customer the risk downstream of receivables (for example. B claims of investors who may have suffered a loss as a result of a product related to an investment index) and to give the client the responsibility to include appropriate exclusions and exclusions with its investors and counterparties. The parties. Either the issuer`s issuer or the issuer`s associated broker can enter into the licensing agreement with the index provider and often several related companies may be parties to the licensing agreement. The potential use of the index should be taken into account in determining which companies should participate in the agreement: will the issuer distribute index-related debt securities among several insurers? Will the underwriter distribute debt securities related to the index issued by several different issuers? Which parties need index data to make payment or price calculations? Licensing agreements describe the necessary statements regarding the ownership of the index and the index marks that appear in the supply documentation, as well as the necessary statements regarding the liability of the index provider. Some licensing agreements contain a particular language, while others contain only the physical requirements for disclosures.
Whether it is a description of disclosure obligations or a particular language, licensees should consider the expected offer documentation and the use of short “quick view” marketing materials or appointment sheets. The main points of negotiation are the possibility of using an abbreviated version of many necessary information, depending on the expected offer documentation, and the possibility of making minor changes to provide the necessary information on relevant documents (i.e. modifying the language to reflect defined terms or several types of products). Contact email@example.com to get your index license or for your own custom Euronext index. Depending on the intended use of the index, the licensee may wish for a licence agreement that automatically remains at the end of one or more conditions, unless it has been terminated by one of the parties. Index licensees should also consider the index provider`s current presentations regarding the publication of an updated methodology in the event of a change in the index calculation and notification requirements for these changes or methodological updates or interruptions or corrections at previously published levels.