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Derivatives & Underlying Security
| What is a Derivative |
A derivative is an instrument that derives its value from another security. Two categories of derivatives are used on SEDI:
- “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.
- “Third party derivatives” are securities offered by someone 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 options or over-the-counter options. Please refer to the derivatives section in the on-line help on SEDI for additional information about derivatives reporting. The insider, not the issuer, must define these securities in the insider profile.
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| What is an Underlying Security |
An underlying security is a security you would acquire if you exercised the right attached to another previously acquired security.
For example, if you previously acquired an option that is exercisable into a common share, the common share is the “underlying security.” You would receive a common share when you exercise the option. You need to report both the grant of the option and, when you exercise the option, the acquisition of the underlying security, the common share. |
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