The calculation agent is an entity or an individual engaged in the valuation and estimation of different types of exchangeable financial instruments.
The basic task of any calculation agent is the control, monitoring and estimation of investors’ returns.
His work is carried out especially in the field of derivative products. The agent studies and analyzes its value and establishes its corresponding closing price.
In a situation of purchase and sale of assets between various parties (including as a third party) you must establish the asset exchange ratio and its price adjusted to certain exchange and interest rates.
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It is usual for the role of agent of this type to be assumed by the selling party. That is, the entity offers certain securities in the form of negotiable titles and determines their exchange or sale price.
Main features of a calculation agent
Beyond what was explained above, a calculation agent responds to the following characteristic features:
- Legal personality. This work is carried out by commercial companies specialized in the financial and investment fields.
- Exhaustive knowledge of the markets. The work of calculation agent must be assumed with broad control of the stock market world and of the financial assets in which a position is held.
- Relevance in the market. Usually large investors or entities resort to this figure. Those with a more retail profile generally do not require their operations.
- Guarantor and issuing paper. Often the calculation agent operates in the market assuming the role of guarantor and issuer of an asset. Especially in cases of little standardized titles.
- Agency commission. The work in the markets of these entities generates special commissions called agency commissions, which are found in many stock market operations.
- Specific regulation. Usually this activity is regulated in regulatory frameworks of competition and financial matters. In the Spanish case, we would speak of the specific institution CNMV.
In this way, it actively participates in the investment map by evaluating a multitude of investment tools such as derivatives, structured or swaps.
As detailed at the beginning, the exchange agent commonly acts as a mediator between parties that exchange shares, bonds, etc.
On the other hand, within its management activity, it must calculate those amounts of money that the investor must receive as part of its participation in different mechanisms such as investment funds, especially.
In this sense, it is said that the calculation agents assume tasks of calculation of periodic settlement of contracts.