Index Services play a very important role for those indulged in making investments in the market. Without Index Calculation it is hard to determine if making investment is worth of knot. To calculate Dividend Indices there is a calculation agent. Here we are going to discuss about the meaning and role of calculation agent.

Meaning of Calculation Agent

It is not that easy to understand the term calculation agent, the role and duties that are associated with the same. The term calculation agent refers to an individual or says an entity who is responsible to determine the value of the derivative. It is the duty of the calculation agent to calculate the value of the derivative or in other words the amount that each party owes. He also has the power to establish structured product price thereby acting as the guarantor as well as the issuer. In case the counterparty in this derivative transaction also acts as the broker-dealer, then they also get to behave like a calculation agent.

Roles and duties of Calculation Agent

The roles and duties of a calculation agent is not at all restricted to one or two but there are immense duties that one has to perform. The calculation agent also acting as the seller or a third party, at times is required to perform n number of roles in case of complex transactions. The pivotal role is to decide as to who owes how much to whom in the transaction like that of a swap. For this, it is important to determine the final price on the basis of the agreed valuation method in addition to the currency rate and the accreted amounts. Not to forget current market value also plays a vital role here.

All in all, this is all you need to know about meaning and role of calculation agent.

Source: https://indexdevelopment.home.blog/2019/04/19/meaning-and-role-of-calculation-agent/