Available dates

Dec 9—12, 2019
4 days
London, United Kingdom
GBP 4195 ≈USD 5392
GBP 1048 per day


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About the course

Understand the legal issues surrounding derivatives with this technical course

Derivatives have become a vital tool in risk management and structured financings and are used by an ever-increasing number of banks, financial institutions and corporations. From the basic swap structure a wide range of complex instruments have developed.

These are usually complex and have been the cause of major litigation. To protect all the parties involved, transactions must be properly documented. Lawyers and documentation staff need to understand both the products, the legal issues and effective documentation techniques.

This course will provide you with an in-depth analysis of the role of, and the critical legal issues relating to derivatives in the financial markets.

You will learn:

  • What swaps are and how they work
  • Understanding the Master Agreement
  • The significance of every clause in the Agreement
  • How to complete the Schedule to the documentation
  • How to draft clauses to meet special situations
  • How to deal with insolvency and close-out netting
  • The risks in credit exposure and techniques for credit enhancement
  • How to assess the capacity of the counterparty
  • The significance of major swaps litigation


Day 1 - Introduction to Derivatives

  • How, why and by whom are derivatives used? from their origins to the modern day
  • About the market – facts & figures
  • Types of derivative
    • OTC vs exchange-traded
    • product types: forwards / options / swaps
    • settlement
    • asset classes: interest rates / currency / credit / equity / inflation / commodities / longevity / weather
  • The constituent parts of a derivative transaction
  • The life cycle of a derivatives trade
  • Risks: market risk / credit risk / liquidity risk / operational risk (including legal risk) / basis risk
  • Simple example: interest rate swap

Day 2 – Derivatives Documentation (ISDA training)

  • What documents do we need to consider? the ISDA architecture
  • The key features of the ISDA Master Agreement

2002 ISDA Master Agreement: The fundamentals (Sections 1 – 4)

  • The legal implications of transacting under ISDA
  • Payment and delivery obligations
  • Netting of payments
  • Representations
  • Agreements
  • Tax

2002 ISDA Master Agreement: Enforcing the commercial relationship (Sections 5 and 6)

  • Early termination: Events of Default vs Termination Events
  • Specified Entities
  • Credit support and Credit Support Providers
  • Events of Default in detail
  • Termination Events in detail
  • A closer look at the termination process:
    • who may terminate?
    • what transactions may be terminated?
    • notices
    • calculation of Close-out Amounts and Early Termination Amount
    • settlement, close-out netting & set-off: incl. relevant principles of insolvency and ISDA netting opinions
    • practical termination workshop

2002 ISDA Master Agreement: The all-important boilerplate (Sections 7 - 13)

  • Transfer
  • Contractual Currency / Expenses / Miscellaneous
  • Offices / Multibranch Parties
  • Notices
  • Governing law & jurisdiction

2002 ISDA Master Agreement: The Schedule

A group negotiation exercise

ISDA credit support documentation

  • The ISDA credit support universe
  • Focus on the English law Credit Support Annex
    • overview, structure & legal characterisation
    • determining amount of collateral required
    • operational mechanics: delivery / exchanges / return of collateral
    • dispute resolution
    • distributions
    • default
    • boilerplate
    • elections & variables
  • Standard CSA

ISDA trade documentation

  • A closer look at some definitions booklets:
    • 2006 ISDA Definitions
    • 2002 ISDA Equity Definitions
  • Trade confirmations – practical exercise

Day 3 - OTC derivatives clearing

Derivatives clearing

  • The financial crisis: what happened?
  • The regulatory response: EMIR (including EMIR REFIT); Dodd-Frank; other jurisdictions
  • Clearing overview
  • Clearing models
  • The EMIR clearing obligation
  • The EMIR reporting obligation7) Exemptions
  • Penalties
  • Central counterparties (CCPs)
  • Trade repositories
  • Clearing documentation (including margin CSAs)

Uncleared OTC derivatives

  • Risk mitigation practices
  • Margining

Day 4 - Regulatory and legal issues of OTC Derivatives Clearing

  • Gambling, insurance and other public policy issues
  • Capacity & authority
  • Suitability & misrepresentation
  • MiFID
  • Market Abuse Regulation
  • Brexit
  • Benchmarks Regulation
  • Sanctions
  • Securities Financing Transaction Regulation
  • Islamic derivatives
  • Future technology: blockchain / distributed ledger technology; smart derivatives contracts

Trust the experts

Adam Ward

Adam Ward is an English-qualified lawyer with over 20 years experience in the financial markets. He has broad expertise but specialises in structured derivatives and lending transactions, as well as various other areas such as prime brokerage.Adam runs his own financial markets legal consultancy ...


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