Euromoney Legal Training

Euromoney Legal Training and this course are neither endorsed by, nor affiliated with, ISDA.®

ISDA is a registered trade mark of the International Swaps and Derivatives Association.

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

Swaps are legally 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.

WHO SHOULD ATTEND

This training course is beneficial to:

• Lawyers in banks, financial institutions, funds and corporations
• Documentation staff who deal with swaps transactions
• Bankers in derivatives
• Lawyers who advise clients dealing with derivatives

ABOUT THE COURSE

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

COMPLIMENTARY DOCUMENTATION

Course fees include copies of the following publications, purchased on delegates behalf from ISDA:

• 2002 ISDA Master Agreement (Multicurrency- Cross-border)
• 1996 ISDA Credit Support Annex (Transfer-English Law)

 Euromoney Legal Training and this course are neither endorsed by, nor affiliated with, ISDA.®

ISDA is a registered trade mark of the International Swaps and Derivatives Association.

Day 1

Introduction and Welcome

The Derivatives Markets and Their Uses

• The markets
• Definitions
• The tensions and key concepts

Description and Uses of Basic Derivative Structures

• Swaps
• Fully-paid transactions
• Hybrid securities

Derivatives Risk

• Legal and operational risk
• Position or market risk
• Valuation and hedge risks
• Delivery risk
• Long term exposure: rate risk and performance risk
• Quantification of credit risk

Netting and Insolvency Issues

• Principles of insolvency
• Netting: payment and close-out
• Summary of US and UK insolvency issues

Capacity and Authority

• Hammersmith & Fulham, Piraeus and Korea Life
• Resolutions
• Signatories
• Funds and other special counterparties
• Minmetals

Regulation

• Regulation overview
• Are swaps:
• Securities?
• Illegal off-exchange futures?
• Gaming contracts?
• Insurance contracts?
• Caiola
• Capital adequacy requirements

Tax

• Direct tax in another jurisdiction
• Withholding tax
• ISDA structure

Accounting

• FAS 133
• IAS 39

Introduction: Need for Documentation and Functional Analysis

• Avoiding uncertainty
• Financial provisions: confirmations and definition booklets
• Legal, credit and trading relationship: master agreement

Questions

Day 2

ISDA Agreements and Other Derivatives Documentation

• Overview
• Evolution of documentation: 1977-2007
• Architecture of documents
• Fitting together the ISDA components
• One master for all products/Offices?

Confirmations

• Oral trades, confirmations and confirmation process
• Backlogs

Confirmation Workshop

• Prepare an interest rate swap confirmation

ISDA Master Agreement (Provision-by-provision)

• Sections 1-4 ISDA MASTER AGREEMENT
• Sections 5-6
• Grounds and procedures for termination
• How to calculate close-out values
• Nuova Safim, ANZ/Societe Generale, Peregrine I and II and High Risk

ISDA Master Agreement

• Sections 5-6 continued

ISDA Master Agreement: Section 7

• Concepts
• ISDA forms
• Novation Protocol
• Negotiated terminations

Section 7: Workshop

ISDA Master Agreement: Section 8-14

Questions

Day 3

Completing the Schedule

Suitability/Misrepresentation

• Bankers Trust Cases
• Recent cases: Kwiatkowski, Korea Life, Eternity and Caiola
• PowTel/SunTrust and Peekay
• Nonreliance representations

Master Agreement Workshop

Break into small groups - each with a statement of a party's policy regarding the ISDA 2002 Master Agreement.

Each group:

• Completes first draft of a Schedule to the ISDA 2002 Master Agreement
• Reviews and responds to other group’s draft
• Negotiates a final draft with the other group

Credit Enhancement

• Guarantees
• Collateral
• Rehypothecation
• Partial?

ISDA Credit Support Documents

• CSA
• ISDA 2001 Margin Provisions

Discussion of Enron

Recap and Questions

Interested in holding this course in-house? Please fill out your details and a member of our team will be in touch with more information.

Advanced OTC Derivatives: Equity Derivatives, Credit Derivatives & Structured Notes

30 May 2012 - 1 Jun 2012 (London, United Kingdom)

This Euromoney Legal Training course is specifically designed for delegates who having mastered the basic issues, are facing the challenges of these new and complicated applications. As the range of users and applications of swaps and derivatives increase, the legal and documentation issues become difficult and require more sophisticated techniques.

7th Swaps & Other OTC Derivatives School - London

9-13 Jul 2012 (London, United Kingdom)

Swaps and other OTC derivatives have grown both in volume and in complexity over the years. They provide flexible, effective and valuable tools for risk management and investment. On the other hand, they were blamed by some for the recent financial crisis largely due to their role in structured financings. Swaps are legally complex, a fact that frequently leads to litigation. To protect all parties involved, transactions must be properly documented

 

Comments