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

Course overview

Since 1990 Euromoney Legal Training, in association with Schuyler K. Henderson, has organised a widely praised course on the basic legal concepts in swaps and the documentation of swap transactions using the ISDA® Master Agreements. Each year, swaps and derivatives become more and more complex. New developments in equity and credit derivatives and insurance derivatives and synthetic securitization, new and emerging jurisdictions are involved, and derivatives are increasingly used as part of financing structures.

This 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.

How this course will help you

You will learn:

• The significance of "appropriateness" and "suitability"
• Use of derivatives in project financing
• Rationale, "Tricks" and risks in structured financing
• Synthetic investing
• Off balance sheet structures: lending against puts and calls
• Legal structure, key terms, documentation and risks incredit derivatives and equity derivatives
• Repackagings and synthetic securitisation
• Use of the ISDA® Master Agreements in structured financing

Who should attend?

The course is specially designed for those with some experience of swaps and the associated legal issues. It is particularly suitable for past delegates of Euromoney's Legal Issues in Swaps and Swap Derivatives course.

• In-house lawyers in banks and securities houses
• Bankers involved in complex financing using swaps and derivatives
• Lawyers in corporations, fund managers and other end users
• Lawyers and accountants in private practice who advise clients on the above categories
• Senior documentation staff
• Compliance officers

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

Euromoney Legal Training and this course are neitherendorsed by, nor affiliated with, ISDA®.

Day 1

Description of derivatives

• Overview of the OTC derivatives markets
• Form: swap, option and forward
• Optionality
• Present value; marking-to-market, marking to model
• Dealers and end-users
• Hedge issues
• Standardisation; liquidity

Derivatives technology and uses

• Examples
• Valuations
• Hedges; asymmetry

Accounting issues

• FAS 133
• IAS 39

Documentation

• Master agreement
• Confirmations
• Definition booklets

Currency products

• Forwards and NDFs
• Options and barrier options
• Currency products (cont’d)
• FX and currency option definitions
• Disruptions

Commodity/project financing

• Commodity swaps
• “Pre- Export financing”
• Relationship to lending documents
• Bullion definitions
• Energy annexes
• 2005 ISDA® Commodity Definitions

Insurance and economic derivatives

• Insurance derivatives
• Notional amount contracts
• Regulation
• Weather derivatives
• 2005 and 2006 ISDA® Inflation Definitions
• Real estate derivatives

Issues with respect to particular counterparties

• Analysing the risks
• Agents and fiduciaries
• Hedge and other Funds
• Partnerships
• Sovereigns

Day 2

Equity derivatives

• Equity share derivatives
• Equity index derivatives
• Baskets
• Form: option, swap and forward
• Equity-funding deposit swap
• Other uses
• Takeover legislation (Perry)
• Employee offering (Marconi)

2002 Equity Derivatives Definitions

• Products; the dealing market
• Trading (hedge disruptions)
• Index events
• Extraordinary events (mergers, recapitalizations, etc)
• Fallbacks
• Knock-in/out events
• Additional disruption events; hedging issues
• Calculation agent; determining party
• Additional representations and acknowledgements
• Master equity derivatives confirmation agreements

Credit derivatives

• Overview of market
• Default swaps
• Baskets: leverage or diversification
• Uses
• Hedging
• Investment
• Capital reduction
• Physical and cash settlement

2003 Credit Derivatives Definitions: overview

• Reference entity
• Credit events (obligations and credit event): issues

2003 Credit Derivatives Definitions (continued)

• Physical and cash settlement: issues
• Dealing market choices: compromise; standard
• Indexes

2009 protocols and fundamental changes

• Lookbacks and pricing
• Determination committees
• Auctions

Capital

Day 3

Principles of structured derivatives

• Tricks
• Indexed security
• Currency option built into loan
• Embedded derivatives: principal protected/unprotected
• Issuing vehicles: program issuers, SPEs and rating agencies

Structured notes

• Reverse floaters: embedded swap
• Leverage
• Credit linked notes: embedded credit default swap
• Broad selections
• Exposures

Case studies workshop

• Deconstructing complex notes

Common issues

• Calculation agent
• Prohibited transactions
• Hedging and self-dealing
• Disclosure
• Tax issues

Structured issuers

• SPE issues
• Credit supplied independent of originator
• Rating agency requirements
• Enron structures
• Monetized put and call: deferred sale of securities
• Hedge issues
• Transformer companies
• Repackaging: yield enhanced note based on asset swaps
• Clean, yield-enhanced note; complexity at issuer level
• Credit issues

Synthetic securitisation

• “Traditional” vs synthetic securitisation - considerations
• Risk transfer mechanisms
• Credit loss determination
• Allocation of losses
• Documentation issues
• CDOs and AIG

Issues in relation to the ISDA® Master Agreement

• Rating agency requirements
• Termination close-out calculations: default or external illegality or tax
• Commonly overlooked issues
• Program issuers: note payments on an unanticipated early termination?
• Commonly overlooked exposures

Suitability and misrepresentation

• Transparency of pricing
• Hedge risk
• Liquidity
• Bankers Trust cases, Kwiatkowski, Caiola, Eternity, Korea Life
• PERLS and Puglisi
• SunTrust/PowTel; Peekay
• Enron related lawsuits and administrative proceedings
• Reputational issues
• FSA: treating customers fairly

New regulatory world

• Central clearing counterparties: mandatory, heavy capital charges on others
• SEC and CFTC
• Suitability for “unsophisticated” counterparties

Questions and recap

• The Course Director, during his active career as a partner in several leading international firms, was generally regarded as one of the world’s leading derivatives lawyers. Trained as a bank lawyer, he acted for one of the participants in the first currency exchange agreement in1977. Following that he was actively involved in the creation of innovative financial products on behalf of over 50 financial institutions, His practice regularly included: developing new products; participating in complex financings; preparation of standard form ISDA® documentation (including for use with specialised  counterparties and supervision of backlog documentation); provision of regulatory, enforcement and tax advice in respect of over 30 jurisdictions; and enforcement of derivatives documentation. Following retirement from the daily practice of law, he regularly consults for banks and end-users, advises on and acts as an expert witness in derivatives litigation and writes and lectures on derivatives matters.

  Courses run by this instructor

  • Swaps & Other OTC Derivatives
  • Swaps & Other OTC Derivatives
  • 8th Swaps & Other OTC Derivatives School

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.

Swaps & Other OTC Derivatives

16-19 Dec 2013 (London, United Kingdom)

Swaps and other OTC derivatives are a vital tool in risk management, investment and structured financings, and are used by almost all major financial institutions, hedge funds, central banks and corporations. Swaps are legally complex and have been the cause of major litigation and have figured prominently in the headlines during the recent financial crisis. This course will teach you effective documentation technique to protect all parties involved in the transactions.

Swaps & Other OTC Derivatives

25-27 Sep 2013 (Copenhagen, Denmark)

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. This Euromoney Legal Training course will teach delegates how to properly document a transaction to protect all the parties involved.

8th Swaps & Other OTC Derivatives School

15-19 Jul 2013 (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

Repo and Securities Lending

21-22 Nov 2013 (London, United Kingdom)

Negotiation and Documentation

Prime Brokerage

4-5 Nov 2013 (London, UK)

An Essential Introduction to the Key Legal and Documentation Issues

Please note that the dates below, 4-5 November, are likely but not yet confirmed. Final dates TBC soon.