12th Derivatives Documentation School

5 days 24-28 Jul 2017, London United Kingdom £4,795.00 + VAT* Download brochure Add to basket

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Overview

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.

Lawyers and documentation staff need to understand both the products, the legal issues and effective documentation techniques. This five-day intensive training course will provide you with the tools you need to deal with all aspects of derivatives and make sure your institution is protected.

Through a series of lectures, practical workshops, case studies and the speaker's own extensive experience you will be truly prepared for any issue arising from derivatives deals and their associated documentation.

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

Who should attend

  • Lawyers in banks, financial institutions, funds and corporations
  • Documentation staff who deal with derivatives transactions
  • Bankers in derivatives transactions, particularly those wishing to understand credit and other risk ramifications
  • External lawyers who advise clients dealing with derivatives
  • Financial regulators and others charged with oversight of the OTC derivatives markets
  • Instructors

    We work with a series of expert instructors, please select the course location of interest to review the credentials of who will be delivering the programme.

    London
    Schuyler K Henderson
    Schuyler K. Henderson, author of 'Henderson on Derivatives', is one of the leading international derivative lawyers. Since 1977 he has been resident in London, during which he has represented numerous international financial institutions in the full range of credit extensions. He has been particularly active in he derivatives market, having acted for one of the participants in the first publicised currency exchange agreement in 1977.

    Since then he has been actively involved in the creation of innovative financial products on behalf of over fifty financial institutions. His practice has regularly included: developing new products; structuring, drafting and negotiating complex financings, including repackagings, credit-linked securities and tax or regulatory drive structured transactions; preparation of standard form ISDA® documentation (including for use with specialised counterparties and confirmation templates for virtually all types of derivatives); supervision of backlog documentation and establishment of derivatives dealers in a number of jurisdictions, provision of regulatory, enforcement and tax advice in respect of over 30 jurisdictions; enforcement of
    derivatives documentation and representation of parties in disputes involving derivatives.

    Since retiring he has continued to consult, lecture and write on derivatives. Schuyler is the author of numerous publications on financial topics, and is a member of the Editorial Advisory Board of The Law and Financial Markets Review. He is a regular speaker and chairman at various conferences on international finance in many international financial centres.

    Venue

    London

    Hotel in Central London

    All  courses are held at four or five star venues in Central London, Zone 1. We strive to provide you with a training environment of the highest quality, to ensure that the whole learning experience exceeds your expectations.

    Your training venue will be confirmed by one of our course administrators approximately 3-4 weeks before the course start date.

    Related Courses

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    Agenda

    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

    • Lehman Brothers

    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

    Suitability/misrepresentation

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

    Tax

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

    Accounting

    • FAS 133
    • IAS 39

    Day 2

    Introduction: need for documentation and functional analysis

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

    ISDA® agreements and other derivatives documentation

    • Overview
    • Evolution of documentation: 1977-2010
    • 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-byprovision)

    • 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 1 and 2 and High Risk

    ISDA® master agreement

    • Sections 5-6 continued

    ISDA® master agreement: section 7

    • Concepts
    • Negotiated terminations
    • ISDA® forms
    • ISDA® novation protocol

    Section 7 workshop

    Day 3

    ISDA® master agreement: sections 8-14 completing the schedule

    Master agreement workshop

    Break into small groups - each with a statement of a party’s policy regarding the ISDA® 2002 master agreement. Each group:

    1. Completes first draft of a schedule to the ISDA® 2002 master agreement

    2. Reviews and responds to other group’s draft

    3. Negotiates a final draft with the other group

    Credit enhancement

    • Guarantees
    • Collateral
    • Rehypothecation
    • Partial?

    ISDA® credit support documents

    • CSA

    Currency products

    • Forwards and NDFS
    • Options and barrier options
    • FX and currency option definitions
    • Disruptions

    Day 4

    Currency products

    • Forwards and NDFS
    • Options and barrier options
    • 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, economic and real estate derivatives

    • Insurance derivatives
    • Notional amount contracts
    • Regulation
    • Weather derivatives
    • Economic derivatives
    • 2005 & 2006 ISDA® inflation definitions
    • Real estate derivatives

    Economic derivatives

    • 2005 & 2006 ISDA® inflation definitions

    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
    • 2006 fund derivatives definitions

    Credit derivatives

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

    2003 credit derivatives definitions: overview

    • Reference entity
    • Credit events (obligations and credit event): issues
    • Physical and cash settlement: issues
    • Dealing market choices: compromise; standard capital

    Indices and auctions: the new world

    • Credit Indexes
    • Auction: 2009 protocols

    Day 5

    Key Developments pre-2008: Standardisation

    • Dealer dominance
    • Transaction facilitators: DTCC, Markit, Creditex
    • Master confirmation agreements
    • The 2005 Fed initiative and its aftermath
    • The credit default swap market: indices and protocols
    • Electronic platforms

    Prime Brokers

    • Description and issues
    • Duration
    • Give-up and compensation agreements

    The Financial Crisis of 2008

    • What caused it?
    • US real estate, asset-backed securities and CDOs
    • Fannie Mae and Freddie Mac
    • Modelling and rating agencies
    • Banks: moral hazard
    • The non-role of derivatives
    • AIG FP
    • The visceral response

    The Dodd-Frank Act

    • Overview
    • Jurisdictional responsibilities
    • New regulatory entities with overlapping jurisdiction
    • CFTC and/or SEC registration requirements
    • Derivative Clearing Organizations
    • The swap-pushout
    • Risk management and prudential requirements
    • The Volcker Rule
    • Business conduct rules and duties towards “victim” class; whistle-blowers
    • Application to foreign banks and US subsidiaries of foreign entities

    The Rules

    • CFTC
    • SEC

    Banking Regulation

    • Jurisdictional responsibilities
    • Substantive changes

    European Regulation

    • Background
    • EU level v national supervisors
    • Emerging regulation

    Basel III

    • Integration with regulatory schemes

    The CCPs

    • Europe
    • US

    CCP: Structural Case Studies

    • Formal incorporation and regulation
    • Risk committee
    • Documentation
    • Relationships: who is your counterparty?
    • Margining
    Why us


    We have a combined experience of over 60 years providing learning solutions to the world’s major organisations and are privileged to have contributed to their success. We view our clients as partners and focus on understanding the needs of each organisation we work with to tailor learning solutions to specific requirements.

    We are proud of our record of customer satisfaction. Here is why you should choose us to help you achieve your goals and accelerate your career:

    • Quality – our clients consistently rate our performance ‘excellent’ or ‘outstanding’. Our average overall score awarded to us by our clients is nine out of ten.
    • Track record – we have delivered training solutions for 95% of worlds’ top 100 banks and have trained over 250,000 professionals.
    • Knowledge – our 150 strong team of industry specialist trainers are world leading financial leaders and commentators, ensuring our knowledge base is second to none.
    • Reliability – if we promise it, we deliver it. We have delivered over 20,000 events both in person and online, using simultaneous translation to delegates from over 180 countries.
    • Recognition – we are accredited by the British Accreditation Council and the CPD Certification Service. In an independent review by Feefo we scored 96% on service and 95% on product