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.

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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Do you have five or more people interested in attending this course? Do you want to tailor it to meet your company's exact requirements? If you'd like to do either of these, we can bring this course to your company's office. You could even save up to 50% on the cost of sending delegates to a public course.

To find out more about running this course in-house:





Our Tailored Learning Offering

If you want to run this course at a location convenient to you or if you want a completely customised learning solution, we can help.

We produce learning solutions that are completely unique to your business. We'll guide you through the whole process, from the initial consultancy to evaluating the success of the full learning experience. Our learning specialists ensure you get the maximum return on your training investment.

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We can offer any of our public courses delivered at your office or we can devise completely tailored solutions:


Read more about our offering or complete a call back request to speak to a learning specialist.

 

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