Documenting Swaps and other OTC Derivatives

4 days 12-15 Dec 2016, London United Kingdom £3,750.00 + VAT* Download brochure Add to basket

* Claim back your VAT
Find out more

Request a different date or location for this course (we regularly add courses following requests).

{{alternativeRequestSuccess}}
{{alternativeRequestError}}

* Claim back your VAT
Find out more

Overview

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 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.


This course will provide you with an in-depth analysis of the role of, and the critical legal issues relating to, OTC derivatives in the financial markets. We will do a detailed clause-by-clause analysis of the 1992 and 2002 ISDA® Master Agreements, including a discussion on the implications for derivatives in the financial crisis.


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)


This course are neither endorsed by, nor affiliated with, ISDA. ISDA is a registered trade mark of the International Swaps and Derivatives Association.
This course is an objective and impartial analysis of ISDA documentation

Who should attend

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

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

Inhouse


 

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.



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

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
  • Enron: MARTA
  • Lehman Brothers; Metavante
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: Basle and Basel II Accords
  • The new regulatory framework
The US Dodd-Frank Act
  • Overview
  • Derivatives
  • Effect on Europe
Suitability/Misrepresentation
  • Bankers Trust Cases
  • Cases: Kwiatkowski, Korea Life, Eternity, Caiola, PowTel/SunTrust and Peekay
  • Single bank loan/swap cases
  • CDO cases
  • 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: 1977-2011
  • 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, TXU/Enron, High Risk, Marine/Pioneer and Brysons
ISDA® Master Agreement
  • Sections 5-6 continued
  • Termination Workshop
Day 3
Default Checklist
  • Steps to take on counterparty’s default
ISDA® Master Agreement: section 7
  • Concepts
  • ISDA® forms
    – Novation protocol
  • Negotiated terminations
  • Section 7: Workshop
ISDA® Master Agreement: sections 8-14
Completing the Schedule
Credit Enhancement
  • Guarantees
  • Collateral
  • Rehypothecation
  • Partial?
ISDA Credit Support Documents
  • CSA
  • Disputes

Day 4

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 & responds to other group’s draft
  • Negotiates final draft with the other group
The Developments: 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 Credit Crunch, Its Causes and Its Uses
  • US real estate, CDOs
  • AIG
CCPs: Structural Analysis
  • Formal incorporation and regulation
  • Risk committee
  • Documentation
  • Relationships: who is your counterparty?
  • Margining
  • Guaranty fund
Case Studies
  • ICE
  • LCH.Clearnet
  • CME
Issues
  • Lack of flexibility
  • Oligopoly
  • Concentration of risk
  • Legal jurisdiction
  • Liquidity
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