Derivatives

Recent Articles

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  05/06/2024

  2024 UK EMIR Refit: finalisation of Q&A-style guidance

  On 30 September 2024, significant changes to the UK’s derivatives reporting framework will come into effect known as the “2024 UK EMIR refit”. Counterparties are in the process of finalising implementation projects to reflect the revised Article 9 reporting requirements under the UK version of the European Market Infrastructure Regulation (“UK EMIR”), having negotiated similar changes in relation to EU EMIR, which took effect on 29 April 2024. The UK Financial Conduct Authority (“FCA”) and Bank of England (“BoE”) (together the “Supervisory...

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  29/03/2023

  ESMA Public Statement on derivatives on fractions of shares

  On 28 March 2023, the European Securities and Markets Authority (ESMA) published a Public Statement on derivatives on fractions of shares. Fractional share trading has risen in popularity in the UK and European markets in recent years, enabling retail investors to get direct exposure to tech companies and other issuers whose shares may be relatively expensive and which have traditionally been more frequently accessed indirectly through mutual funds. This exposure can be achieved through a trust-based or “co-ownership” model, under which multiple clients each have a beneficial claim...

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  13/07/2021

  China Futures Law: netting, collateral and prudential requirements for banks

  CN

  Close-out netting for OTC derivatives As mentioned above, the provisions for OTC derivatives, importantly, include protection for close-out netting. Close-out netting is the right to terminate all outstanding transactions (and the various payment and delivery obligations agreed under them) and to determine a net amount owed by one party to the other, should a counterparty default - and is a key provision of trading agreements, such as those published by the National Association of Financial Market Institutional Investors and the Securities Association of China, and, internationally, the ISDA Master...

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  30/03/2021

  ESG Derivatives: all the lights are green

  In December 2020, in a true sign of the times, water entered Wall Street. Just like oil, it is now a rare commodity. It is now possible to hedge against a water shortage by entering into futures contracts on the Chicago Mercantile Exchange. Faced with the ravages of pollution on the environment and the climate, the international community has taken on the issue of preserving our vital resources by initiating a large-scale ecological transition. This includes transforming our economic activities into environmentally sustainable activities, i.e. activities that meet environmental, social and governance...

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  16/02/2021

  Synthetic LIBOR and tough legacy contracts - FCA's enhanced powers

  Last June the UK Government announced that it would take legislative steps to assist with a narrow pool of “tough legacy” contracts that cannot transition from LIBOR by the current deadline of end-2021. The purpose of this Law-Now is to discuss these proposed steps and the recent public consultations. On 21 October 2020 the UK Government introduced the Financial Services Bill to Parliament. This Bill includes amendments to the Benchmarks Regulation as it now forms part of UK domestic law (“UK BMR”), which provide the Financial Conduct Authority (“FCA”) with...

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  14/10/2020

  ISDA launches IBOR Fallbacks Supplement and Protocol: next steps and issues

  ISDA has published a statement from its Board of Directors announcing that on 23 October 2020 it will launch the ISDA 2020 IBOR Fallbacks Protocol and IBOR Fallbacks Supplement to the 2006 ISDA Definitions. The effective date of the Protocol and the Supplement is 25 January 2021. From this date, the new fallbacks will apply to all legacy derivatives contracts that incorporate the Protocol and new transactions that incorporate the 2006 ISDA Definitions (as supplemented by the IBOR Fallbacks Supplement). Please click below for further details on the impact and issues arising from the ISDA 2020 IBOR...

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