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Burdening assignees with arbitration agreements via “conditional benefits”
In this article, the author compares two concepts that seek to explain why an assignee of a chose in action may be burdened by an arbitration agreement to which it is not privy. He posits that, of the “conditional benefits” concept and the “subject to equities” principle, the latter provides the better explanation.
25 March 2024Another roll of the dice: the elusive line between hedging and speculation
The question of whether a derivative transaction is properly characterised as a hedge or as speculation has long vexed the English courts. It has arisen recently in a decision of the Commercial Court dealing with the capacity of an Italian local authority to transact interest-rate swaps. This article reviews the caselaw on the question and asks: (i) is it possible for the courts to make any distinction between hedging transactions and speculative transactions?; and (ii) what test should be applied?
25 March 2024Bankers’ liability for Authorised Push Payment fraud: the evolution of the Quincecare duty
In this article, David McIlroy and Ruhi Sethi-Smith of Forum Chambers examine the basis of the Court of Appeal decision in Philipp v Barclays Bank Plc [2022] EWCA Civ 318 and highlight the salient points of the appeal judgment before providing their conclusions on what this means for the victims of sophisticated Authorised Push Payment (APP) fraud scams in the future.
25 March 2024Fund finance: the regulatory requirements applicable to securitisations in the EU and UK
In the March 2022 edition of Butterworths Journal of International Banking and Financial Law ((2022) 3 JIBFL 198), we briefly explored the analysis undertaken to determine whether a transaction in the European fund finance market constitutes a “securitisation” under the EU1 and UK2 regulatory frameworks. If a fund financing does constitute a securitisation, further work is required to establish how the applicable regulatory requirements will be met. In this follow-on article, we survey the application of the key regulatory requirements imposed on participants in securitisations in the EU and UK in the context of fund financing transactions, namely: risk retention, transparency (and reporting), due diligence and credit granting requirements. We also consider the direct applicability of the rules to fund parties and the related provisions participants in these transactions should expect in the financing documents.
25 March 2024Sanctions test illegality clauses in financial contracts
The recent sanctions imposed in response to the war in Ukraine have meant that the consequences of illegality under financial transactions such as derivatives, repo and securities lending have again been in the spotlight for financial institutions and their clients. The legal position varies across different market standard agreements. This article considers the relevant provisions in the ISDA aster Agreement (2002 version) (ISDA Master Agreement), the Global Master Securities Lending Agreement (2010 version) (GMSLA) and the Global Master Repurchase Agreement (2011 version) (GMRA), in each case assuming that the governing law is English law.
25 March 2024The UK’s bank ring-fencing legislation: legal uncertainties and potential solutions
This article is based on the FMLC’s Report on UK bank ring-fencing legislation, published in November 2021, in which the FMLC recommended amendments to the legislative framework. It delves into four of the eight issues examined by the FMLC’s Report, providing the legislative context, the impact of the uncertainty and the proposed solution by which each issue may be mitigated.
25 March 2024It is dangerous to use pithy terms to describe the complex risks of a fund
For marketing purposes, the complex and multiple risks of a fund are often summarised in catchy terms which ultimately are inaccurate or incomplete. This can lead to a charge of misrepresentation and censure by the regulator and litigation by the investors.
25 March 2024Interest under a loan linked to a base rate: issues to consider
This article considers the issues that it is suggested finance lawyers should have in mind if asked to advise on a proposed loan where the interest payable is to be linked to the Bank of England bank rate, the base rate of another central bank, or the base rate of the lender. The author focuses on key differences between different methods of calculating interest, how interest rates can be structured and various practical issues that arise.
25 March 2024Interpreting statutes and contracts: what are the differences? Part I
In this Part 1, Richard Calnan discusses the similarities between contractual and statutory interpretation and then explores one important difference. Part 2, to be published in a later edition, will discuss three other important differences.
25 March 2024A comparison of re-proposed SEC Rule 9j-1 and the UK/EU Market Abuse Regulation
Despite industry criticism of the Rule 9j-1 originally proposed in 2010, the SEC recently re-proposed Rule 9j-1 with even further reach in antifraud, anti-manipulation liabilities for security-based swaps. In particular, the re-proposal lowers the standard of mental state requirement for insider trading liabilities, adds a new prohibition on acts and attempted acts of price manipulation, and seeks to apply similar expanded violations to assets underlying or related to the security-based swap. Compared to the re-proposed Rule 9j-1, the UK/EU Market Abuse Regulation has a different scope and is not specifically designed to apply to swaps and derivatives, but contains prohibitions in the same categories as those under the re-proposed Rule 9j-1.
25 March 2024
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