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Digital securities: where are we now?
In this article Dorothy Livingston looks at the conclusions of the UK Jurisdiction Taskforce’s third statement on the English law relating to digital assets, notes its limitations and indicates the areas that require further development to place English law at the forefront of legal systems chosen for new digital systems using DLT/Blockchain.
19 March 2024Base metal traders betting on the courts to enforce their agreed trades in a disorderly market
While recognised investment exchanges sometimes halt trading or very occasionally cancel transactions, for example as a non-regulatory circuit breaker, or when trades, known as “fat finger” trades, are placed in error, it is very rare for them to suspend trading for days, or to cancel entire trading sessions. Yet, that is what happened earlier this year at the London Metal Exchange (LME). This article considers US activist hedge fund Elliott Management’s challenge of the LME’s decision to cancel trades.
19 March 2024Is it wise for UK CCPs to clear crypto derivatives?
While crypto derivatives are currently traded over the counter in the UK, Bitcoin futures have been sold in international derivatives markets. This article explores the economic incentives, legal grounds and systemic concerns over clearing crypto derivatives in the UK under the European Market Infrastructure Regulation (EMIR) as retained EU law. It concludes that clearing crypto derivatives is unwise, as systemic risk involved outweighs potential economic gains. Practitioners should experiment in de-centralised clearing to meet the market’s desire for reliable crypto derivatives products.
19 March 2024When is a third party on notice of an agent’s lack of ostensible authority?
In this article Lisa Lacob considers the test which applies to the question of when a third party is on notice of an agent’s lack of ostensible authority. This can easily arise in a financial services context where a financial intermediary or adviser has been authorised by a product provider to arrange a deal.
19 March 2024AIFMD2 proposals on loan origination
New draft rules in the EU amending the Alternative Investment Fund Managers Directive (AIFMD) propose a product regulation regime for loan origination funds, which may affect structuring of new and existing funds and impose additional requirements including on risk and liquidity management.
19 March 2024Preserving security interests and guarantees in key EU jurisdictions when the underlying obligation is varied
This article examines the position on the jurisdiction’s approach in France, Germany, Italy and Luxembourg to preserve security interests and guarantees when the underlying obligation (governed by English law) is varied, for example when the maturity date of an existing facility is extended. We think a brief analysis may be useful to understand if and how security interests and/or guarantees, provided by overseas parties incorporated in the abovementioned jurisdictions, still continue to be in force and whether additional formalities will need to be performed to avoid the additional obligations not being covered by the security or guarantee in case of an amendment or variation of the underlying obligation.
19 March 2024Risks for investors at the post-insolvency stage of the covered bond issuer
As a result of EU “legacy” provisions, covered bonds receive a clearly preferential regulatory treatment in the UK, when compared with other similar instruments, especially securities issued as part of a “true sale” securitisation. This article questions the extent to which such treatment is justified, particularly following a covered bond issuer insolvency event, when the risks are arguably greater than those present in “true sale” securitisation structures.
19 March 2024Collateral quality or increased recoveries: CLO portfolio management in a time of credit deterioration
This article considers: (i) the delicate balance between competing interests and incentives in collateralised loan obligations (CLOs) with regard to restructurings of credit-impaired portfolio (broadly syndicated leveraged) loans; and (ii) recent innovations and changes to CLO documentation driven by specific well-publicised examples of leveraged loan restructuring.
19 March 2024Revisiting the transaction at an undervalue risk to UK covered bondholders
This article considers a particular aspect of the insolvency risk to investors in UK covered bonds. Specifically, it considers whether the transfer of assets from the Issuer to the SPV to create the cover pool, including any over-collateralisation, can be impugned as a transaction at an undervalue such that it may be reversed on application to the court by the administrator or liquidator of the Issuer under s 238 of the Insolvency Act 1986. Such risk has long been appreciated. However, the issue has been the subject of fresh comment because of the intended revocation of the Regulated Covered Bonds Regulations under the Financial Services and Markets Bill and the opportunity for a new regulatory regime with a different approach to risks of this kind.11 1
19 March 2024Pension scheme’s liability driven investment strategies: what went wrong? A lawyer’s guide
This article explains liability driven investments (LDIs), identifies features of the statutory and regulatory framework applicable to investment by Pension Schemes, and examines what went wrong in the recent market turmoil.
19 March 2024
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