Feature

AIFMD2 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.

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.

Base 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.

Is 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.

When 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.

What’s next for the EU Directive on NPLs?

The non-performing loan (NPL) market has a significant presence in the European financial markets, valued at around €27.4bn. EU Directive 2021/2167 on NPLs sets out new rules for credit servicers and credit purchasers aimed at promoting the secondary market for NPLs.

What does AI mean for professional services business models?

DeFi: game changer for regulatory reporting

In this article Dr Giovanni Bandi considers initiatives to transform regulatory compliance through “embedded supervision”, a regulatory framework that provides for the compliance with regulatory standards in distributed ledger technology-based markets to be automatically monitored.

Sanctions clauses in documentary credit transactions: a cautionary tale

In the current geopolitical climate, sanctions are increasingly used as a foreign policy tool and can have significant implications for contractual obligations in international trade. In Kuvera Resources Pte Ltd v JPMorgan Chase Bank, N.A. [2023] SGCA 28, the Singapore Court of Appeal held that a confirming bank could not deny payment to the beneficiary of two letters of credit (LCs) on the ground that its confirmations of the LCs included a contractual clause (Sanctions Clause) extinguishing the confirming bank’s liability as the underlying commercial transaction was allegedly caught by the sanctions laws of the US.

LMA €STR fallbacks to EURIBOR: use in corporate lending transactions

In December 2023, the Working Group on Euro Risk-Free Rates (Euro WG)¹1 issued their final, closing statement1²2 having agreed that their current mandate had been completed. 2Does this mean that work in relation to the use of risk-free reference rates based on 2€2STR 2in the context of euro has ended? The short answer is “not necessarily”: whilst the tools2 to implement use of such rates exist, some elements of the financial markets, such as the corporate lending market, have been slow to change practice. In this article we take stock 2of the potential use of such 2€2STR-related tools in the corporate lending markets.2