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The rise of “hybrids” in the ever-converging PIK and Preferred Equity landscape
In this article the authors consider the key structural, economic and documentary differences between Holdco payment in kind and preferred equity shares and consider recent demand for new hybrid instruments.
18 March 2024The implications of the novel “Audit Duty” on professional service firms: Part 1: Rihan v Ernst & Young
In Part 1 of this two-part article, barrister and Chartered Banker Jacob J Meagher analyses the legal basis of the novel “Audit Duty” using Rihan v Ernst & Young [2020] EWHC 901 (QB) as a case study. In Part 2 he discusses the uncertainties related to the scope and application of the “Audit Duty”, in particular to professional service firms more widely.
18 March 2024What is in a name? The regulators seek to have the final word on the meaning of trading venue under MiFID
For the EU’s and UK’s securities and markets regulators nothing is in the name nor in the technology used when it comes to the need for a trading venue licence. Yet, noting some uncertainty around the application of key concepts to certain facilities, each regulator has sought to provide clarity for their respective markets via recently published guidance.
18 March 2024Risk retention in securitisations: if not the original lender, who else?
It is almost 15 years since the EU’s risk retention (skin-in-the-game) rules were developed in response to concerns that interests of investors in securitisations and their originators were insufficiently aligned. In that time, the market has developed a number of solutions to adhere to the rules in situations where there may no longer be a substantial entity that was involved in the creation of the underlying exposures to perform the risk retention function.
18 March 2024An assessment of the reliability requirement in the Electronic Trade Documents Act
On 20 September 2023 the Electronic Trade Documents Act (ETDA) came into force. Formerly, in English law, document possession usually required physical possession. Now, the ETDA allows for “electronic trade documents” to be treated as equivalent to traditional “paper trade documents”, if they meet certain “gateway” criteria underpinned by a “reliable system”. In this article, we consider how the English courts are likely to approach interpretating this reliability requirement. Would any flaw in the system, no matter how short-lived and abnormal, render it unreliable? Or would a more detailed systemic analysis be needed? If so, what would that look like?
18 March 2024Significant Risk Transfer’s impact on the output floor under Basel III: the EU’s proposed panacea unveiled
The European Banking Authority, in its Basel III full implementation impact report11 found that European banks’ Tier 1 capital requirements would increase by 15% as a 1result of Basel III changes, with the proposals for an output floor being responsible for a 7.1% overall rise. In this article, the authors consider how significant risk transfer (SRT) transactions can be used to decrease a bank’s risk weighted assets (RWAs) in order to minimise their capital burden in light of increased capital requirements as a result of the output floor. Other capital requirements specific to securitisations are also considered.1 1
18 March 2024Foreign crypto arbitrations and UK consumer rights: a culture clash?
In this article, Lara Kuehl discusses the enforceability of arbitration agreements which provide for foreign (non-UK) seated arbitration and foreign governing laws, commonly found in the terms of service of crypto exchanges and platforms, in contracts with UK consumers.
18 March 2024New challenges for tackling Authorised Push Payment fraud
The Payment Systems Regulator (PSR) has recently announced significant changes to the mandatory reimbursement regime for Authorised Push Payment (APP) fraud that will be implemented during 2024. The scheme is likely to create difficulties for financial institutions preparing for the far-reaching changes. This article summarises the reforms, explores the challenges and provides suggestions for preparing for the new measures.
18 March 2024Shared appreciation mortgages: how far can the “unfair relationships” regime stretch?
A trial of alleged mis-selling of shared appreciation mortgages (SAMs) by Bank of Scotland plc (BoS) is listed for early 2024. In this article Benjamin Pilling KC and Ruth Bala of 4 Pump Court review the issues in the case. Does the “excessive” finance charge generate an “unfair relationship”? Will the court be willing to use the “unfair relationship” provisions to rewrite a mortgage, where there was full disclosure upon inception of the level of the finance charge (c.f. PPI, where the high level of commission was undisclosed)? The authors also consider limitation.
18 March 2024Collective stress or collective redress? Examining available mechanisms for securities litigation in England and Wales
It has been a turbulent few years for mass litigation in England and Wales. The advent of new collective procedures and revival of old ones has seemingly gifted claimant investor groups an abundance of choice. But the precise boundaries of the various mechanisms available seem to be in a constant state of flux. This article examines the current state of play through the prism of securities litigation and seeks to identify key considerations and future trends.
18 March 2024
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