Derivatives Law and Practice (LAWS70023)

This subject considers the law and practice of the international derivatives markets. It has a distinctly practical focus. A key objective is to provide students with skills they can apply in legal practice. The lecturer will draw on his extensive experience as well as bring in guest lecturers from a variety of backgrounds to add to an interactive and challenging subject. It will also include a negotiation session.

Principal topics of the subject will include:

• Derivatives markets generally (exchange-traded, over-the-counter and embedded derivatives) and their commercial drivers and legal risks, on central clearing in practice
• Derivative products (ranging from plain interest rate derivatives to credit derivatives and niche products such as weather and emission trading derivatives)
• The structure, mechanics, key features and pitfalls of ISDA derivatives documentation
• Regulation of international derivatives markets and their key risks (including a comparison of United States derivatives regulation under Frank-Dodd and the European Union implementation under the EMIR regulation)
• The interrelationship between derivatives and other financial products (the use and documentation of swaps in structured finance, for instance securitisation and covered bonds)
• Analysis of the role of derivatives, especially credit derivatives, in the Greek crisis as well as the Eurocrisis
• The risk of mis-selling derivative products and potential liabilities (examples from Australian, Asian and other overseas transactions)
• Explanation of the role derivatives can play in international development finance.