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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.
Intended learning outcomes
A student who has successfully completed this subject should:
A key objective of this subject is to provide students with skills that can be applied in legal practice.
- Understand the commercial drivers and legal risks of derivatives
- Be aware of the pitfalls in negotiating derivatives documentation
- Understand derivatives regulation, both on a national and an international level
- Understand basic, advanced and novel derivatives products
- Be able to analyse the differences between the various derivatives markets
- Understand the interrelationship of derivatives to structured finance
Last updated: 3 November 2022