Derivatives updates

France

Preparations for no-deal Brexit: continued application of market master agreements
  • France
  • 29 May 2019

The government recently adopted Ministerial Order 2019-75, which aims to ensure that International Swap Derivatives Association-type master agreements on financial services continue to be used. To enable EU clients to pursue their existing contractual relationships after a no-deal Brexit, the order offers a simplified method of replicating a master agreement with an EU entity that belongs to the same group of companies as the UK financial institution with which that client had an existing contractual relationship.

Preparing for a no-deal Brexit: master agreements on financial services
Hughes Hubbard & Reed LLP
  • France
  • 06 March 2019

In January 2019 France passed Act 2019-75, which authorised the government to take measures to prepare for the United Kingdom's departure from the European Union without a deal by way of ministerial orders, particularly in the area of financial services. Subsequently, in February 2019 the government adopted a ministerial order which, among other things, aims to ensure that International Swaps and Derivatives Association-type master agreements on financial services continue to be used.


International

COVID-19 Weekly Report (23-30 March 2020)
International Law Office
  • International
  • 01 April 2020

The impact of COVID-19 is being felt in almost every work area across the globe. In order to keep readers abreast of this evolving situation, ILO's COVID-19 Weekly Report provides insight into the major legal developments of the past seven days, as well as a round-up of our panel of expert international legal commentators' legislative and regulatory guidance.

COVID-19: derivatives implications
Shearman & Sterling LLP
  • International
  • 25 March 2020

The outbreak of the novel coronavirus (COVID-19) has implications for derivatives contracts. For example, some companies are asserting that the reported disruptions in the global supply chain and travel restrictions constitute a force majeure, which is a legal basis for excusing non-performance and a right to terminate under contracts. This article examines certain issues that market participants may wish to consider when evaluating the potential impact of the COVID-19 outbreak on their outstanding derivatives contracts.


Switzerland

Contributed by Meyerlustenberger Lachenal
Swiss financial market infrastructure regulation – revised reporting duties
  • Switzerland
  • 28 November 2018

The Federal Council recently agreed to push back the effective date for derivative transaction reporting duties for small non-financial counterparties to 1 January 2024 and extend the corresponding transitional period. The corresponding amendment to the Financial Market Infrastructure Ordinance will enter into force on 1 January 2019. The reporting duties already in force for other market participants are unaffected.

Mitigating counterparty credit risk in the OTC derivatives market
  • Switzerland
  • 21 September 2011

Except for some regulated entities, market participants are in general free to assume unlimited counterparty risk at their discretion, whether under over-the-counter derivative transactions or otherwise. Collateralisation is a useful means of significantly reducing counterparty risk, although it cannot fully eliminate any remaining credit risks relating to the counterparty.


USA

Contributed by Shearman & Sterling LLP
CFTC staff issues three letters providing LIBOR transition relief to market participants
  • USA
  • 11 March 2020

The Commodity Futures Trading Commission (CFTC) recently issued three no-action letters providing relief for swap transactions (and amendments to swap transactions) in connection with the expected market transition from using the London Interbank Offered Rate and other interbank offered rates. The approach is consistent with an increasing focus at the CFTC and other regulators on facilitating an orderly transition to alternative rates.

SEC finalises capital, margin and segregation requirements
  • USA
  • 13 November 2019

As a further step towards the implementation of its security-based swap regime, the Securities and Exchange Commission (SEC) has adopted a number of long-awaited capital, margin and segregation requirements for security-based swap dealers and major security-based swap participants. The SEC's final rules address one of the key remaining questions required to implement the security-based swap regime: which capital and margin requirements will apply to non-bank dealers?

SEC proposes modifications to cross-border application of security-based swaps regime
  • USA
  • 04 September 2019

The Securities and Exchange Commission (SEC) continues to take steps towards the implementation of its security-based swap (SBS) dealer registration framework. In a recent proposal, the SEC has sought to address certain questions as to the cross-border implementation of its SBS regime and, in some cases, to further harmonise its regulations with the Commodity Futures Trading Commission's swaps regulatory framework.

CFTC proposes amendments to DCO core principle regulations
  • USA
  • 10 July 2019

The Commodity Futures Trading Commission has proposed a series of changes to its general regulations governing derivatives clearing organisations (DCOs). While the proposed amendments intend to (among other things) enhance certain risk management and reporting obligations, many of them would require significant changes to current practice and impose new obligations on DCOs and their clearing members.

CFTC proposes updated swap data reporting regulations
  • USA
  • 19 June 2019

The Commodity Futures Trading Commission (CFTC) has proposed the first instalment of a series of amendments to its rules relating to swap data repositories and the reporting of swap data. The proposed amendments, which would affect Parts 23, 43, 45 and 49 of the CFTC's regulations, implement the CFTC's Roadmap to Achieve High Quality Swaps Data and are intended to improve the quality and accuracy of data available to the CFTC and the public and to streamline data reporting.