Derivatives—H1 2017 round up

Derivatives—H1 2017 round up

What have been the key developments in the world of derivatives over the past six months?

Overview

Market Activity

Statistics published by the International Swaps and Derivatives Association (ISDA) and the Bank of International Settlements (BIS) show that central clearing has increased further, particularly for over-the-counter (OTC) interest rate derivatives.

Regulation

Regulatory activity has been focused on:

  • the European Market Infrastructure Regulation (EU) 648/2012 (EMIR):
    • amendments to EMIR
    • variation margin requirements, and
    • central counterparty recovery and resolution planning
  • the Markets in Financial Instruments Directive 2014/65/EU (MiFID II):
    • trading obligations, and
    • position limits and position reporting of commodity derivatives

Industry body initiatives

ESMA has launched a new Q&A tool.

Initiatives by ISDA in H1 2017 have included:

  • ISDA Resolution Stay Jurisdictional Modular Protocol, and
  • a second Bail-in Article 55 BRRD Protocol

The Futures Industry Association’s (FIA) initatives has focussed on the US regulatory framework and potential reforms to it.

PRIME Finance has added new members to its board and held its sixth AGM.

Cases

Dexia Crediop S.p.A. v Commune di Prato related to an argument that an Italian counterparty did not have capacity to enter into swaps and that in any case the ISDA master agreement should be governed by Italian laws.

Deutsche Bank v Comune di Savona also related to an argument that mandatory Italian laws should apply to an ISDA master agreement.

In Ventra Investments Ltd (in creditors voluntary liquidation) v Bank of Scotland plc, Ventra alleged that it was induced to enter into trades by fraudulent and negligent misrepresentations.

AMT Futures Ltd v Marzillier and others was another jurisdiction case, in which the English courts determined that they did not have jurisidiction pursuant to Article 5(3) of the Brussels I Regulation.

In Mohammad Zadeh Khorassani v Kathrin Pflanz, the advocate general of the Court of Justice of the EU considered whether brokering the conclusion of a portfolio management agreement amount to the provision of investment services under MiFID

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About the author:

Meet Emma:

1.Banking and finance lawyer with experience in derivatives, debt capital markets, securitisation and structured finance in London and Paris

2.Likes ballet, playing the harp and holidays

3.Thinks the law is always changing!

Emma trained and qualified at Allen & Overy LLP and worked in their derivatives and structured finance teams in London and Paris.  She then joined the foreign exchange prime brokerage legal team at Deutsche Bank before spending 4 ½ years with Crédit Agricole CIB advising the fixed income and derivatives desk.