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Habib Motani, partner and global head of the derivatives group at Clifford Chance LLP, and Carolyn Jackson, partner at Katten Muchin Rosenman UK LLP, and both P.R.I.M.E. Finance experts, discuss the impact of no-deal Brexit for derivative contracts and derivative market participants, both in the UK and the EU.
Habib Motani (HM): I am tempted to respond ‘resources’ but I suppose resource is not a challenge for contracts but a challenge for those entering into contracts. Those who have a business of entering into derivatives contracts are undoubtedly seeing their resources stretched very thin as they identify the businesses potentially affected, evaluate the potential effects, develop their strategy for addressing the potential effects and implement it, while at the same time reading, evaluating and understanding the truckloads of new legislative and regulatory publications coming out of not just the UK but also EU27 authorities too. Keeping on top of what legal and regulatory changes are proposed and addressing their impact is a massive, massive challenge, and of course this is still subject to exactly what deal is done, if any, between the UK and the EU.
For a sell side institution, you can break the analysis down into two broad buckets:
Let's start with existing contracts, that is contracts that are outstanding on the date of the UK's exit from the EU. You might think why should Brexit affect contracts that have already been entered into? Surely all that needs to happen is for the contracts to be performed by both parties and for them to gracefully mature? It's not so simple I'm afraid.
The question is whether, post Brexit, doing the things that you will need to do in order to perform the contract (the so-called
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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.
0330 161 1234