Notional amount definition

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Commodity derivatives

Commodity derivatives The global commodities market The global commodities market covers a wide range of products, which are traditionally divided into hard and soft commodities: • 'soft commodities'—generally refer to harvested products such as wheat, sugar, cocoa, soy beans or corn • 'hard commodities'—refer to extracted products such as precious or base metals, rubber or energy products such as oil Global commodities markets work to standard measurements, such as deliverable grades and standard pricing by weight, which allows participants to buy commodities unseen, safe in the knowledge that they are certified to the recognised standard. What are commodity derivatives? Commodity derivatives are financial instruments which take their value from the underlying price of a traded commodity and require payments to be made or products delivered based on the movement of that price. They can be traded ‘over-the-counter’ or on exchange. See Practice Note: The nature of financial derivatives—Over-the-counter or exchange traded derivatives. Commodity derivatives allow investors to invest in commodities without actually owning the underlying...

Guide to hedging within a financing context—for the financing lawyer

Guide to hedging within a financing context—for the financing lawyer This Practice Note considers the key documentation issues in a loan financing transaction which deal with hedging. It covers the key provisions in the facility agreement, hedging strategy letters, intercreditor agreements and security documentation. It also considers fixed rate facilities and provides useful links to applicable regulatory requirements. For specific information on the ISDA documents, see Practice Note: Guide to hedging within a financing context—the ISDA documents. For information on why borrowers use hedging in lending transactions, see Practice Note: Use of derivatives to hedge against risk in a lending context—Hedging against risk in a lending context. Facility agreement Hedging clause Some facility agreements include a clause setting out what is required in terms of hedging in a particular transaction (see, for example, the drafting options in clause 8.3 (Hedging) of the Loan Market Association (LMA) Single Currency Term Facility Agreement for Real Estate Finance Multiproperty Investment Transactions with/without Observation Shift (LMA REF investment facility agreement)—the first option...

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ICC report on financial institutions and international arbitration

Arbitration analysis: On 9 November 2016, the ICC Commission on Arbitration and ADR (ICC) published a report on financial institutions and international arbitration. The report was the result of a two-year study by the ICC Task Force on Financial Institutions and International Arbitration (the Task Force), which examined the use of both international commercial and investor-state arbitration by financial institutions in a wide range of activities. Steven Finizio, Manuel Casas, Jonny Lim, and Rina See of WilmerHale consider the ICC’s report and summarise the Task Force’s findings and recommendations.