Sutherland lawyers have been advising clients on derivatives transactions since the inception of the swaps market more than 20 years ago. We address the complex and novel legal issues that arise as innovative derivative products are created to meet business needs and investment opportunities. We believe it is incumbent on all derivatives market participants to understand the business issues addressed in their trading agreements and not to regard derivatives documentation as “legal boilerplate.”
We advise our clients on a wide variety of derivatives and structured products:
- Interest rate and other fixed-income hedging products
- Credit derivatives and synthetic securitizations
- Equity derivatives, including variance swaps, contracts for differences and total return swaps
- Energy and commodity derivatives
- Currency hedging
- Weather derivatives
- Freight derivatives
A core group of Sutherland lawyers actively participates in the derivatives and structured products practice. Our work encompasses:
- Derivatives use policies, oversight and controls
- Negotiation of trading documents
- Tax
- Financial disclosure
- Structuring new products
- Settlement, close-out and valuation
- Bankruptcy, restructuring and insolvency
- Regulatory issues and investigations
- Dispute resolution and investigation
Documentation and Negotiation
We evaluate and negotiate master agreements, including those using documentation developed by ISDA (both the 1992 and 2002 Master Agreements), IFEMA, EEI and BMA, with all the major derivatives dealers. We advise with respect to many types of related documentation:
- Transaction-specific confirmations
- Master confirmations
- ISDA’s Credit Support Annex and other credit support documents
- Master netting agreements
- Repurchase and securities lending agreements
- Prime Brokerage documents
- Novation agreements
- Protocols
- Electronic trading and confirmation processing (including DTCC and SwapsWire)
We have assisted clients in developing model documents and documentation policies. Some clients have outsourced their documentation to us, and we have created a Trading Agreement tracking database to monitor the progress of ongoing negotiations.
Sutherland is a Member of the Key Organizations Affecting Derivatives Markets
- International Swaps and Derivatives Association (ISDA)
- Futures Industry Association (FIA)
- Managed Futures Association (MFA)
- Emerging Markets Trade Association (EMTA)
- Loan & Syndicated Trading Association (LSTA) and Securities Industry & Financial Markets Association (SIFMA)
We are active participants on the following ISDA Committees:
- Credit Derivatives Market Practice Committee and Operations Committee
- Collateral Committee
- Documentation Committee
- Energy, Commodities and Developing Products Committee
- Equity Derivatives Committee
- Tax Committee
Warren Davis served as a consultant to ISDA’s Derivative Users Committee, which seeks to enhance the voice and role of end users within the organization.
Collateral and Other Credit Support
We advise on both standardized collateral agreements and other credit support arrangements. These include customized transactions that employ operating assets, physical commodities and restricted securities as collateral.
Settlement, Close-Out and Valuation
We have extensive experience in close-outs of derivatives transactions and portfolios:
- Represented numerous clients who closed out thousands of energy transactions with Enron
- Served as special derivatives and trading counsel to PG&E Energy Trading in its bankruptcy proceeding
- Currently advising clients on a variety of close-out issues related to the Lehman Brothers
Bankruptcy Tax
The taxation of financial products is complex and ever-changing. We advise on a host of issues, including income recognition, constructive sale, straddle rules, recharacterization and withholding taxes.
Regulation
Sutherland’s derivatives and structured products team monitors regulatory developments under a number of potentially applicable statutes, including the Commodity Exchange Act, federal banking laws, federal and state securities laws, federal energy laws, federal and state bankruptcy and insolvency laws and state insurance laws.
Issues arising under these laws include:
- Applicability of commodities laws exemptions and exclusions
- Disclosure requirements
- Applicability of insurance laws and regulations
- Investment limitations
- Capital requirements
- Exchange trading limits
- Insider trading and broker-dealer requirements
Dispute Resolution and Litigation
Sutherland lawyers have extensive experience litigating derivatives-related matters in both state and federal courts as well as federal administrative tribunals. We have also been actively engaged in resolving derivatives disputes through mediation, arbitration and negotiated settlements.
Cutting-Edge Practice
Our derivatives and structured products practice has expanded in response to our clients’ demands for sophisticated and market-sensitive advice.
Sutherland lawyers have been at the forefront of the derivatives markets:
© 2010 Sutherland Asbill & Brennan LLP