Modern Financial Techniques Derivatives And Law

This work examines both the UK and international regulation, as well as the case law and legislation affecting a wide spectrum of modern financial techniques. Within the scope of those financial techniques are the broad range of instruments, structures and contracts deployed by global financial markets in relation to corporate customers, sovereign entities and other public sector bodies. The essays in this collection are concerned with the nature of the modernity of financial products like derivatives, and the particularly acute challenge that they pose both to the control of financial markets by private law and by established means of regulation. Much of the book focuses on derivatives as exemplars of this broader context. The authors analyse practical and theoretical issues as diverse as credit derivatives, dematerialised securities, the ISDA EMU protocol, and the OTC derivatives market, as well as the regulation of financial products, the economics of financial techniques, and the international regulatory framework. They examine issues of private law, including the legal implications of immobilisation and dematerialisation in collateral transactions, seller liability in credit derivatives markets and fraud. The essays examine the benefits and shortcomings of various legal mechanisms and methods of financial regulation, and suggest new approaches to the questions facing the law of international finance. The essays in this book arose out of the W.G. Hart workshop on Transnational Corporate Finance and the Challenge to the Law held at the Institute of Advanced Legal Studies in London in 1998.

It is now widely recognized that an uncontrolled "derivatives revolution" triggered one of the most spectacular worst-case scenarios of modern times. This book - the most cogent legal analysis of the subject yet to appear in any language - lays bare the core role played by the failure to adequately regulate derivatives in the financial crisis of recent years. The author's insistence that derivatives must be viewed not as profit-seeking investments but as risk management tools - and his well-grounded prescriptions to ensure that they are regulated in that way - sheds clear light on the best way for companies, financial institutions, and hedge funds to move forward in their use of these useful but highly hazardous instruments. This book clearly shows how such elements as the following fit into the legal analysis of derivatives, and how proper regulation will preserve their usefulness and economic value: ; derivatives allow for the most efficient and cost-effective risk fractioning, hence risk taking, techniques ever conceived; derivatives allow for all measurable and identifiable risks that may exist in modern finance; the ability to isolate risks and insure against risk exposures is the key to the very survival of modern financial markets; risk buyers effectively take on financial exposure to various types of risk while hedgers unload unwanted exposures; derivatives allow domestic investors to acquire exposure to foreign markets without the necessity of dealing with foreign laws, foreign investments, currency exchange, or foreign fiscal regimes; derivatives increase social welfare by making it easier and less expensive to carry out many types of financial transactions; derivatives allow governments to insulate, manage, hedge or concentrate risks deriving from financial, meteorological, and even geopolitical exposure; and derivatives allow radical changes to financial and risk structure to be performed silently and rapidly. To the question: how do we ensure that a company trading derivatives is regulated effectively? this work offers a clear and convincing answer. The author's detailed recommendations for regulatory and corporate governance measures are designed to prevent excessive risk taking, the emergence of rogue traders, and ultimately the emergence of another systemic disturbance caused by chains of derivatives-related losses.

Despite their significance in modern financing transactions, there is no law dealing specifically with derivatives. This work covers the commercial basis for the instruments and adapts existing legla principles from all fields in this area. Written for both lawyers and readers with no prior knowledge of the market, the book provides a comprehensive guide to the legal complexities of the derivatives market, enabling the reader to understand the structure of the products.

In recent decades, the volume of EU legislation on financial law has increased exponentially. Banks, insurers, pension funds, investment firms and other financial institutions all are increasingly subject to European regulatory rules, as are day to day financial transactions. Serving as a comprehensive and authoritative introduction to European banking and financial law, the book is organized around the three economic themes that are central to the financial industry: (i) financial markets; (ii) financial institutions; and (iii) financial transactions. It covers not only regulatory law, but also commercial law that is relevant for the most important financial transactions. It also explains the most important international standard contracts such as LMA loan contracts and the GMRA repurchase agreements. Covering a broad range of aspects of financial law from a European perspective, it is essential reading for students of financial law and European regulation.

Market-based environmental instruments are the most creative of the many initiatives devised to combat air and water pollution and promote biodiversity. Among these, none has attracted more attention than the burgeoning trade in environmental allowances and credits. Originally developed in the United States around 1990, these varieties of tradable instruments were globally validated by the Kyoto Protocol of 1997, which explicitly contemplates the buying and selling of environmental allowances and credits among both sovereign states and corporate entities. Despite U.S. opposition to the Kyoto Protocol, global trading in pollution instruments is growing at an exponential rate, with instruments representing over 70 million tonnes of greenhouse gas emissions estimated to have been traded in 2003. Eco-Finance is the first in-depth legal analysis of this extraordinary hybrid of environmental regulation and global financial markets. It deals with what are currently the two dominant types of market-based environmental instruments: market-traded environmental instruments (which include the tradable pollution allowances envisaged by the Kyoto Protocol), and environmental financing instruments (which include the emerging class of environmental and socially responsible investment funds). Among the numerous topics and issues treated by Ali and Yano are the following: the ?cap-and-trade? regime; debt-for-environment swaps; forestry securitisations; greenhouse gas emissions markets; carbon funds and swaps; tradable green certificates weather derivatives; duty to hedge climatic risks; catastrophe bonds; protected cell companies; the prudent investor rule; and ethical security indices. The authors deal searchingly with the critical legal issues that arise in connection with these market-based environmental instruments, such as the danger that courts might recharacterise underlying risk transfer agreements as illegal insurance products. For this reason, and for its wealth of practical, theoretical, and informational detail, Eco-Finance will be of enormous value to a broad range of legal, governmental, and business professionals, including environmental regulators, securities regulators, financial market professionals, institutional and other fiduciary investors, corporate risk managers, and investment fund managers, as well as practitioners and academics in both environmental law and financial law.

Over the last few decades, banks, insurers, pension funds, investments firms and other financial institutions have become subject to sometimes dramatically new, but always substantially more, legislation. This is especially true for the EU. Moreover, Brexit has already caused profound changes to the dynamics of EU financial regulation, and its effects will likely become ever-more significant in the years to come. This book serves as a comprehensive introduction to these developments, and, more generally, to European banking and financial law. It is organised around the three economic themes that are central to the financial industry: (i) financial markets, (ii) banking and financial institutions and (iii) financial transactions. It covers not only regulatory law but also commercial law that is relevant for the most important financial transactions. This Second Edition has been completely revised. The basic structure of the First Edition has been maintained, but all chapters have been thoroughly rewritten and restructured. Attention is now also given to topics such as shadow banking and credit rating agencies. As a matter of course, all new relevant legislation and case law has been included. In addition, on the basis of real-life classroom experience, student questions and further reading suggestions have been updated and expanded.

We seem to be living at a time when insurance is strained to the breaking point. From hurricanes and earthquakes to terrorist attacks and threats of nuclear devastation, enormous risks to life and property; and accompanying liabilities; proliferate on an unprecedented scale. Insurer insolvency is not yet common, but it is not unusual either. And at the root of such failures often lies the compound failure of uncollectable reinsurance. This important book proposes that a significant part of the emerging insurance crisis results from inadequate regulation of reinsurance. In a detailed and cogent analysis of what an effective regulatory regime for reinsurance must entail, the author examines such factors as the following: direct supervision of reinsurers versus supervision of reinsurance policies models from developed countries (US, UK, EU) and international organisations (Organization for Economic Cooperation and Development, International Association of Insurance Supervisors) the importance of taking legal and economic differences into account while applying models the problem of local protectionism, especially in developing countries the dismantling of trade barriers in the reinsurance industry global harmonization of reinsurance regulation the role of reinsurance intermediaries finite risk reinsurance insurance-linked securities. The author's concluding chapter presents an essential legal infrastructure that allows for efficiency, security, and individual market characteristics. Professor Wang then applies this framework to the Taiwanese insurance market, demonstrating convincingly how his proposed regime can solve specific problems while respecting Taiwan's distinct market environment. As a meticulously considered appraisal of, and solution to, a world problem that is growing quickly and uncontrollably, Reinsurance Regulation will be of immense value to lawyers, professors, academics, and officials who deal with any facet of economic law.

This new edition considers all of the academic commentary governing the area of equity and trusts - in particular the emerging law of restitution and the raft of new case law over the 1990s. It is suitable both as a sholarly reference and as a resource for students.