Derivatives Download

Kirkland’s Derivatives Download covers regulatory developments and transactional trends affecting the derivatives, repo and prime finance markets. Bookmark this page and check back often for updates on the ever-evolving Dodd-Frank rules, accessible digests of front-page trading news and our attorneys’ perspectives on this dynamic sector.

Inquiries may be directed to editor Jaime A. Madell, or the authors as noted.

Derivatives Resource Roundup

by Jaime A. Madell

Thank you for taking a moment to check in. We wanted to share some of our recent events and thought leadership here at Kirkland derivatives.

Please click here for links to the full materials, and don't hesitate to reach out with any questions. We'll be following up on all these topics and more.

• Derivatives and Investment Funds: Topics included fund-level hedging, synthetic leverage strategies and the evolving derivatives regulatory landscape.
• European Credit Derivatives Outlook: The presentation explores the evolution of the “Bankruptcy” Credit Event and several key considerations in handling CDS in the restructuring process.
• Equity Derivatives: A Walk Through for Public Companies: Topics included accelerated share repurchases, reverse ASR disposition strategies, call spreads and trust mandatories.
• Leaving LIBOR: Strategies for a Successful Transition: Topics included key LIBOR transition challenges, juggling alternative credit sensitive rates and hedging/basis risk considerations.

A Cross-Border AANA Inconsistency

by Jaime A. Madell

Following on the margin theme of our previous post, we thought we might point out one of the stranger inconsistencies between U.S. and non-U.S. uncleared margin rules. In the U.S., options on single securities and single security indices are generally not considered swaps or security-based swaps and are therefore not subject to the various mandatory margin rules. This means that they don’t count towards the average aggregate notional amount (“AANA”) calculations that determine whether parties are subject to mandatory initial margin rules. However, under EMIR (EU derivatives regulations), these transactions are generally considered in-scope for AANA calculations, even though they’re not subject to mandatory margin rules until at least 2024. (Continue reading)

Spring Forward, Fall Into New Margin Rules

by Jaime A. Madell

Welcome to the inaugural post of the Kirkland Derivatives Download! Thank you for reading.

Today we touch on margin requirements for uncleared derivatives. This topic generates frequent questions — which makes sense given how often the landscape has changed since various regulators worldwide started finalizing uncleared margin regulations. We’ve all been living with the margin rules promulgated by the CFTC and the various prudential regulators (OCC, FDIC, etc.) for some time. With new SEC rules and an updated FINRA proposal, however, the status quo will change. (Read more)