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Intensive Course: Financial Derivatives Market and Contracts Program 2021

The Universidad Externado de Colombia and its Commercial Law Department invite interested parties to register for this free course, which will be led by Ligia Catherine Arias-Barrera, Ph.D. in Law from the University of Warwick (UK).

OBJECTIVE 

To discuss the state of regulation and supervision of the OTC derivatives market in the main international markets, especially in the European Union, the United Kingdom and the United States. Promote critical analysis, from the perspective of risk-based regulation, of the gaps affecting the implementation of regulatory reforms following the 2007-2008 Global Financial Crisis. Present the book ‘Regulation and Supervision of the OTC Derivatives Market‘[1] published by Routledge, chosen by BookAuthority as the third best banking law book of 2018 and the thirteenth within the 41 best banking law books of all time. In 2021 the book is still considered the third best Banking Law book and was included within the 16 best books on financial derivatives.

In this fourth version, the course includes new topics. In particular, the LIBOR transition, its opportunities and challenges, the adoption of disruptive technologies such as Smart Contracts and distributed risk technology or DLT, their implementation and the first advances and changes in the infrastructure of the financial derivatives market. Likewise, we will study the regulatory changes that have affected the functioning of the market since 2019 and the challenges of using these contracts to manage environmental, social and governance (ESG) risks. 

CONTENTS

Background and usefulness of the Over-the-counter Derivatives Market.

  • Definitions
  • Functions of the Derivatives Market. Financing mechanisms. Risk management and administration.
  • Global Financial Crisis. The true role of financial derivative contracts as a cause of systemic risk propagation.
  • Types of contracts. “Plain Vanilla and exotic derivatives.

Theme 2. Regulatory Reforms to the Derivatives Market

  • Reforms in the European Union EMIR.
  • Reforms in the United Kingdom and the impact of ‘Brexit’.
  • Reforms in the United States – Dodd-Frank Act.
  • Harmonization of OTC derivatives reporting obligation
  • LIBOR transition: opportunities and challenges

Topic 3: Regulation of Central Counterparty Risk Chambers in the OTC Derivatives Market or ‘Over the Counter’ in the European Union and the United Kingdom.

  • Why should there be conduct regulation?
  • Morphology of behavioral regulation:
    Consumer Protection
    Competition Regime
  • Contractual relations between the Chamber and member institutions.
  • Insolvency Regime for Central Counterparty Risk Chambers.
  • How to regulate innovation risk?
  • Innovation to avoid the mandatory use of Central Counterparty Risk Chambers (CCRs)
  • Governance rules of the Central Counterparty Risk Chambers. Liability Regime.
  • Demutualized structure of the Central Counterparty Risk Chambers.
  • “Adverse effects” of regulation as a form of innovation.

Comments on the regulation of the OTC Derivatives Market in the Dodd-Frank Act. Limits on its implementation.

PART I
  • General aspects of derivatives market regulation in the U.S.
  • Dodd-Frank Act
    Central Counterparty Risk Chambers
    Regulatory Agencies
  • Limits of the Dodd-Frank Act in the face of technological innovation. Implementation of Smart Contracts and Distributed Risk Technology (DLT).
PART II
  • Dual regulatory structure
  • Extraterritorial application of U.S. regulations
  • Lack of insolvency regime for Central Counterparty Risk Chambers.

Topic 5. Adoption of Smart Contracts in the Derivatives Market

  • General notions Smart Contracts
  • Definition DLT
  • Automatable Clauses
  • Non-Automatable Clauses
  • ISDA documentation and negotiation at Corda

Topic 6. ESG Derivatives

  • ESG investment notions
  • Channel more capital into sustainable investments.
  • Coverage of ESG risks.
  • Facilitating transparency, facilitating transparency, price discovery and market efficiency.
  • Contribute to strengthening long-term investment.

[1] https://www.routledge.com/Regulation-and-Supervision-of-the-OTC-Derivatives-Market/Arias-Barrera/p/book/9781138634787