Derivative Definition

GLOSSARY

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What does Derivative mean?

A derivative is a type of financial instrument which is entered into in connection with an underlying asset, index or reference point which has a variable financial value, for example, a floating rate of interest, a currency exchange rate or commodity price.

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ISDA documentation in a finance transaction—checklist

ISDA documentation in a finance transaction—checklist This checklist sets out the key ISDA documentary requirements which need to be considered during the course of a financing transaction. Term sheet stage • if acting for a borrower and specialist hedging advisors are instructed, get their input on the term sheet • if acting for a borrower, ensure that the overall pricing of the transaction is understood (across both the loan and the hedging). A borrower may choose a particular lender based on a low margin offered on the loan, but then find that the credit spread on the swap offered by the same lender means that the overall economics of the transaction are less attractive than those offered by a different lender • is the loan and hedging on an IBOR basis (eg EURIBOR) or on a risk free rate (eg SONIA)? Will the loan transition from an IBOR to a RFR during its term and, if so, how will the hedging be dealt with? • does the lender require a...

Bank Recovery and Resolution Directive (BRRD)—timeline [Archived]

Bank Recovery and Resolution Directive (BRRD)—timeline [Archived] Archived:This timeline has been archived. For developments from January 2024 onwards, see EU Bank Recovery and Resolution Directive—timeline if they relate to the EU BRRD, or UK bank recovery and resolution regime—timeline if they relate to the UK bank recovery and resolution regime, For further guidance on the EU BRRD, see Practice Note: Bank Recovery and Resolution Directive (BRRD)—essentials. For further guidance on the UK bank recovery and resolution regime, see Practice Note: The UK bank recovery and resolution regime. Date Source Document Description 20 December 2023 European Banking Authority The EBA publishes amendments to disclosures and reporting on MREL and TLAC The European Banking Authority (EBA) has published its final draft implementing technical standards (ITS) on amendments to disclosure and reporting of the minimum requirement for own funds and eligible liabilities (MREL) and the total loss absorbency requirement (TLAC). The amendments reflect the new requirement to deduct investments in eligible liabilities instruments of entities belonging to the same resolution group, the...

Celanese/Blackstone/JV (M.8547) [Archived]

Celanese/Blackstone/JV (M.8547) [Archived] CASE HUB ARCHIVED–this archived case hub reflects the position at the date of the abandonment of the transaction on 20 March 2018; it is no longer maintained. See further, timeline. Case facts ARCHIVE 20/03/2018 Outline European Commission merger investigation into the proposed joint venture between Celanese and Blackstone in relation to acetate flake and acetate tow (Case M.8547). The transaction involves horizontal overlaps in market for acetate tow. Latest developments On 20 March 2018, the Commission ended its investigation after the parties withdrew the notification as a result of their decision to abandon the transaction. Parties Celanese Corporation is a US-based global technology and speciality materials company headquartered in Irving, Texas. Blackstone is a US-based private equity group. The joint venture will comprise Celanese’s Cellulose Derivatives business (including existing joint ventures with China National Tobacco Corporation) and Blackstone’s Rhodia Acetow business (recently acquired from Solvay). Background Under the transaction, announced by the...

Deutsche Börse/NYSE Euronext (M.6166) [Archived]

Deutsche Börse/NYSE Euronext (M.6166) [Archived] CASE HUB (note–appeal lodged in Case T- 175/12 Deutsche Börse v Commission) ARCHIVED–this archived case hub reflects the position at the date of the decision of 1 February 2012; it is no longer maintained. See further, timeline and related cases. Case facts Outline European Commission merger investigation into the proposed merger between Deutsche Börse and NYSE Euronext (Case M.6166). The Commission prohibited the transaction the transaction 01/02/2012. Parties Deutsche Börse and NYSE Euronext Deutsche Börse is a German-based company involved in all aspects of cash and derivatives markets. Deutsche Börse operates the Frankfurt Stock Exchange and also owns the majority of Eurex, the company that operates the Eurex Deutschland derivatives exchange. NYSE Euronext is a US-based company dual-listed in the US and France. It operates a number of stock exchanges throughout the world. It has four main business divisions—cash listing services, cash trading services, derivatives trading and clearing services and information services and technology services. In Europe, NYSE operates...

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Director’s responsibility letter—offeree directors

Director’s responsibility letter—offeree directors To: [name of offeree] (the Company) and its other directors [name of financial adviser] (the Bank) Proposed takeover offer for the Company 1 I, the undersigned, a director of the Company, understand that in connection with the offer [to be] made by the [insert name of offeror] (the Offeror) for [all] the issued [and to be issued] [ordinary] [and preference] share capital of the Company [(such offer to be implemented by means of a scheme of arrangement (Scheme) of the Company) ](the [ Offer OR Acquisition ]), 1.1 [the Offeror will or may issue or publish, or cause to be issued or published (amongst other things): 1.1.1 a document addressed to shareholders of the Company, containing information about the Offer, including full details of its terms and conditions (the Offer Document); 1.1.2 [a prospectus or equivalent document containing details of the issue of shares proposed to be made by...

Memorandum on the responsibilities and obligations of a director of an AIM company

Memorandum on the responsibilities and obligations of a director of an AIM company 1 Introduction 1.1 This memorandum has been prepared for the directors and proposed directors (the Directors) of the Company to provide a general introduction to the principal responsibilities and obligations of a director of a company whose shares are admitted, or will be admitted, to AIM, a market operated by London Stock Exchange plc (LSE). 1.2 Once a company’s securities are admitted to trading on AIM, a company and its directors are subject to an increased layer of regulation. This includes requirements set out in the AIM Rules for Companies published by the LSE (AIM Rules), the Disclosure Guidance and Transparency Rules sourcebook (DTRs), the Prospectus Rules and the Market Abuse Regulation. 1.3 As a Director, you will be responsible (individually and collectively with your fellow Directors) for the Company's compliance with these provisions. The LSE has the power to fine or publicly censure an AIM company in the case of a...

Dive into our 76 Precedents related to Derivative

How do I know if my guarantee is a qualifying guarantee under the ISDA 2014 credit derivative definitions?

How do I know if my guarantee is a qualifying guarantee under the ISDA 2014 credit derivative definitions? What is a qualifying guarantee? A qualifying guarantee is an instrument that constitutes a guarantee of a reference entity under the 2014 ISDA Credit Derivatives Definitions (the 2014 Definitions). If certain conditions are met, a qualifying guarantee will constitute: • an 'Obligation' under Section 3.1 of the 2014 Definitions so that a credit event can be triggered, and • a 'Deliverable Obligation' under Section 3.2 meaning that the credit derivative can be settled How do I check if my guarantee is a qualifying guarantee? In order for a guarantee to be an 'Obligation' capable of triggering a credit event or considered a valid 'Deliverable Obligation' in terms of settling a credit derivative transaction, it must be a 'Qualifying Guarantee'. This term is defined in Section 3.21 of the 2014 ISDA Credit Derivative Definitions. A Qualifying Guarantee means: • a written instrument...

How can a shareholder transfer its shares to a non-shareholder, without following the procedure for pre-emption on the transfer of shares?

How can a shareholder transfer its shares to a non-shareholder, without following the procedure for pre-emption on the transfer of shares? A right of pre-emption on the transfer of shares prohibits a shareholder from selling its shares to a non-shareholder without first offering them to the holder of the right of pre-emption. There are no provisions in the Companies Act 2006 (CA 2006) relating to pre-emption rights on transfer and, as such, any pre-emption rights on transfer must be imposed by contract (ie in a company’s articles of association and/or shareholders’ agreement). The law recognises pre-emption clauses as valid restrictions on the right to transfer. The provisions of the articles of association of the company and/or shareholders’ agreement should be carefully considered, in order to determine whether there are any relevant exemptions to the pre-emption rights. If, having done so, compliance with the pre-emption rights on the transfer of shares is either not possible or impractical with regard to the proposed transfer, there are a number...

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EU Law weekly highlights—5 December 2024

This week's edition of EU Law weekly highlights includes analysis on HSBC losing its challenge to the €32m Euribor rigging fine. In addition, this week the Council of the EU adopted the EU Cyber Solidarity Act and an amendment to the EU Cybersecurity Act and approved conclusions to address labour and skills shortages, the European Data Protection Board approved the certification criteria for EU Data Protection Seal under EU GDPR, the European Commission introduced data specifications for alternative fuels infrastructure rollout, proposed common EV charging and hydrogen rules and opened consultations on implementing regulations for EUDI Wallets, and the European Central Bank published the second progress report on the preparation phase of the digital euro.

Banking and Finance weekly highlights—5 December 2024

This week's edition of Banking and Finance weekly highlights includes: (1) RICS announces updated Red Book Global Valuation Standards; (2) AFME releases report on UK capital markets; and (3) European Commission publishes FAQs on the EU taxonomy for sustainable economic activities.

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