Securitisation & Structured Products: Upcoming Regulatory Changes

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1 Securitisation & Structured Products: Upcoming Regulatory Changes This course can also be presented in-house for your company or via live on-line webinar The Banking and Corporate Finance Training Specialist

2 Course Objectives Participants will: Be introduced to structured products including static, revolving and managed transations, the role of a portfolio manager and the impact of the credit crisis Get an overview of CDOs, CLOs and CBOs Have explained to them asset backed commercial paper (ABCP) conduit programmes and SIVs Master credit Course linked Overview notes (CLNs) including the different types of CLNs and the key issues to consider in documentation Gain an understanding of credit default swaps (CDSs) Learn about constant proportion portfolio insurance (CPPI) transactions. Be appraised of structured equity derivatives products Be taught about EU & US regulatory issues and upcoming regulatory changes. ORAL EXERCISE: Example scenarios relating to the Market Abuse Regulation ( MAR ) which aim to prevent abuse of inside information and carry both civil and criminal sanctions Background of the trainer Trained as a lawyer, the trainer has over 19 years experience in international banking and structured finance transactions, including real estate finance, loans, leverage finance, debt capital markets, securitisation, structured products, repos, derivatives and financial regulatory and compliance. She has been actively involved in the creation of innovative award winning structured transactions and negotiating complex financings. She has advised global institutions such as Credit Suisse, Citigroup and Goldman Sachs and spent many years practicing law at Allen & Overy LLP, Linklaters and Sidley Austin Brown & Wood in multiple jurisdictions including London, New York, Hong Kong, Singapore etc. She holds a Law LLB (Hons) degree from University College London and has worked in the Finance Know-how team at Clifford Chance. She is an author and now runs her own business advisory, training and legal consultancy. Course Content Introduction: Structured Products Static Transactions Revolving Transactions Managed Transactions Eligibility Criteria The Role of a Portfolio Manager Standard of care Recent case law: UBS AG (London Branch) and another v Kommunale Wasserwerke Leipzig Gmbh; UBS Ltd v Depfa Bank plc; UBS AG (London Branch) v Landesbank Baden-Wurttemberg [2014] EWHC 3615 (Comm), [2014] All ER (D) 47 (Nov) The Removal of a Portfolio Manager

3 Cash vs Synthetic Balance Sheet vs Arbitrage Impact of the Credit Crisis CDOs, CLOs and CBOs Types of Portfolio Structure and Key Features Static Cash CDO Managed Arbitrage Cash CDO Managed Arbitrage Synthetic CDO Balance Sheet Synthetic CDO Core Concepts Overcollateralisation Tests Interest Coverage Tests When Tests Are Applied Consequences of Breach Priority of Payments of Notes OC Tests The CDO Timeline Managed CDO Timeline Warehousing Period Ramp Up Period Reinvestment Period Amortisation Period Capital Structure Key Legal Issues Control of changes and waivers Events of default/enforcement Prospectus liability Selection of Portfolio Manager Asset backed Commercial Paper (ABCP) Conduit Programmes and SIVs Structure of ABCP Conduit Types of guarantees Structure of SIVs Key Features and Differences between SIVs and ABCP conduits Differences between SIV vs CDO Credit Linked Notes (CLNs) Key Features and Structure Types of CLNs Single name Linear Basket Nth to Default Basket Index Linked Zero Coupon Self Referencing Key issues to consider in documentation What happens on Credit Events Physical Settlement Cash Settlement

4 Auction Settlement EMIR Requirements for Clearing Credit Default Swaps (CDSs) Structure and Key Features Benefits Types: CDS on ABS Basket CDS Portfolio CDS Nth to Default CDS Loan only CDS (LCDS) Documentation Constant Proportion Portfolio Insurance (CPPI) Transactions Structure and Key Features Rebalancing Static Managed Gap Risk Cash out Event Example The Benefits The Documentation Structured Equity Derivatives Products Equity Linked Notes Yield Enhancement Principal Protected Structure Equity Linked Deposits Equity swaps and options combined Example Hedge Funds Fund of funds Fund Linked Notes Convertible Bond Arbitrage Credit Default and Equity swaps combined Repack Programmes Basic Structure and Key Features Benefits Documentation Repackaging ABS for ECB repo eligibility ORAL EXERCISE: Example scenarios relating to the Market Abuse Regulation ( MAR ) which aim to prevent abuse of inside information and carry both civil and criminal sanctions EU & US Regulatory Issues and Upcoming Regulatory Changes The Regulatory Bodies Regulations relevant to Structured Products involving Securities

5 Regulations relevant to Structured Products involving Swaps Other Regulations relevant to Structured Products MiFID II and MiFIR PRIIPs UCITs Regulations relevant to Securitisations The Basel II Framework The EU Capital Requirements Regulation (CRR) Basel III and CRD IV The Application of the Ringfencing Regime Part 9B FSMA 2000 US Regulations Dodd-Frank Act Derivatives in Structured Products Risk Retention Requirements Disclosure for Rating Agencies on ABS Products The Volcker Rule Foreign Account Tax Compliance Act (FATCA) US Securities Act of 1933 Rule 144A Regulation S Course Summary This Structured Products & Upcoming Regulatory Changes course is designed to provide coverage of the important aspects of upcoming regulatory changes within the securitisation and structured products arena and the popular structured products in the market. During the course, we will go through an exercise covering example scenarios whereby you may come across inside information. This could happen, for example, in the course of advising or dealing with clients or when you are working on documents, when you enter a meeting room or even if you overhear a conversation in the lift or see a document left on a printer. The new rules ( Market Abuse Regulation ) came into effect in July 2016 and carry both civil and criminal sanctions. This course is relevant for in-house lawyers and private practice lawyers alike and bankers involved in structured finance, from the documentation teams, structurers, sales teams to compliance personnel monitoring such transactions as well as accountants who advise clients on structured finance transactions. This course will also be of relevance to asset managers, portfolio managers, hedge funds and investors such as wealth funds, pension s funds, insurance companies looking to invest or be involved in structured products and securitisation. The course sets the scene by giving you an introduction to Structured Products, the various types of transactions, the eligibility criteria and the role of the Portfolio Manager. The impact of the credit crisis on structured products is briefly discussed before moving on to the different types of Structured Products in detail. We go through the different types of securitisation structures in the market and cover the pertinent issues to consider when undertaking due diligence of the underlying assets. We

6 further cover the risk factors that are typically disclosed to investors and various regulatory considerations. We undertake a detailed analysis of the multitude of key issues and features involved in and the variety of structures in Structured Products transactions. We cover CDOs, CLOs, CBOs, CLNs, CDSs, and CPPI transactions. We go through ABCP Conduit Programmes and repackaging programmes and transactions. We cover key legal issues, regulatory issues, documentation issues and timelines. We also touch on the various types of Structured Equity Derivatives Products, fund linked products and hybrid products. An overview of the EU and US regulatory framework within which UK securitisations and Structured Products operate and a summary of the latest reforms of interest to structured finance lawyers is covered. We then focus on EU and US reforms having a direct impact on securitisation, CDO and CLO transactions including the ringfencing regime. We cover the risk retention requirements, credit ratings reforms and industry-led initiatives promoting transparency and disclosure.

7 In-House Training Delivering this course in-house for a number of participants could be very cost effective. The venue and timing can be agreed to suit the client, as well as the selection of the trainer and the precise contents of the seminar. Tailored Learning All of our training courses can be tailored to suit your company s exact training needs. We will work closely with you to help develop a training programme with content that is unique for your organisation. Please us on enquiries@redcliffetraining.co.uk for more information E-Learning This course can also be presented as a bespoke e-learning programme created by you to fit your exact requirements.