Fundamentals of Derivatives

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Get a solid and up-to-date grounding in derivatives, their use and documentation The Osgoode Short Course Fundamentals of Derivatives Participants will come away with a thorough understanding of the

1 Get a solid and up-to-date grounding in derivatives, their use and documentation The Osgoode Short Course Fundamentals of Derivatives Participants will come away with a thorough understanding of the key principles and documentation requirements for today s complex and dynamic derivatives market. Topics include: Derivatives defined: what are they and how are they used? The role of derivatives in structured products What are the distinctions between over-the-counter and exchange traded derivatives? Applications in trading, hedging and arbitrage The regulators perspective Understanding the terminology and purpose of derivatives documentation Considerations when choosing between the 1992 and 2002 Master Agreements Best practices relating to the holding and usage of collateral What do you do when the deal goes bad? How interest rate and currency swaps are used The role of equity derivatives and their advantages Benefits and risks of credit derivatives in today s market Development and application of commodity market derivatives Plus! Optional Post-Conference Workshops: Documenting and Confirming Derivative Transactions and Derivatives Gone Bad Terminating Derivatives in a Bankruptcy Course Leaders Tracy Ross, Senior Counsel Royal Bank of Canada DATES & TIMES March 1-2, :30 a.m. - 5:15 p.m. EDT/EST 8:30 a.m. - 1:00 p.m. EDT/EST OPTIONAL WORKSHOPS March 2, :00 p.m. - 4:30 p.m. LOCATION Osgoode Professional Development Centre 1 Dundas St. W., 26th Floor Toronto, ON Conference Webcast Available Public CLE Seminars Customized CLE Programs Skills Training & Certification ITAW Part-time LLM Register now at

The Osgoode Short Course Fundamentals of Derivatives Gain a complete understanding of the legal concepts in swaps and the documentation of swaps transactions using the ISDA Master Agreement Despite

2 The Osgoode Short Course Fundamentals of Derivatives Gain a complete understanding of the legal concepts in swaps and the documentation of swaps transactions using the ISDA Master Agreement Despite recent events, the number of corporations, financial institutions and asset managers turning to derivatives to better manage risk and increase returns continues to grow. As well, derivatives are becoming more complex; so too are the associated documentation and legal issues. If you are going to be involved in any way in today s dynamic derivatives market, it is critical that your market and product knowledge are completely up-to-date in order to minimize your risk of loss. Osgoode Professional Development has developed this unique short course to help the newcomer to derivatives understand the nature, structure and application of a broad range of derivative products including the forms of documentation used all in one intensive session. This course is also an invaluable update for those who want a comprehensive refresher. Topics include: The derivatives market participants, how they use the products and why Understanding the applications of derivatives in trading, hedging and arbitrage Documenting derivative transactions using the ISDA Master Agreement and Schedule Emerging regulatory issues Using collateral to manage market and counterparty risks Dealing with the critical issues when the deal goes bad Examining the structures and uses of interest rate and currency swaps Using fx derivatives in today s markets Advantages and disadvantages of equity derivatives to each market participant Today s credit derivatives market, its current size, key players and the impact of recent market turmoil The principles, characteristics and uses of commodity market products Participants will come away with a thorough understanding of the key principles, best practices and documentation requirements that they need to know to confidently deal with the issues that arise in today s complex and rapidly growing derivatives market. Plus! Don t miss the interactive, hands-on, optional half-day workshops, Documenting and Confirming Derivative Transactions and Derivatives Gone Bad Terminating Derivatives in a Bankruptcy. Register by visiting calling or , ing opd-registration@osgoode.yorku.ca or faxing Course Leaders Tracy Ross, Senior Counsel Royal Bank of Canada Faculty Matt Arnold, Royal Bank of Canada Rene Cayouette, Christopher J. Fowles, Torys LLP Caterina Furlano, Royal Bank of Canada Paul Hayward, Ontario Securities Commission Scott R. Hyman, Davies Ward Phillips & Vineberg LLP Doug Isbister, P. Jason Kroft, Stikeman Elliott LLP Lisa Mantello, Goodmans LLP Marc Mercier, Cassels, Brock & Blackewell LLP Eric Metivier, CIBC World Markets Candace Pallone, McCarthy Tétrault LLP Aaron Palmer, Blake, Cassels & Graydon LLP Ruth Preston, RBC Capital Markets Derek West, Autorité des marchés financiers Victoria Wilson, Bank of Montreal

3 Agenda Day One: Monday, March 1, :00 Registration and Continental Breakfast 8:30 Welcome and Introduction from the Course Leaders Tracy Ross, Senior Counsel, Royal Bank of Canada 8:45 Introduction to Derivatives and Markets Aaron Palmer, Partner, Blake, Cassels & Graydon LLP Lisa Mantello, Senior Associate, Goodmans LLP Swaps and derivatives have become a vital tool in risk management and structured financing. They are used in an infinite variety of ways by an ever-increasing number of commercial and government entities to manage the commercial and financial risks they confront. This session will provide you with an overview of the derivatives market and the products and applications used by today s market players. Derivatives defined: what are they and how are they used? Applications of derivatives The role of derivatives in structured products Basic derivative contract designs - forwards - swaps uses and applications - options - hybrid securities Over-the-counter vs. exchange traded derivatives Overview of applications in trading, hedging and arbitrage Mark-to-market valuation 10:45 Refreshment Break 11:00 Regulatory Update Moderator Panellists Paul Hayward, Senior Legal Counsel, Corporate Finance Ontario Securities Commission Derek West, Director, Centre of Excellence for Derivatives, Autorité des marchés financiers (Québec) Overview of OSC Notice and impact on the OTC derivative products market Registration requirements under the Quebec Derivatives Act and its impact on the Canadian market 12:00 Luncheon 1:00 IDSA Master Agreement Christopher J. Fowles, Partner, Torys LLP Victoria Wilson, Senior Counsel, Bank of Montreal As the breadth and complexity of derivatives evolve, so too does the complexity of associated documentation and legal issues. Understanding the framework for documenting derivatives is critical in order to properly reflect the terms of arrangements between the parties and to avoid potentially costly errors. Experienced counsel will provide an overview of ISDA s documentation architecture and a detailed explanation of the provisions of the master agreements widely used to document derivatives transactions and the practical and legal issues associated with their use. Ample time will be given for discussion and questions. Topics covered will include: Overview of the ISDA documentation and how it fits together Comparison of, and differences between, the 1992 and 2002 ISDA Master Agreements - single agreement/netting opinions - basic obligations - events of default and termination events - close-out and payment measures on early termination - set-off provisions 3:00 Refreshment Break 3:15 IDSA Master Agreement (cont d) P. Jason Kroft, Partner, Stikeman Elliott LLP The ISDA Credit Support Annex forms part of the Schedule of the ISDA Master Agreement. It is used to document security arrangements between the parties and usually involves cash or marketable securities. This session will help you to understand the provisions relating to the holding and usage of collateral, transfer and substitution of collateral, events of default as well as best practices for navigating through disputes. Collateral arrangements and the ISDA Credit Support Annex - using collateral to manage market and counterparty credit risk - whose laws should govern? - credit support obligations - transfers - substitution of collateral - dispute resolution 4:15 Interest Rate and Currency Swaps: Structure and Confirmations Eric Metivier, Global Head and Managing Director Corporate and Government Solutions, CIBC World Markets Fundamental rationale Fundamental structure - swaps, forwards, options - single and cross-currency swaps

4 Pricing considerations Common applications Emerging issues 5:15 Day One Adjourns Day Two: Tuesday, March 2, :00 Continental Breakfast 8:30 Recap and Introduction from the Course Leaders Tracy Ross, Senior Counsel, Royal Bank of Canada, Canadian Imperial Bank of Commerce 8:45 FX Derivatives Marc Mercier, Partner, Cassels Brock & Blackwell LLP Forward foreign exchange - outrights and fx swaps - quotation conventions - calculating outright forward fx rates - applications of forward fx Currency options - market conventions, terminology, price quotations - puts; calls European and American styles - hybrid structures Definitional Guide 9:45 Equity Derivatives Tracy Ross, Senior Counsel, Royal Bank of Canada Equity derivatives are playing an increasingly important role in financial markets as evidenced by the availability of such instruments both on and off exchange. They allow their users to gain exposure to a variety of equity assets and many different structures have been developed to suit the needs of different types of users. This session will provide a comprehensive understanding of the broad equity derivatives product range, the types of instruments, their structures and the markets in which they trade. What are equity derivatives? How are they used? Who are the major users? Equity derivatives products - forwards and futures - key terms and concepts in options - basic options vanilla calls and puts/american and European style Equity forwards, futures and swaps OTC products Definitional Guide (2002) 10:45 Refreshment Break 11:00 Credit Derivatives Candace Pallone, Counsel, McCarthy Tétrault LLP Rene Cayouette, Managing Director, Structuring The credit derivatives market has far reaching implications impacting the activities of banks, hedge funds and other investment institutions, as well the capital markets generally. This session will provide delegates with a solid practical understanding of the intricacies of the credit derivatives market including key products, structures and mechanics. It will also review the recent credit events and market events that have challenged the foundation of the standard credit derivative contract. The credit derivatives market - what are they? - how are they used? Credit default swaps - definitions - credit events - termination, assignment by novation Uses and benefits - investment applications - yield enhancement Recent developments and key issues - impact of the credit crisis - the Big and Small bangs - mismatches (reference entities, terms, accounting) - counterparty failures Clearing and settlement current and future developments Definitional Guide 12:00 Energy and Other Commodity Derivatives Scott R. Hyman, Partner, Davies Ward Phillips & Vineberg LLP Volatile commodity prices, and fluctuations in the dollar are contributing to increased activity in commodity markets and the inflow of capital as investors and fund managers try to boost their returns. This session will introduce delegates to the principles, characteristics and uses of commodities and the strategies for investing in today s commodity markets. Development of commodity market derivatives - what are they? - how are they used? Who are the major users? Underlying commodity markets Commodity forwards and swaps Cash and physical settlement Commodity hedging Legal issues and considerations Definitional Guide 1:00 Course Concludes

5 Workshop A Documenting and Confirming Derivative Transactions Tuesday, March 2, :00 p.m. - 4:30 p.m. Chris Fowles, Partner, Torys LLP Caterina Furlano, Assistant Manager, Trading Documentation, RBC Capital Markets Royal Bank of Canada Doug Isbister, General Manager, Trading Documentation As the range of users and applications of derivatives increases, so too does the complexity of the documentation. This practical, hands-on negotiation workshop is designed to help you understand the product issues and concepts discussed earlier in the program. Experienced workshop leaders will discuss product characteristics, specific deal terms and actual confirmations for a variety of transactions under the: Master Agreement and Schedule Credit Support Annex Product-specific confirmations Workshop B Derivatives Gone Bad Terminating Derivatives in a Bankruptcy Tuesday, March 2, :00 p.m. - 4:30 p.m. Ruth Preston, Managing Director and Head of Trading Credit Risk, RBC Capital Markets Matt Arnold, Senior Counsel, Royal Bank of Canada The implosion of the credit markets in 2008 underlines the importance of understanding your company s exposure to financial risk in the event of counterparty default due to insolvency. Financial institutions that were deemed too big to fail have seen their balance sheets collapse and have received massive government cash infusions in order to remain solvent. Understanding your rights to offset the debt against an insolvent counterparty and your rights for protection under legislation is critical in today s economy. This interactive, hands-on workshop will take you through the steps of terminating the ISDA transaction, determining the payment obligations and accessing security that has been taken. As well, you ll gain a thorough understanding of the protection available under insolvency legislation. This session will focus on key areas such as: Lessons learned from the credit crisis Preparing for a counterparty default - what to include in the agreements at the beginning of the client relationship - what warning signs to look for during the relationship How you go about closing out after a default - what message to deliver to different trading desks to maintain consistency - how to handle rumours about what other institutions are doing Close-out netting Treatment of Eligible Financial Contracts in restructurings under the Bankruptcy and Insolvency Act and Companies Creditors Arrangement Act How to support your final close out claim (or payment) after the fact in a bankruptcy court or administrator Who Should Attend Derivatives traders Documentation staff In-house counsel financial institutions, insurance companies, oil and gas companies, mutual fund companies, pension funds Lawyers in private practice banking and finance, mutual funds, commercial law Lending, treasury and debt capital markets personnel Fund managers, private bankers and investment advisors Compliance professionals Heads of trading Structured finance personnel Financial regulators ISDA is a registered trademark of the International Swaps and Derivatives Association, Inc. This Osgoode Professional Development program is neither sponsored by nor affiliated with the International Swaps and Derivatives Association, Inc. Osgoode Professional Development, 2009 To register visit call or , opd-registration@osgoode.yorku.ca or fax

6 Registration Register me for: Fundamentals of Derivatives Workshop A: Documenting and Confirming Derivative Transactions or Workshop B: Derivatives Gone Bad Terminating Derivatives in a Bankruptcy I will attend: on site via webcast - single viewer (course only) I am unable to attend. Please send me information about ordering program materials. Name: Position: This practical and comprehensive course will help you understand the use and application of derivative products Firm/Company: Practice Area: Address: City: Province: Postal Code : Telephone: Fax: Priority Service Code O L (from mailing label below) Please complete all registrant information. Add me to your mailing list Delete me from your mailing list If you do not wish to be contacted by , indicate here Fee Per Delegate Course only: $1595 plus 5% GST for a total of $ ; Course plus workshop: $1895 plus 5% GST for a total of $ ; Workshop only: $300 plus 5% GST for a total of $ Fees include attendance, program materials, break refreshments, continental breakfast and lunch (course only). Group discounts are available for both on site and webcast participants. Visit for details. OPD Searchable e-binder now available! Contact us for further information. CLE Credits Approved in accordance with the requirements of the LSUC Certified Specialist program, BC CPD, Barreaux du Québec and the NY CLE Board (for transitional and non-transitional lawyers). Note: NY CLE Credits are not available for webcast participants. BC CPD webcast participants must contact us for further information. Payment Options Cheque enclosed (payable to York University GST# R ) Bill my credit card: VISA Mastercard Card# Signature: Payment amount: Expiry: Interested in Custom and In-house Programs? Osgoode Professional Development also offers many of its programs in-house and can customize some programs to your specific needs. If you would like further information, please contact Heather Gore, Program & Business Development Lawyer, at or custom@osgoode.yorku.ca or visit Program Changes We will make every effort to present the program as advertised, but it may be necessary to change the date, location, speakers or content with little or no notice. In the event of program cancellation, York University and Osgoode Hall Law School s liability is limited to reimbursement of paid fees. Dates & Times March 1-2, 2010 Day One: 8:30 a.m. - 5:15 p.m. EDT/EST Day Two: 8:30 a.m. - 1:00 p.m. EDT/EST Optional Post-Conference Workshops: March 2, :00 p.m. - 4:30 p.m. Please arrive a half hour early for sign-in and material pick-up. Dress is business casual. Cancellations and Substitutions Substitution of registrants is permitted at any time. If you are unable to find a substitute a full refund (less $50 administration fee) is available if a cancellation request is received in writing 14 days prior to the program date. No other refund is available. Location Osgoode Professional Development Downtown Toronto Conference Centre 1 Dundas Street W., 26th Floor Toronto, ON, M5G 1Z3 Public CLE Seminars Customized CLE Programs Skills Training & Certification ITAW Part-time LLM 4 Convenient Ways to Register 1. MAIL your registration form to: Osgoode Professional Development Downtown Toronto Conference Centre 1 Dundas St. W., 26th Floor Toronto, ON M5G 1Z3 2. ONLINE at 3. FAX your registration to CALL US at or

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