Sidley frequently represents financial institutions and investors in a broad variety of “repackagings,” structured derivatives, private equity CDOs (collateralized fund obligations or CFOs), credit derivatives and synthetic CDOs.
Issues addressed in repackaged securities, structured derivatives and credit derivative transactions have included disclosure requirements, broker-dealer questions and other securities law issues, withholding tax, insurance excise tax and insurance entity-level taxes, bankruptcy or insolvency issues, accounting treatment and pension and insurance regulatory requirements. These issues are generally encountered in a cross-border context in which, through our presence in London, New York, Hong Kong, Chicago, Frankfurt and Tokyo, we are positioned to bring cutting-edge experience to bear on behalf of our clients.
Exchange Traded Derivatives
Sidley represents derivatives exchanges, clearinghouses, their members and end-users of exchange traded derivatives in complying with the complex regulatory landscape governing both the derivative products themselves and their underlyings.
We advise exchanges and clearinghouses with respect to the classification of certain derivative instruments such as securities, futures, or under some other regulatory regime. We draft applications for designation by regulatory bodies as an exchange or clearinghouse as well as regulatory filings for established exchanges and clearinghouses.
We assist trading and brokerage firms seeking to become exchange members with the application process and the drafting and adoption of regulatory compliance manuals. We provide ongoing advice to market-makers and exchange brokers with respect to compliance with the rules of exchanges, clearinghouses, the SEC and the CFTC as well as the commodities and securities laws.
For end-users of derivatives, we advise with respect to position limits and reporting, negotiation of brokerage and “term margin” agreements and other aspects of their businesses.
Over the Counter Derivatives Transactions
Our Investment Funds, Advisers and Derivatives practice serves as the firm's principal focal point for the structuring and documentation of transactions involving derivatives, including swaps, futures, options, collars, repurchase agreements and participation agreements. These services are utilized by our group's investment fund clients as well as the firm's corporate, banking, energy, insurance, securitization and real estate clients.
We represent dealers and end users in credit default swaps on portfolio and single name exposures and asset-backed securities and total return swaps on equity securities, hedge funds, loans, asset-backed securities and other assets. We represent companies in hedging currency, commodity, credit and interest rate risk through swaps and other derivatives transactions.
In the course of our representations, we negotiate ISDA master agreements, credit support annexes and other industry standard agreements for a broad array of market participants in a wide variety of settings, including private and public offerings of rated securities. Our firm is a member of ISDA, and our firm's lawyers have been major participants in the development of the OTC derivatives industry, including serving on ISDA drafting committees and task forces. Lawyers within our group regularly appear on and moderate panels sponsored by trade and bar associations, in recognition of our standing within the legal community and of the importance to our practice of making a contribution to the awareness of current developments and concerns for the business community and the public.
Governments Establishing Derivatives Markets
Sidley has been active over the years in advising governments on numerous futures, derivatives, private equity and venture capital related matters. After working with our clients to develop the first futures funds offered in Japan, we advised both the Japanese Ministry of International Trade and Industry and the Ministry of Finance in drafting commodity fund legislation. Similarly, we advised the government of the Republic of China in drafting a statute to regulate its futures brokerage business.
We advised the government of Mexico concerning the legislation necessary to facilitate the establishment of futures markets in Mexico. We were engaged by the government of Indonesia to draft not only a model statute governing its futures markets but also agency rules and the rules of a proposed futures exchange and its related clearing association.
Securities and Derivatives Regulation
Our lawyers regularly advise our clients on compliance with the complex laws and regulations governing the securities and derivatives industries.
In the U.S., these include the Commodity Futures Modernization Act of 2000, the Gramm-Leach-Bliley Act, the USA PATRIOT Act, the Securities Act of 1933, the Securities Exchange Act of 1934, the Investment Company Act of 1940, the Investment Advisers Act of 1940, the Commodity Exchange Act, the SEC and CFTC regulations thereunder, the rules of the various derivatives exchanges and clearinghouses and other industry self-regulatory organizations and the “Blue Sky” state securities laws. We also assist clients in obtaining no-action and interpretive letters and exemptive orders from the SEC and CFTC and represent interested clients in the legislative and rulemaking process.