The International Swaps and Derivatives Association (ISDA) has further supplemented its Legal Guidelines for Smart Derivatives Contracts series with guidelines focused on credit and foreign exchange (FX) derivatives contracts. A “smart derivatives contract” is a derivative contract that incorporates software code to automate aspects of the derivative transaction and operates on a distributed ledger, such as a blockchain. As discussed in our post of February 14, 2019, the series marks long-term efforts and discussions between…

By Andrew Cross and Kari Larsen Original post is from 12/18 in the Virtual Currency Report. The Commodity Futures Trading Commission (CFTC) recently released a Digital Assets Primer that provides updated information to the public about emerging concepts in digital assets. The primer is part of a series issued by the CFTC’s innovation office, LabCFTC, and is the second to delve into issues surrounding digital assets. The Digital Assets Primer is a helpful high level…

In this episode, Todd Zerega and Andrew Cross discuss three timely topics: 1) Recent market developments that may result in an effective 18-month deferral of the transition from LIBOR to a replacement reference rate; 2) Changes to CFTC Regulation 4.5 related to the designation of a registered investment company’s commodity pool operator; and 3) Margining of delayed delivery mortgage backed securities under FINRA Rule 4210. Good (snowy) day.  Good to stay current. DR2…

A discussion with Andrew Cross on the ISDA’s new LIBOR fallback protocol and guidance for FCMs holding virtual currencies and single security futures. Listen to “New ISDA LIBOR Fallback Protocol and FCMs Holding Virtual Currency – Episode 1” on Spreaker.…

This post ends our series critiquing the proposed definition of “unfunded commitment agreement” in re-proposed Rule 18f-4. This definition is important because it would create an exception from the Value at Risk (VaR) limitations the proposed rule would impose on “derivatives transactions” by investment companies. This post will recap the problems with the proposed definition and the approach we would recommend for addressing these shortcomings. Read the full article on our…

In a previous post, we compared loan commitments, which re-proposed Rule 18f-4 would treat as “unfunded commitment agreements,” and “to be announced” (“TBA”) mortgage-backed securities (“MBS”) trades and put options, which Rule 18f-4 would treat as “derivative transactions,” to identify features that may be unique to loan commitments. Our last post showed how one feature, greater uncertainty as to the term of eventual loans as compared to the average life of the mortgages that…

This post continues our consideration of a carveout from the proposed Value at Risk (“VaR”) limitations of Rule 18f-4 for unfunded commitment agreements “because they do not present an opportunity for the fund to realize gains or losses between the date of the fund’s commitment and its subsequent investment ….” Our last post dealt with commitments to invest in a company’s equity. But the definition of “unfunded commitment agreement” would also include a contract…