UK Law and Practice Contributed by: Carolyn Jackson, Nathaniel Lalone, Christopher Collins and Ciara McBrien, Katten Muchin Rosenman UK LLP (Katten)
Master Securities Forward Transaction Agreement (MSFTA) The MSFTA, published by SIFMA, is the primary form of standardised agreement used to document a US securities forward transaction that is subject to mar - gin requirements under Financial Industry Regulatory Authority Rule 4210. 4.2 Clearing Documentation In summary, the following documents may be relevant with respect to cleared derivatives. • CCP rulebook and procedures: These set out details in relation to access to clearing and how clearing works. • Clearing agreement between the clearing mem - ber and the client: The terms on which contracts are cleared are stipulated in the clearing house’s standard clearing agreement. The FIA has pub - lished terms of business that are commonly used to document this relationship. • Collateral agreement regarding the cleared trans - actions: Pursuant to this agreement, the client will provide IM and VM to the clearing member, who then posts IM and VM to the CCP. • Other ancillary agreements between the clearing member and the client: These include engagement letters and service and licensing agreements. • Indirect clearing documentation between the clear - ing member, client and indirect client, as appropri - ate: This documents the provision of indirect clear - ing services along an indirect clearing chain. The FIA has published a number of industry-standard documents to help firms comply with the indirect clearing requirements. 4.3 Opinions and Other Documentation Issues While legal opinions are not generally required by regulation in this jurisdiction for entering into deriva - tives under trading agreements, various opinions and other documents in this section are widely used in the derivatives market and have been issued for this jurisdiction.
ISDA Opinions ISDA has published several legal opinions cover - ing various issues and jurisdictions. Such opinions include, among others: • netting opinions; • collateral opinions; • Notices Hub Platform (Notices Hub) opinions; • international financial institutions opinions; and • client clearing opinions. To the degree that a UK counterparty is not covered under the UK ISDA netting or collateral opinion, its counterparty would likely request an opinion relat - ing to the UK counterparty’s capacity and authority to enter into the transaction, as well as a netting and collateral opinion. ISDA Netting and Collateral Opinions ISDA has commissioned netting opinions in over 80 jurisdictions and collateral opinions in over 60 jurisdic - tions, including for England and Wales. These opin - ions are available to ISDA members and are generally updated on an annual basis. The ISDA netting opinions address the enforceabil - ity of the termination, bilateral close-out netting and multibranch netting provisions of the 1992 and 2002 ISDA master agreements. The collateral opinions examine the enforceability of the ISDA credit support documents in different jurisdictions. The ISDA England and Wales netting and collateral opinions currently consider the following English entities (as defined in such opinions, as necessary): (i) corporations; (ii) friendly societies; (iii) co-operative or community ben - efit societies; (iv) statutory corporations; (v) chartered corporations; (vi) banks/credit institutions; (vii) invest - ment firms; (viii) building societies; (ix) banking group companies and bank holding companies; (x) trustees of English trusts; (xi) insurance companies; (xii) chari - ties; (xiii) pension funds; (xiv) investment funds; (xv) partnerships; (xvi) Standard Chartered Bank; (xvii) the Bank of England (only considered in the netting opinion); and (xviii) the UK acting through HMT (only considered in the netting opinion).
112 CHAMBERS.COM
Powered by FlippingBook