Aide-memoire of the 28th meeting of the European Financial Markets Lawyers Group

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28th meeting of the European Financial Markets Lawyers Group

Quadrilateral Event EFMLG/FLB/FMLC/FMLG

11 June 2008 16.30-18.00 followed by dinner at 18.00

12 June 2008 08.30-17.30

Federal Reserve Bank of New York, 33 Liberty Street, New York , NY 10045

Please access the building through the 33 Maiden Lane entrance, Federal Reserve Plaza (the building across the street from 33 Liberty Street). The Federal Reserve recommends that you arrive early to allow for time to clear security.

Proposed Agenda, Proposed Agenda (annotated)

ITEM: Recent Market Turmoil:

• "Genesis of the sub-prime problem" Adam Ashcraft, Research and Statistics Officer, FRBNY [FMLG]

• "Effects on financial markets"

Ken Kopelman, Senior Managing Director, Bear Stearns [FMLG], will discuss the effects on auction rate securities, sub-prime mortgages, and securitizations

Document: The Sub-Prime Problem and Its Effects on Financial Markets, Presentation Outline

• "Effects on financial institutions"

 

o Bear Stearns: Michael Nelson, Vice President, FRBNY [FMLG] and Joyce Hansen, Deputy General Counsel, FRBNY [FMLG] will discuss the events leading up to the difficulties experienced at Bear and their resolution

o Northern Rock: Joanna Perkins, Secretary FMLC [FMLC] will speak about the effect of “Northern Rock” on financial institutions

Document: Parliamentary Brief- City Financial and EU Affairs, Memo to Members of the EU Regulatory Working Group from the UK Parliamentary Team

o Monolines: Mark Steffensen, Managing Director and Deputy General Counsel at
HSBC Securities (USA) Inc. [FMLG] will discuss the effects of the recent market turmoil on the monolines

Document: Select Issues Arising for Monolines in the Current Environment

• "Reading the fine print: emerging legal documentation issues FMLG + EFMLG (Moïse Bâ)

 

Maria Douvas, Executive Director, Morgan Stanley, Legal and Compliance Division [FMLG], Locke McMurray, Managing Director, Lehman Brothers [FMLG], and Alan Kaplan, Deputy General Counsel, Barclays Bank PLC [FMLG] will discuss novation and valuation disputes from the U.S. perspective

Moïse Bâ, Senior Attorney, BNP Paribas [EFMLG] will discuss some aspects related to the financial turmoil and legal documentation.

• "Perspectives on the way forward: Regulatory restructuring in the United States and the United Kingdom in the FMLG + FMLC

 

Michael Nelson, Vice President, FRBNY [FMLG] will discuss the current proposals to restructure the regulatory framework for the financial sector in the United States

Documents: Treasury Blueprint for a Modernized Financial Regulatory Structure Fact Sheet, U.S. Department of the Treasury, Blueprint for a Modernized Financial Regulatory Structure, U.S. Department of the Treasury

Habib Motani, Partner, International Finance Practice, Clifford Chance (London office) [FMLC] will discuss the changes proposed to the regulatory structure in the UK as a result of the 'credit crunch' crisis. In particular, Habib will address the actions proposed to be taken in order to improve the stability and resilience of the financial system, including changes to the regulatory and supervisory framework, and greater co-ordination between the UK Financial Services Authority, the Bank of England and the UK Treasury.)

Document: Financial Stability and Depositor Protection: Strengthening the Framework, Bank of England, HM Treasury, FSA.

ITEM: Bankruptcy Law Guideposts and Developments

• U.S. Chapter 15 cases – Gredd FMLG

John Vollkommer, Managing Director & Associate General Counsel, JP Morgan Chase & Co. [FMLG] will discuss the Gredd case and its significance

Documents: : Bear Stearns Secs. Co. v. Gredd (In re Manhattan Inv. Fund, Ltd.), 2007 U.S. Dist. LEXIS 92194, In re Bear Stearns High-Grade Structured Credit Strategies Master Fund, Ltd., 2008 U.S. Dist. LEXIS 41456

• Lessons learned from banking crises in Japan and Europe (Spain, Sweden) in the 1990s – can they help us now? EFMLG + FLB

Fernando Conlledo, Head of the Legal Department, CECA [EFMLG] will focus on the most significant episodes that occurred in Spain over the last 30 years in this field. First, between 1978 and 1983 a severe crisis affected almost half of the Spanish Financial Institutions; second, in 1983 Banesto, the fourth largest bank in terms of deposits was subject to reorganisation measures. The Spanish legal framework for the management of banking crises will be presented, with particular attention to the institutional set- up, and the regulatory responses to the abovementioned episodes.

Document: Lessons Learned from Banking Crises in Spain

• Lessons learned from banking crises in the Nordic Countries

Olof Myhrman, Head of the Legal Department, SEB Merchant Banking [EFMLG]

In the early 90’s, Norway, Finland and Sweden ran into a deep financial crisis with a similar origin and development. Olof will focus his presentation on the crisis in Sweden, which primarily was caused by an extremely rapid credit expansion creating a bursting bubble in the real estate market, which resulted in liquidity problems for the major banks with some of them on the verge of insolvency. The crisis was handled by a swift response from the Swedish government and central bank, consisting of various forms of government support (incl. take-overs) and other market interventions

Documents: Lessons learned from the 1990's Banking Crises in the nordic countries

• Japanese cases: Is the 90's the lost decade? Could they help us now?"

Masao Okawa, Director & Head of Section and Central Banking Section, Institute for Monetary & Economic Studies [FLB] will discuss Japanese financial crisis experiences to the extent appropriate with some reference to legal regime both on general bankruptcy and bank bankruptcy.

Document: Is the 90’s the Lost Decade? Could They Help Us Now?

• UK Institutions Resolution legislation

Ed Murray, Partner, Allen & Overy LLP [FMLC] will speak about the effects of Northern Rock's liquidity crisis, which have resulted in emergency legislation introduced to nationalise it, and a joint consultation between the Bank of England, the UK Treasury and the UK Financial Services Authority on legislative proposals to introduce, on a permanent footing, a special resolution regime for banks, including a separate bank insolvency procedure. The proposed regime would include the power, by administrative action, to nationalise banks or to effect a transfer of the whole or part of the business of the bank to another bank or to a bridge bank. Financial market participants and others have raised important objections and concerns regarding the proposals, which are likely to be modified substantially in final legislation, expected later this year.

Documents: Financial stability and depositor protection: strengthening the framework January 2008, ISDA Response to the UK Consultation Document on Financial Stability and Depositor Protection, ISDA, FMLC Issue 133- Banking Reform- Depositor Protection, FMLC response to the Tripartite Consultative Paper on Banking Reform, Financial Markets Law Committee

ITEM: Governance & Controls

• Lessons learned: Société Générale

Stéphane Kerjean, Secretary, EFMLG [EFMLG] and Bertrand Bréhier, Legal Department, Société Générale [EFMLG] will discuss the internal controls regarding OTC and exchange-traded derivatives.

Documents: Report to the French Prime Minister on lessons to be learned from recent events at Societe Generale, PwC review and analysis of action plan Mission green summary report, Société Générale: Summary of PwC Diagnostic Review and Analysis of the Action Plan, Internal control and financial market activities: fighting fraud

• Revised Guidelines on FX Trading Activities (FXC)

Bob Spielman, Director & Senior Counsel, Deutsche Bank AG [FMLG] will discuss the recently released revised guidelines and the rationale behind some of the new provisions

Document: 2008 Guidelines on FX Trading Activities, Foreign Exchange Committee

ITEM: EU-US Global Regulatory Convergence

TOPIC 1: "General Introduction"

Keith Clark, Managing director and International Counsel, Morgan Stanly[FMLC] will speak about international regulatory convergence. The work of the IIF Securities Group, SIFMA and the EU-US Coalition on Financial Regulation has put forward suggestions for regulatory modernisation. The proposals identify mutual recognition, exemption relief and 'targeted' rules standardisation on the techniques to be deployed to achieve greater regulatory convergence. The FSF report on the credit crisis action agenda and the experience of the last 9 months demonstrate the importance of regulatory co-ordination over convergence. Many regulatory and other authorities have carried over considerable activities in relation to these matters and the efforts are ongoing. The SEC, Fed, European commission, CESR, FSA, etc are all involved.)

Document: Effective and Efficient Regulation of Cross-Border Capital Markets Transactions, Mutual Recognition, Exemptive Relief and “Targeted” Rules’ Standardisation: The Basis for Regulatory Modernisation, EUIS Coalition on Financial Regulation

Hubert de Vauplane, General Counsel, Calyon [EFMLG] will speak about the topic of regulatory convergence and EU-US dialogue by providing the individual view of a European bank.

TOPIC 2: "International standards for investor classification (with Unidroit, IOSCO)"

Joanna Perkins, Secretary FMLC [FMLC] will speak about regulatory convergence, focusing on the need for uniformity in the way in which categories of investors are defined. She will cover the adverse effects of the existing array of classifications, initiatives to date in this area, and a proposed
solution to the problem. In particular, she will discuss how an international convergence initiative in the field of investor definition could be well accommodated by UNIDROIT.)

Document: Convergence of Client Classification Regimes, UK Proposal to UNIDROIT

TOPIC 3: “Common registration and examination requirements”

Natalia Butragueño, Subdirector General Adjunto, BSCH will discuss the Coalition Report, specifically with respect to the formulation and agreement of a common set of registration
and examination requirements for those countries that operate licensing regimes or other forms of competence standards for individuals active in financial services

TOPIC 4: “Conflicts of Interest - Possible Global Standards”

Klaus Poggemann, Executive Director, Legal Counsel, Legal Department, Head of Documentation, WestLB [EFMLG] will discuss the Coalition Report, specifically with respect to convergence towards global standards on conflicts of interest

Document: Conflicts of Interest; Convergence Towards Global Standards on Conflicts of Interest

ITEM: Netting and other Documentation Issues :

• "Proposal for new global cross-product multi-jurisdictional master agreement"

Ulrich Parche, UniCredit Markets & Investment Banking, Bayerische Hypo- und Vereinsbank AG [EFMLG] will explore the drafting of a global cross-product multijurisdictional Master Agreement (“EMA-type”) applicable in as many as possible jurisdictions, which could be endorsed by major global market associations and which would be governed by possibly various laws, including New York law.

Document: Global Master Agreement: The One-Stop Approach

• "Proposal for UNIDROIT international convention on netting"

Holger Hartenfels, Managing Director and Senior Legal Counsel, Deutsche Bank [EFMLG] will discuss the possibility for UNIDROIT to draft an international Convention on netting, in addition to the EFMLG’s current proposal to the European Commission that it set forth European legislation regarding close-out netting arrangements in order to further increase the legal certainty of these transactions at the EU level.

Ed Murray, Partner, Allen & Overy LLP [FMLC] will speak about the project recently adopted by UNIDROIT as part of its triennial work programme for 2009-2011, to develop a draft Convention on netting of financial transactions. Finally, Ed will discuss the legislative changes that are underway in Russia and in China to provide a legal framework for over-the-counter financial transactions, including legislation protecting close-out netting arrangements. Whilst some legislative changes have been made, further progress is still necessary in each country, and further developments are likely in the short to medium term

Document: Proposal for a Convention on Netting for UNIDROIT’s New Triennial Work Programme, ISDA

• New netting laws in China, Russia

Jeffrey Golden, Partner, International Capital Markets Department, Allen & Overy, LLP [FMLC] will speak about netting developments in both Russia and China. In resepct of China recent legislative changes in the law (namely a new Enterprise Bankruptcy Law, effective from 1 June
2007, and the PRC Property law, effective from 1 October 2007) have improved the position relating to close-out netting and financial collateral, but concerns still remain that the changes do
not go far enough. In addition, there are related documentation developments which require the use of specific forms of agreement, in Chinese and subject to Chinese law, in relation to the FX market and the financial derivatives market. Both forms borrow heavily from the ISDA Master Agreement, but the Chinese government is, in effect, requiring the use of these forms - so party autonomy is restricted. The forms provide for close-out netting and given the government-mandated nature of the forms, it is hard to envisage a Chinese court ruling that the close-out netting provided for in the form is not effective; but, as will be outlined in detail, the background legislative framework is not entirely clear.

Documents: Law of the People’s Republic of China on Enterprise Bankruptcy (2008)

Walter White, Jr., Founding Partner, White & Jones, LLP [FMLC] will discuss current initiatives underway in Moscow to revise Russian insolvency legislation to provide greater harmonization with ISDA standards with regard to close out netting and related Russian regulatory impediments to derivatives trading, including amendments to Part II of the Russian Civil Code Article 1062, the proposed ISDA-type Master Agreement for the Russian Federation as well as interpretation and enforcement issues related thereto.)

ITEM: All other business

Date and place of the next Quadrilateral meeting.

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