The pan-European retail market are we there yet?

The first 150 words of the full text of this article appear below. Key points

• When the EU Prospectus Directive was introduced inlate 2003, there was great optimism that it would finally leadto the long awaited pan-EEA retail capital market.
• This articleasks whether the Directive has achieved this result and looks,in particular, at the disclosure regime relating to the admissionof debt securities to EEA-regulated markets and the public offeringof such securities in the EEA.
• A number of impediments to thecross-border retail market, that are completely separate fromdisclosure, are examined.
• In conclusion, the article discusseswhether, in fact, expectations for the Prospectus Directivein this area were set too high and could never be met and looksat what more needs to be done in order to achieve the goal ofa single retail debt market in the EEA.

 

Loan only credit default swaps the new European standard form

The first 150 words of the full text of this article appear below. Key points

• European Loan Only Credit Default Swap (‘LCDS’)documentation was published by the International Swaps &Derivatives Association, Inc. in the form of a Standard TermsSupplement and Form of Confirmation for use with Credit DerivativeTransactions on Leveraged Loans on 30 July 2007 (the ‘EuropeanLCDS’).
• This article reviews some of the changes thathave been made since the first circulation of the draft EuropeanLCDS documentation on 2 May 2006 (the ‘Draft LCDS’).
• Acomparison between the Draft LCDS, the current form of the EuropeanLCDS and the US LCDS (defined in the article below) providesan insight into how the development of the European LCDS hasrequired a compromise to be made between the needs and demandsof various market participants and the specifics of the Europeanleveraged loan market (as more fully described in our recentarticle¹) and indicates points of convergence between the . . . [Full Text of this Article]

 

Innovation after the revolution: foreign sovereign bond contracts since 2003

The first 150 words of the full text of this article appear below. Key points

• In 2003, under official pressure, amendment provisionsin standard form New York law sovereign bond contracts shiftedto resemble English law boilerplate.
• Market participants andofficials expected contracts in New York and London to convergearound a common formulation.
• Contrary to expectations, theshift away from old boilerplate did not lead to convergencearound new boilerplate.
• Issuers in London, and to a lesserdegree in New York, are experimenting with diverse terms andinstitutional arrangements.
• Amendment provisions in recentissues have used hybrid formulations, permitting holders tovote in person or by written consent, with different approvalthresholds.
• More issuers are using trust structures.
• Creditorcommittees are making a qualified comeback, though the adoptionand formulation of committee provisons does not appear to trackissuers' credit quality.
• Not all issuers agree to pay committeeexpenses.
• Some issuers have agreed to require unanimous creditorconsent to amend litigation-related terms, . . . [Full Text of this Article]

 

Sourcing from China: stopping the IP leaks from your clients' supply chain

Legal context: It is no secret that IP in China is a challenge. However, commercialactivity in or with China is now predictable enough that companiescan, and should, plan for it by taking control of their supplychain. This requires a combination of legal and practical measures.This article sets out some of these steps. Key points: In order to minimize the risks of IP leakage their supply chainsin China, there are three key stages of protection: (i) Pre-sourcing;(ii) Negotiating strong contracts with suppliers; and (iii)Managing the relationship with your supply chain. Practical significance: If your clients do business in China or source products fromhere and cannot answer the following questions, their IP isat risk of infringement. They need to take steps to proactivelymanage their supply chain.

• Do your clients know which factoryis producing their products?How many links are in your clientssupply chain, each one increasingthe chances for IP infringement?
• Do your clients' agreements with their suppliers adequatelyprotect their IP?
• Have your clients taken steps to prevent‘midnight productionruns’ and ‘backdoor sales’by their suppliers?
• How is the IP being provided to them?Do your clients need togive them everything for production?
• What steps have been taken post-production to ensure thatyourclients' suppliers don't continue to manufacture theirproducts?

     

Perceptions of fairness: industry action on the use of material non-public information

Key points

• Fair dealing is critical to trading relationshipsin the financial markets, and the perception of fairness isjust as important as any legal restrictions on the use of materialnon-public information, perhaps more so.
• Major participantsin the global credit markets and the associations that representthem have, in recent years, published a set of principles regardingthe use of material non-public information and the safeguardsthat an active market participant should have in place to protectagainst misuse.
• Ensuring this perception of fairness promotesconfidence in markets and enhances their liquidity and transparency.

  In their article, (see pp 245–259 of this issue of CMLJ)Dr Sharon Brown-Hruska and Robert Zwirb present a persuasiveargument for distinguishing between securities and derivatives,particularly when it comes to the issue of     

'Canada Steps Up'--Task Force to Modernize Securities Legislation in Canada: recommendations and discussion

The first 150 words of the full text of this article appear below. Key points

• The Task Force to Modernize Securities Legislationin Canada released its report entitled ‘Canada Steps Up’in October 2006. Its 65 recommendations focused on bringingCanadian securities law into the 21st century, enhancing Canada'scompetitiveness in the global marketplace and eliminating itshigher cost of capital relative to the US.
• This article reviewsand analyses the Task Force's recommendations in five criticalareas: cost–benefit analysis (CBA), improving access tocapital markets, the use from electronic disclosure systemsand financial literacy, the regulation of hedge funds and finally,enforcement.
• This article also reviews two issues that receivedsignificant Task Force discussion, but were left as ideas forconsideration, namely an insurance scheme for misinformationin the capital markets and subsidizing securities analysis toimprove analyst coverage of small firms.
• Finally, conclusionsare drawn from the Task Force's deliberations and recommendationsand next steps are suggested.

 

Implementation of the Transparency Directive--room for variations across the EEA

The first 150 words of the full text of this article appear below. Key points

• The Transparency Directive, which had to be implementedin the Member States of the European Economic Area (EEA) by20 January 2007, seeks to enhance transparency in European capitalmarkets by setting new minimum standards for periodic reportsand notifications of major holdings of voting rights. New ruleson dissemination and central storage of regulated informationwill also contribute to more transparency and drive harmonizationof disclosure practices in the longer term.
• Due to the minimumharmonization approach of the Transparency Directive, therewill be an array of different super-equivalent measures adoptedby Member States,¹ creating a complex picture across Europeanjurisdictions. The article discusses the types of issues thatnational regulators and legislators considered when implementingthe Transparency Directive into national law by looking at theUK and German examples.
• The article also discusses the consequencesof implementation of the Transparency Directive for non-EEAissuers, both in . . . [Full Text of this Article]

 

Disclosure practices under the EU Prospectus Directive and the role of CESR

The first 150 words of the full text of this article appear below. Key points

• In February 2005, CESR issued its Recommendationsfor the consistent implementation of the Prospectus Regulation.
• SinceJuly 2006, CESR has begun to develop a line of clarificationson disclosure practices under the Prospectus Directive and theProspectus Regulation in the form of common positions basedon Frequently Asked Questions (FAQs).
• This article first analysesthe question to which extent CESR's Recommendations and commonpositions have binding effect, in the sense that individualnational securities regulators are under some form of obligationto apply these.
• Subsequently, the article discusses a selectionof CESR's common positions on FAQs which are of material importancefor day-to-day disclosure practice.

 

Private equity: the UK regulatory response

The first 150 words of the full text of this article appear below. Key points

• Rapid growth in private equity in recent years hasgenerated a public debate over the possibility of regulation.The Financial Services Authority (FSA), British Venture CapitalAssociation (BVCA), Treasury and the Treasury Select Committeehave all been active on this front in recent months.
• This briefingnote provides an overview of the current state of play in theUK, taking account of the final guidelines published by SirDavid Walker and the changes to capital gains tax that havebeen announced by the Treasury.
• The BVCA guidelines will bringwithin its enhanced disclosure regime around 65 portfolio companiesand will operate on a ‘comply or explain’ basis.
• TheFSA has indicated that it will focus on the risks of marketabuse and conflicts of interest arising from private equitytransactions, but it does not envisage a discrete regulatoryregime for the sector.

 

Legal Certainty and the Role of the Financial Markets Law Committee

The first 150 words of the full text of this article appear below. Key points

• The role of the Financial Markets Law Committee (‘FMLC’)is to provide specialist assistance to those who must meet thechallenges of reforming, modernizing and applying financiallaw by identifying issues of legal uncertainty that may facethe wholesale financial markets and by working to resolve them,if possible, before they give rise to any material risk.
• Itis the author's view that the FMLC is uniquely positioned toserve rule of law values such as legal certainty and legal stability.
• Thisarticle suggests that, in the light of the challenges facingthe financial markets today, the rapid emergence of new markets,the accelerating rate of financial products ‘innovation’,the impact of recent international and European initiativesto harmonize financial markets law and the prospect of law reforminitiatives not yet even underway, the FMLC has an importantrole to play for the future.

  Much is said and . . . [Full Text of this Article]

Underwriters' counsel as gatekeeper or turnstile: an empirical analysis of law firm prestige and performance in IPOs

The first 150 words of the full text of this article appear below. Key points

• The article investigates the relationship betweenpricing in an initial public offering (IPO) and the prestigeof the participating underwriters’ law firm.
• The hypothesisof the article is that law firm quality affects how law firmsperform their obligations in IPOs—more prestigious lawfirms acting more independently. Consistent with this hypothesis,the authors find a negative relationship between pre-IPO priceadjustment and the participation of prestigious underwriters’counsel, and a negative relationship between the participationof prestigious underwriters’ counsel and initial return,which is consistent with market trading reflecting the decreasedrisk associated with offerings involving prestigious underwriters’counsel.
• Finally, it is found that certain observable characteristicsindicating diminished likelihood of undisclosed negative information(venture backing and quality of the issuer's counsel) are associatedwith an increased likelihood that prestigious underwriters’counsel is used.

 

Disclosure in the EEA securities markets--making sense of the puzzle

The first 150 words of the full text of this article appear below. Key points

• This article looks at the various elements of thedisclosure regimes for issuers that are admitted to EEA-regulatedmarkets, including the initial requirement for the productionof a prospectus on admission and on-going requirements to discloseprice sensitive information as it arises and to make regularreports to the market.
• After a brief analysis of some of thesimilarities and differences between the various regimes, thearticle makes an attempt to reconcile the differences by lookingat each regime in the context of the others and viewing themas a continuum.
• Finally, remaining problems concerning multi-jurisdictionliability for disclosure in the EEA and potential liabilityfor forward-looking disclosure are discussed.