Emissions trading in the European Union

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• The EU ETS will undergo a number of changes consequentupon the commencement of the first Kyoto Commitment Period on1 January 2008.
• This article considers the existing EU ETSframework and also the key developments that are anticipatedin the European emissions market for 2008–2012.
• A secondarymarket for trading EUAs has already developed and this market,together with the standard-form documentation used, is discussed.
• Inconclusion, the article questions the future of emissions tradingin Europe—particularly after the current Kyoto targetsexpire in 2012.

  European businesses entered a carbon-constrained economic environmenton 1 January 2005. For some, the impacts were immediate anddirect in the form of caps on their emissions. The majorityfelt it indirectly and more slowly through increased energycosts as the perceived cost of compliance was passed on by generators.The full impacts are not yet clear, but a quiet revolution is. . . [Full Text of this Article]

The evolution of regulatory enforcement action in the UK capital markets: a case of 'less is more'?

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• Formal enforcement action is a relatively rare occurrencewithin the UK capital markets regulatory framework. This characteristicdistinguishes the UK from the US, where there is a more intensefocus on enforcement, both public and private.
• Several featuresof the UK regulatory system contribute towards a low incidenceof enforcement. Some of these features are embedded in the statutoryframework, but the FSA has played a key role in the developmentof enforcement policy, while the continuing presence of self-regulationin the form of the Combined Code has also played a part.
• Thefocus on risk-based regulation in the UK has been a major influencefor enforcement policy. The move to more principles-based regulationhas also been a factor but one that is more difficult to interpret.If it is correct to assume that principles-based regulationdoes not affect the intensity of regulation, then the effecton the . . . [Full Text of this Article]

 

The pan-European retail market are we there yet?

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• 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.

 

How to compare regulatory regimes

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It is the policy of this Journal to only publish material thathas not been published previously. However, an exception hasbeen made with this article as the work from which it has beendrawn has only recently published. This article is taken fromPhilip Wood's Regulation of International Finance, one of aseries of nine works by Philip Wood on the law of practice ofInternational Finance, published by Sweet & Maxwell in 2007.Philip Wood is a member of the Editorial Board of Capital MarketsLaw Journal. Many readers of Capital Markets Law Journal aroundthe world will not have had the chance to read this very topicalarticle which is of exceptional quality and Capital MarketsLaw Journal is very pleased to make it available to the widercapital markets community.                 TheEditors

Key points

• This article examines the criteria which might usefullybe . . . [Full Text of this Article]

 

A transactional approach to the Hague Securities Convention

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• Transactions involving intermediated securities –ie securities that are held in an account with a broker, bank,clearing agency or other intermediary – demand a highdegree of ex ante legal certainty. However, for intermediatedsecurities accounts and transactions that reach across bordersas is increasingly prevalent, the traditional conflicts of lawrules for many of the most important commercial law issues failto provide this certainty.
• The Hague Securities Conventionprovides a modern and practical approach for determining theapplicable law. In most cases, the express terms of the agreementbetween the applicable account holder and its intermediary willbe determinative, including as against third parties, providedthat at the time of the agreement the intermediary is engagedin the business of maintaining securities accounts in the specifiedjurisdiction. The Convention is expected to be ratified in somenations fairly soon.
• Once the Convention becomes effective,it . . . [Full Text of this Article]

 

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

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• 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.

 

Hedge fund regulation, market discipline and the Hedge Fund Working Group

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• Against a general background of suspicion, criticismand even hostility, the recently formed Hedge Fund Working Group(HFWG), comprising 14 leading fund managers based mainly inthe United Kingdom, published their Final Report in January2008.
• The Report is based on standards of best practice (the‘Standards’ of which there are 28) that are, inthe final analysis, to be administered by a newly establishedHedge Fund Standards Board (HFSB)—a self-regulatory bodycharged with the responsibility of keeping the Standards up-to-dateand ‘fit for purpose’.
• Borrowing from both theFinancial Services Authority's Principles for Business, whichrepresent bold statements of good business practice within theUK's financial services sector, and the Combined Code on CorporateGovernance's voluntary approach of ‘comply or explain’,the Standards are heralded by the HFWG as ‘an exercisein market discipline, based on disclosure’.
• The unprecedentednature of recent financial market . . . [Full Text of this Article]

 

Only connect--the importance of considering disclosure requirements in the light of their legal consequences

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• This article explains why the recent TransparencyDirective led to an unintended change in law in the United Kingdomrelating to liability for annual and other reports by listedcompanies. The change was the result of a misunderstanding ofthe fact that the expressed or implied purpose of disclosurecan act as a trigger for liability in negligence. The articleargues that new disclosure requirements should always be reviewedin the light of the liability that will be imposed on thoseresponsible for the disclosure, so that costs and benefits canbe correctly balanced and prompt, reliable and relevant disclosurewill be encouraged.
• The new liability regime for reports inthe United Kingdom is considered and it is argued that the regimeshould logically be extended beyond company reports to the fullrange of disclosures required of companies that are admittedto regulated markets.
• The article concludes by . . . [Full Text of this Article]

 

Loan only credit default swaps the new European standard form

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• 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]