Derivatives Documentation in a New Market Environment

With the introduction of central clearing for OTC derivatives, financial institutions will have to manage new agreements, with different business rules, in addition to the existing documentation for bilateral trading relationships.

Exari's Paul Nelmes was recently interviewed by Julia Schieffer of DerivSource and he explained how documentation will change within a Central Counterparty Clearing (CCP) environment and why financial institutions must implement efficient documentation processing methods to avoid increased legal and operational costs caused by the new market requirements.

DerivSource: How does the introduction of central counterparty clearing change the documents used to support OTC derivatives?

Exari: The existing Over-the-Counter (OTC) clearing documentation structure between financial institutions and clients or counterparties in the bilateral trade clearing environment, will be supported by the existing International Swaps and Derivatives Association (ISDA) Master Agreement and supplemental documents/annexes such as Credit Support Annex (CSA), trade confirmations.

In the central counterparty clearing (CCP) environment there will be a significant increase in the amount of documentation and overall, the documentation will be more complex. The terms of the agreements with CCPs may be less favorable to the clearing members than their typical bilateral agreement, and commonly will give the CCP power to make unilateral changes by virtue of incorporating its clearing rules (which they decide when and how to change).

Banks trading with many thousands of derivatives counterparties will be compelled by regulators to clear a certain amount of those trades on a central exchange. However, not all OTC trades will be cleared, so anyone dealing in OTC trades that are not standardized will still need bilateral ISDAs or other master agreements in place.

To read the entire interview, you can request a copy of the full article here.

And the iPad Goes To...

Thanks to all of you (and there were more than 400 in-house attorneys) who completed our recent Sales Contract Survey which we conducted in conjunction with InsideCounsel Magazine.

If you'd like a sneak peek at the results, join us on Tuesday, June 28th at 11:00 am (EDT) when Karen Cariello, Associate Publisher of InsideCounsel, will be presenting some of the early findings in a webinar. You can register for the webinar here.

Rees Morrison, President of Rees Morrison and Associates, will be joining us as well and sharing some of his benchmark survey results and advice on law department best practices, as they relate to the sales contracts process.

Congratulations to Laurie McCall, Vice President and Associate General Counsel of Harris Broadcast Communications, who was the lucky winner of the iPad drawing held among the survey respondents.

General Counsel Metrics Survey

Rees Morrison, noted law department management advisor and blogger has launched the largest benchmark survey ever done for law departments. We encourage you to join the more than 300 law departments who have already completed the General Counsel Metrics survey. All participants will receive a complimentary report of the results in July.

Click here and answer the six data questions on your staff and spend - all responses are confidential.

The survey asks for six pieces of your law department’s data:
- number of lawyers, paralegals, and other staff broken out (as of Dec. 31, 2010);
- internal and external legal spend last year; and
- your company’s revenue last year.

Responses to this year’s survey are ahead of last year’s pace, which had 805 participants. The final report displayed aggregate benchmark metrics from law departments in 48 countries who employed collectively nearly 22,000 lawyers. Its 25 benchmark metrics were broken down by 20 industries. If you have questions, contact Rees at rees@reesmorrison.com.

Rees, along with Karen Cariello of InsideCounsel, will be joining us for a webinar on Tuesday, June 28 at 11:00 am (EDT) about "How to Minimize Sales Contract Risk." Rees and Karen will be sharing data from their recent surveys. To register for the complimentary webinar, click here.

How to Minimize Risk in Your Sales Contracts -- Complimentary Webinar

We are sponsoring a virtual roundtable discussion featuring a panel of leading experts who will the discuss challenges that Corporate Legal Departments face in trying to reduce risk in their sales contracts. You are invited to attend the complimentary webinar on Tuesday, June 28, 2011 at 11:00 am (EDT). Click here to register.

The panel will be sharing results from the recent InsideCounsel survey on the "state of sales contracts," discussing how to use benchmarks to compare business process to best practice, and providing strategies for law departments to help improve their sales contracts processes in order to reduce risk.

The panel includes:
• Karen Cariello, Associate Publisher, InsideCounsel Magazine
• Rees Morrison, President, Rees Morrison Associates and founder of General Counsel Metrics LLC
• Jamie Wodetzki,, Founder, Exari Systems, Inc

The panelists will discuss the following topics:
1. The number one concern that in-house legal has with the sales contracting process.
2. How to avoid suffering unplanned losses from sales contracts.
3. Law department best practices for contracts.
4. How sales contracts can be a source of competitive advantage.

A Q&A session with the audience and panel speakers will be held after the roundtable discussion to allow for interaction between the panel and attendees.

For more information or to register, click here.