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<span>Toggle Three pillars of financial law formation subsection</span> </button> <ul id="toc-Three_pillars_of_financial_law_formation-sublist" class="vector-toc-list"> <li id="toc-Market_practices" class="vector-toc-list-item vector-toc-level-2"> <a class="vector-toc-link" href="#Market_practices"> <div class="vector-toc-text"> <span class="vector-toc-numb">1.1</span> <span>Market practices</span> </div> </a> <ul id="toc-Market_practices-sublist" class="vector-toc-list"> </ul> </li> <li id="toc-Case_law" class="vector-toc-list-item vector-toc-level-2"> <a class="vector-toc-link" href="#Case_law"> <div class="vector-toc-text"> <span class="vector-toc-numb">1.2</span> <span>Case law</span> </div> </a> <ul id="toc-Case_law-sublist" class="vector-toc-list"> </ul> </li> <li id="toc-Regulation_and_legislation" class="vector-toc-list-item vector-toc-level-2"> <a class="vector-toc-link" href="#Regulation_and_legislation"> <div class="vector-toc-text"> <span class="vector-toc-numb">1.3</span> <span>Regulation and legislation</span> </div> </a> <ul id="toc-Regulation_and_legislation-sublist" class="vector-toc-list"> <li id="toc-Financial_collateral_regulations" class="vector-toc-list-item vector-toc-level-3"> <a class="vector-toc-link" href="#Financial_collateral_regulations"> <div class="vector-toc-text"> <span class="vector-toc-numb">1.3.1</span> <span>Financial collateral regulations</span> </div> </a> <ul id="toc-Financial_collateral_regulations-sublist" class="vector-toc-list"> </ul> </li> </ul> </li> </ul> </li> <li id="toc-Legal_concepts_prevalent_in_financial_law" class="vector-toc-list-item vector-toc-level-1"> <a class="vector-toc-link" href="#Legal_concepts_prevalent_in_financial_law"> <div class="vector-toc-text"> <span class="vector-toc-numb">2</span> <span>Legal concepts prevalent in financial law</span> </div> </a> <button aria-controls="toc-Legal_concepts_prevalent_in_financial_law-sublist" class="cdx-button cdx-button--weight-quiet cdx-button--icon-only vector-toc-toggle"> <span class="vector-icon mw-ui-icon-wikimedia-expand"></span> <span>Toggle Legal concepts prevalent in financial law subsection</span> </button> <ul id="toc-Legal_concepts_prevalent_in_financial_law-sublist" class="vector-toc-list"> <li id="toc-Limited_liability_and_legal_personality" class="vector-toc-list-item vector-toc-level-2"> <a class="vector-toc-link" href="#Limited_liability_and_legal_personality"> <div class="vector-toc-text"> <span class="vector-toc-numb">2.1</span> <span>Limited liability and legal personality</span> </div> </a> <ul id="toc-Limited_liability_and_legal_personality-sublist" class="vector-toc-list"> </ul> </li> <li id="toc-Financial_collateral" class="vector-toc-list-item vector-toc-level-2"> <a class="vector-toc-link" href="#Financial_collateral"> <div class="vector-toc-text"> <span class="vector-toc-numb">2.2</span> <span>Financial collateral</span> </div> </a> <ul id="toc-Financial_collateral-sublist" class="vector-toc-list"> <li id="toc-Financial_collateral_regulations_2" class="vector-toc-list-item vector-toc-level-3"> <a class="vector-toc-link" href="#Financial_collateral_regulations_2"> <div class="vector-toc-text"> <span class="vector-toc-numb">2.2.1</span> <span>Financial collateral regulations</span> </div> </a> <ul id="toc-Financial_collateral_regulations_2-sublist" class="vector-toc-list"> <li id="toc-Possession" class="vector-toc-list-item vector-toc-level-4"> <a class="vector-toc-link" href="#Possession"> <div class="vector-toc-text"> <span class="vector-toc-numb">2.2.1.1</span> <span>Possession</span> </div> </a> <ul id="toc-Possession-sublist" class="vector-toc-list"> </ul> </li> <li id="toc-Control" class="vector-toc-list-item vector-toc-level-4"> <a class="vector-toc-link" href="#Control"> <div class="vector-toc-text"> <span class="vector-toc-numb">2.2.1.2</span> <span>Control</span> </div> </a> <ul id="toc-Control-sublist" class="vector-toc-list"> </ul> </li> </ul> </li> </ul> </li> <li id="toc-Set_off" class="vector-toc-list-item vector-toc-level-2"> <a class="vector-toc-link" href="#Set_off"> <div class="vector-toc-text"> <span class="vector-toc-numb">2.3</span> <span>Set off</span> </div> </a> <ul id="toc-Set_off-sublist" class="vector-toc-list"> </ul> </li> <li id="toc-Payment" class="vector-toc-list-item vector-toc-level-2"> <a class="vector-toc-link" href="#Payment"> <div class="vector-toc-text"> <span class="vector-toc-numb">2.4</span> <span>Payment</span> </div> </a> <ul id="toc-Payment-sublist" class="vector-toc-list"> <li id="toc-Two_conceptual_points_of_mutual_consent" class="vector-toc-list-item vector-toc-level-3"> <a class="vector-toc-link" href="#Two_conceptual_points_of_mutual_consent"> <div class="vector-toc-text"> <span class="vector-toc-numb">2.4.1</span> <span>Two conceptual points of mutual consent</span> </div> </a> <ul id="toc-Two_conceptual_points_of_mutual_consent-sublist" class="vector-toc-list"> </ul> </li> </ul> </li> </ul> </li> <li id="toc-Financial_law_transactional_categories" class="vector-toc-list-item vector-toc-level-1"> <a class="vector-toc-link" href="#Financial_law_transactional_categories"> <div class="vector-toc-text"> <span class="vector-toc-numb">3</span> <span>Financial law transactional categories</span> </div> </a> <button aria-controls="toc-Financial_law_transactional_categories-sublist" class="cdx-button cdx-button--weight-quiet cdx-button--icon-only vector-toc-toggle"> <span class="vector-icon mw-ui-icon-wikimedia-expand"></span> <span>Toggle Financial law transactional categories subsection</span> </button> <ul id="toc-Financial_law_transactional_categories-sublist" class="vector-toc-list"> <li id="toc-Simple_financial_positions" class="vector-toc-list-item vector-toc-level-2"> <a class="vector-toc-link" href="#Simple_financial_positions"> <div class="vector-toc-text"> <span class="vector-toc-numb">3.1</span> <span>Simple financial positions</span> </div> </a> <ul id="toc-Simple_financial_positions-sublist" class="vector-toc-list"> <li id="toc-Derivatives_law" class="vector-toc-list-item vector-toc-level-3"> <a class="vector-toc-link" href="#Derivatives_law"> <div class="vector-toc-text"> <span class="vector-toc-numb">3.1.1</span> <span>Derivatives law</span> </div> </a> <ul id="toc-Derivatives_law-sublist" class="vector-toc-list"> <li id="toc-Legal_issues" class="vector-toc-list-item vector-toc-level-4"> <a class="vector-toc-link" href="#Legal_issues"> <div class="vector-toc-text"> <span class="vector-toc-numb">3.1.1.1</span> <span>Legal issues</span> </div> </a> <ul id="toc-Legal_issues-sublist" class="vector-toc-list"> </ul> </li> </ul> </li> <li id="toc-Recharacterisation" class="vector-toc-list-item vector-toc-level-3"> <a class="vector-toc-link" href="#Recharacterisation"> <div class="vector-toc-text"> <span class="vector-toc-numb">3.1.2</span> <span>Recharacterisation</span> </div> </a> <ul id="toc-Recharacterisation-sublist" class="vector-toc-list"> </ul> </li> </ul> </li> <li id="toc-Funded_positions" class="vector-toc-list-item vector-toc-level-2"> <a class="vector-toc-link" href="#Funded_positions"> <div class="vector-toc-text"> <span class="vector-toc-numb">3.2</span> <span>Funded positions</span> </div> </a> <ul id="toc-Funded_positions-sublist" class="vector-toc-list"> <li id="toc-Difference_between_funded_positions_and_other_positions" class="vector-toc-list-item vector-toc-level-3"> <a class="vector-toc-link" href="#Difference_between_funded_positions_and_other_positions"> <div class="vector-toc-text"> <span class="vector-toc-numb">3.2.1</span> <span>Difference between funded positions and other positions</span> </div> </a> <ul id="toc-Difference_between_funded_positions_and_other_positions-sublist" class="vector-toc-list"> </ul> </li> <li id="toc-Debt_financing" class="vector-toc-list-item vector-toc-level-3"> <a class="vector-toc-link" href="#Debt_financing"> <div class="vector-toc-text"> <span class="vector-toc-numb">3.2.2</span> <span>Debt financing</span> </div> </a> <ul id="toc-Debt_financing-sublist" class="vector-toc-list"> <li id="toc-On-demand_lending" class="vector-toc-list-item vector-toc-level-4"> <a class="vector-toc-link" href="#On-demand_lending"> <div class="vector-toc-text"> <span class="vector-toc-numb">3.2.2.1</span> <span>On-demand lending</span> </div> </a> <ul id="toc-On-demand_lending-sublist" class="vector-toc-list"> <li id="toc-Overdraft" class="vector-toc-list-item vector-toc-level-5"> <a class="vector-toc-link" href="#Overdraft"> <div class="vector-toc-text"> <span class="vector-toc-numb">3.2.2.1.1</span> <span>Overdraft</span> </div> </a> <ul id="toc-Overdraft-sublist" class="vector-toc-list"> </ul> </li> </ul> </li> <li id="toc-Committed_lending" class="vector-toc-list-item vector-toc-level-4"> <a class="vector-toc-link" href="#Committed_lending"> <div class="vector-toc-text"> <span class="vector-toc-numb">3.2.2.2</span> <span>Committed lending</span> </div> </a> <ul id="toc-Committed_lending-sublist" class="vector-toc-list"> <li id="toc-Material_adverse_change_clauses" class="vector-toc-list-item vector-toc-level-5"> <a class="vector-toc-link" href="#Material_adverse_change_clauses"> <div class="vector-toc-text"> <span class="vector-toc-numb">3.2.2.2.1</span> <span>Material adverse change clauses</span> </div> </a> <ul id="toc-Material_adverse_change_clauses-sublist" class="vector-toc-list"> </ul> </li> </ul> </li> </ul> </li> </ul> </li> <li id="toc-Net_positions" class="vector-toc-list-item vector-toc-level-2"> <a class="vector-toc-link" href="#Net_positions"> <div class="vector-toc-text"> <span class="vector-toc-numb">3.3</span> <span>Net positions</span> </div> </a> <ul id="toc-Net_positions-sublist" class="vector-toc-list"> </ul> </li> <li id="toc-Asset-backed_positions" class="vector-toc-list-item vector-toc-level-2"> <a class="vector-toc-link" href="#Asset-backed_positions"> <div class="vector-toc-text"> <span class="vector-toc-numb">3.4</span> <span>Asset-backed positions</span> </div> </a> <ul id="toc-Asset-backed_positions-sublist" class="vector-toc-list"> </ul> </li> <li id="toc-Combined_positions" class="vector-toc-list-item vector-toc-level-2"> <a class="vector-toc-link" href="#Combined_positions"> <div class="vector-toc-text"> <span class="vector-toc-numb">3.5</span> <span>Combined positions</span> </div> </a> <ul id="toc-Combined_positions-sublist" class="vector-toc-list"> </ul> </li> </ul> </li> <li id="toc-References" class="vector-toc-list-item vector-toc-level-1"> <a class="vector-toc-link" href="#References"> <div class="vector-toc-text"> <span class="vector-toc-numb">4</span> <span>References</span> </div> </a> <ul id="toc-References-sublist" class="vector-toc-list"> </ul> </li> <li id="toc-Further_reading" class="vector-toc-list-item vector-toc-level-1"> <a class="vector-toc-link" href="#Further_reading"> <div class="vector-toc-text"> <span class="vector-toc-numb">5</span> <span>Further reading</span> </div> </a> <ul id="toc-Further_reading-sublist" class="vector-toc-list"> </ul> </li> <li id="toc-External_links" class="vector-toc-list-item vector-toc-level-1"> <a class="vector-toc-link" href="#External_links"> <div class="vector-toc-text"> <span class="vector-toc-numb">6</span> <span>External links</span> </div> </a> <ul id="toc-External_links-sublist" class="vector-toc-list"> </ul> </li> </ul> </div> </div> </nav> </div> </div> <div class="mw-content-container"> <main id="content" class="mw-body"> <header class="mw-body-header vector-page-titlebar"> <nav aria-label="Contents" class="vector-toc-landmark"> <div id="vector-page-titlebar-toc" class="vector-dropdown vector-page-titlebar-toc vector-button-flush-left" > <input type="checkbox" id="vector-page-titlebar-toc-checkbox" role="button" aria-haspopup="true" data-event-name="ui.dropdown-vector-page-titlebar-toc" class="vector-dropdown-checkbox " aria-label="Toggle the table of contents" > <label id="vector-page-titlebar-toc-label" for="vector-page-titlebar-toc-checkbox" class="vector-dropdown-label cdx-button cdx-button--fake-button cdx-button--fake-button--enabled cdx-button--weight-quiet cdx-button--icon-only " aria-hidden="true" ><span class="vector-icon mw-ui-icon-listBullet mw-ui-icon-wikimedia-listBullet"></span> <span class="vector-dropdown-label-text">Toggle the table of contents</span> </label> <div class="vector-dropdown-content"> <div id="vector-page-titlebar-toc-unpinned-container" class="vector-unpinned-container"> </div> </div> </div> </nav> <h1 id="firstHeading" class="firstHeading mw-first-heading"><span class="mw-page-title-main">Financial law</span></h1> <div id="p-lang-btn" class="vector-dropdown mw-portlet mw-portlet-lang" > <input type="checkbox" id="p-lang-btn-checkbox" role="button" aria-haspopup="true" data-event-name="ui.dropdown-p-lang-btn" class="vector-dropdown-checkbox mw-interlanguage-selector" aria-label="Go to an article in another language. Available in 25 languages" > <label id="p-lang-btn-label" for="p-lang-btn-checkbox" class="vector-dropdown-label cdx-button cdx-button--fake-button cdx-button--fake-button--enabled cdx-button--weight-quiet cdx-button--action-progressive mw-portlet-lang-heading-25" aria-hidden="true" ><span class="vector-icon mw-ui-icon-language-progressive mw-ui-icon-wikimedia-language-progressive"></span> <span class="vector-dropdown-label-text">25 languages</span> </label> <div class="vector-dropdown-content"> <div class="vector-menu-content"> <ul class="vector-menu-content-list"> <li class="interlanguage-link interwiki-ar mw-list-item"><a href="https://ar.wikipedia.org/wiki/%D9%82%D8%A7%D9%86%D9%88%D9%86_%D9%85%D8%A7%D9%84%D9%8A" title="قانون مالي – Arabic" lang="ar" hreflang="ar" data-title="قانون مالي" data-language-autonym="العربية" data-language-local-name="Arabic" class="interlanguage-link-target"><span>العربية</span></a></li><li class="interlanguage-link interwiki-az mw-list-item"><a href="https://az.wikipedia.org/wiki/Maliyy%C9%99_h%C3%BCququ" title="Maliyyə hüququ – Azerbaijani" lang="az" hreflang="az" data-title="Maliyyə hüququ" data-language-autonym="Azərbaycanca" data-language-local-name="Azerbaijani" class="interlanguage-link-target"><span>Azərbaycanca</span></a></li><li class="interlanguage-link interwiki-bg mw-list-item"><a href="https://bg.wikipedia.org/wiki/%D0%A4%D0%B8%D0%BD%D0%B0%D0%BD%D1%81%D0%BE%D0%B2%D0%BE_%D0%BF%D1%80%D0%B0%D0%B2%D0%BE" title="Финансово право – Bulgarian" lang="bg" hreflang="bg" data-title="Финансово право" data-language-autonym="Български" data-language-local-name="Bulgarian" class="interlanguage-link-target"><span>Български</span></a></li><li class="interlanguage-link interwiki-cv mw-list-item"><a href="https://cv.wikipedia.org/wiki/%D0%A4%D0%B8%D0%BD%D0%B0%D0%BD%D1%81_%D1%82%D0%B8%D0%B2%C4%95%C3%A7-%D0%B8%D1%80%C4%95%D0%BA%C4%95" title="Финанс тивĕç-ирĕкĕ – Chuvash" lang="cv" hreflang="cv" data-title="Финанс тивĕç-ирĕкĕ" data-language-autonym="Чӑвашла" data-language-local-name="Chuvash" class="interlanguage-link-target"><span>Чӑвашла</span></a></li><li class="interlanguage-link interwiki-cs mw-list-item"><a href="https://cs.wikipedia.org/wiki/Finan%C4%8Dn%C3%AD_pr%C3%A1vo" title="Finanční právo – Czech" lang="cs" hreflang="cs" data-title="Finanční právo" data-language-autonym="Čeština" data-language-local-name="Czech" class="interlanguage-link-target"><span>Čeština</span></a></li><li class="interlanguage-link interwiki-de mw-list-item"><a href="https://de.wikipedia.org/wiki/Finanzrecht" title="Finanzrecht – German" lang="de" hreflang="de" data-title="Finanzrecht" data-language-autonym="Deutsch" data-language-local-name="German" class="interlanguage-link-target"><span>Deutsch</span></a></li><li class="interlanguage-link interwiki-et mw-list-item"><a href="https://et.wikipedia.org/wiki/Finants%C3%B5igus" title="Finantsõigus – Estonian" lang="et" hreflang="et" data-title="Finantsõigus" data-language-autonym="Eesti" data-language-local-name="Estonian" class="interlanguage-link-target"><span>Eesti</span></a></li><li class="interlanguage-link interwiki-es mw-list-item"><a href="https://es.wikipedia.org/wiki/Derecho_financiero" title="Derecho financiero – Spanish" lang="es" hreflang="es" data-title="Derecho financiero" data-language-autonym="Español" data-language-local-name="Spanish" class="interlanguage-link-target"><span>Español</span></a></li><li class="interlanguage-link interwiki-ko mw-list-item"><a href="https://ko.wikipedia.org/wiki/%EA%B8%88%EC%9C%B5%EB%B2%95" title="금융법 – Korean" lang="ko" hreflang="ko" data-title="금융법" data-language-autonym="한국어" data-language-local-name="Korean" class="interlanguage-link-target"><span>한국어</span></a></li><li class="interlanguage-link interwiki-hy mw-list-item"><a href="https://hy.wikipedia.org/wiki/%D5%96%D5%AB%D5%B6%D5%A1%D5%B6%D5%BD%D5%A1%D5%AF%D5%A1%D5%B6_%D5%AB%D6%80%D5%A1%D5%BE%D5%B8%D6%82%D5%B6%D6%84" title="Ֆինանսական իրավունք – Armenian" lang="hy" hreflang="hy" data-title="Ֆինանսական իրավունք" data-language-autonym="Հայերեն" data-language-local-name="Armenian" class="interlanguage-link-target"><span>Հայերեն</span></a></li><li class="interlanguage-link interwiki-kk mw-list-item"><a href="https://kk.wikipedia.org/wiki/%D2%9A%D0%B0%D1%80%D0%B6%D1%8B%D0%BB%D1%8B%D2%9B_%D2%9B%D2%B1%D2%9B%D1%8B%D2%9B" title="Қаржылық құқық – Kazakh" lang="kk" hreflang="kk" data-title="Қаржылық құқық" data-language-autonym="Қазақша" data-language-local-name="Kazakh" class="interlanguage-link-target"><span>Қазақша</span></a></li><li class="interlanguage-link interwiki-lt mw-list-item"><a href="https://lt.wikipedia.org/wiki/Finans%C5%B3_teis%C4%97" title="Finansų teisė – Lithuanian" lang="lt" hreflang="lt" data-title="Finansų teisė" data-language-autonym="Lietuvių" data-language-local-name="Lithuanian" class="interlanguage-link-target"><span>Lietuvių</span></a></li><li class="interlanguage-link interwiki-ja mw-list-item"><a href="https://ja.wikipedia.org/wiki/%E9%87%91%E8%9E%8D%E6%B3%95" title="金融法 – Japanese" lang="ja" hreflang="ja" data-title="金融法" data-language-autonym="日本語" data-language-local-name="Japanese" class="interlanguage-link-target"><span>日本語</span></a></li><li class="interlanguage-link interwiki-pl mw-list-item"><a href="https://pl.wikipedia.org/wiki/Prawo_finansowe" title="Prawo finansowe – Polish" lang="pl" hreflang="pl" data-title="Prawo finansowe" data-language-autonym="Polski" data-language-local-name="Polish" class="interlanguage-link-target"><span>Polski</span></a></li><li class="interlanguage-link interwiki-pt mw-list-item"><a href="https://pt.wikipedia.org/wiki/Direito_financeiro" title="Direito financeiro – Portuguese" lang="pt" hreflang="pt" data-title="Direito financeiro" data-language-autonym="Português" data-language-local-name="Portuguese" class="interlanguage-link-target"><span>Português</span></a></li><li class="interlanguage-link interwiki-ro mw-list-item"><a href="https://ro.wikipedia.org/wiki/Drept_financiar" title="Drept financiar – Romanian" lang="ro" hreflang="ro" data-title="Drept financiar" data-language-autonym="Română" data-language-local-name="Romanian" class="interlanguage-link-target"><span>Română</span></a></li><li class="interlanguage-link interwiki-ru mw-list-item"><a href="https://ru.wikipedia.org/wiki/%D0%A4%D0%B8%D0%BD%D0%B0%D0%BD%D1%81%D0%BE%D0%B2%D0%BE%D0%B5_%D0%BF%D1%80%D0%B0%D0%B2%D0%BE" title="Финансовое право – Russian" lang="ru" hreflang="ru" data-title="Финансовое право" data-language-autonym="Русский" data-language-local-name="Russian" class="interlanguage-link-target"><span>Русский</span></a></li><li class="interlanguage-link interwiki-sk mw-list-item"><a href="https://sk.wikipedia.org/wiki/Finan%C4%8Dn%C3%A9_pr%C3%A1vo" title="Finančné právo – Slovak" lang="sk" hreflang="sk" data-title="Finančné právo" data-language-autonym="Slovenčina" data-language-local-name="Slovak" class="interlanguage-link-target"><span>Slovenčina</span></a></li><li class="interlanguage-link interwiki-sr mw-list-item"><a href="https://sr.wikipedia.org/wiki/%D0%A4%D0%B8%D0%BD%D0%B0%D0%BD%D1%81%D0%B8%D1%98%D1%81%D0%BA%D0%BE_%D0%BF%D1%80%D0%B0%D0%B2%D0%BE" title="Финансијско право – Serbian" lang="sr" hreflang="sr" data-title="Финансијско право" data-language-autonym="Српски / srpski" data-language-local-name="Serbian" class="interlanguage-link-target"><span>Српски / srpski</span></a></li><li class="interlanguage-link interwiki-fi mw-list-item"><a href="https://fi.wikipedia.org/wiki/Finanssioikeus" title="Finanssioikeus – Finnish" lang="fi" hreflang="fi" data-title="Finanssioikeus" data-language-autonym="Suomi" data-language-local-name="Finnish" class="interlanguage-link-target"><span>Suomi</span></a></li><li class="interlanguage-link interwiki-tr mw-list-item"><a href="https://tr.wikipedia.org/wiki/Mali_hukuk" title="Mali hukuk – Turkish" lang="tr" hreflang="tr" data-title="Mali hukuk" data-language-autonym="Türkçe" data-language-local-name="Turkish" class="interlanguage-link-target"><span>Türkçe</span></a></li><li class="interlanguage-link interwiki-uk mw-list-item"><a href="https://uk.wikipedia.org/wiki/%D0%A4%D1%96%D0%BD%D0%B0%D0%BD%D1%81%D0%BE%D0%B2%D0%B5_%D0%BF%D1%80%D0%B0%D0%B2%D0%BE" title="Фінансове право – Ukrainian" lang="uk" hreflang="uk" data-title="Фінансове право" data-language-autonym="Українська" data-language-local-name="Ukrainian" class="interlanguage-link-target"><span>Українська</span></a></li><li class="interlanguage-link interwiki-zh-yue mw-list-item"><a href="https://zh-yue.wikipedia.org/wiki/%E9%87%91%E8%9E%8D%E6%B3%95" title="金融法 – Cantonese" lang="yue" hreflang="yue" data-title="金融法" data-language-autonym="粵語" data-language-local-name="Cantonese" class="interlanguage-link-target"><span>粵語</span></a></li><li class="interlanguage-link interwiki-zh mw-list-item"><a href="https://zh.wikipedia.org/wiki/%E9%87%91%E8%9E%8D%E6%B3%95%E5%AD%A6" title="金融法学 – Chinese" lang="zh" hreflang="zh" data-title="金融法学" data-language-autonym="中文" data-language-local-name="Chinese" class="interlanguage-link-target"><span>中文</span></a></li><li class="interlanguage-link interwiki-zgh mw-list-item"><a href="https://zgh.wikipedia.org/wiki/%E2%B4%B0%E2%B5%A3%E2%B5%94%E2%B4%BC_%E2%B4%B0%E2%B5%A5%E2%B5%95%E2%B4%BC%E2%B4%B0%E2%B5%8F" title="ⴰⵣⵔⴼ ⴰⵥⵕⴼⴰⵏ – Standard Moroccan Tamazight" lang="zgh" hreflang="zgh" data-title="ⴰⵣⵔⴼ ⴰⵥⵕⴼⴰⵏ" data-language-autonym="ⵜⴰⵎⴰⵣⵉⵖⵜ ⵜⴰⵏⴰⵡⴰⵢⵜ" data-language-local-name="Standard Moroccan Tamazight" class="interlanguage-link-target"><span>ⵜⴰⵎⴰⵣⵉⵖⵜ ⵜⴰⵏⴰⵡⴰⵢⵜ</span></a></li> </ul> <div class="after-portlet after-portlet-lang"><span class="wb-langlinks-edit wb-langlinks-link"><a href="https://www.wikidata.org/wiki/Special:EntityPage/Q1416588#sitelinks-wikipedia" title="Edit interlanguage links" class="wbc-editpage">Edit links</a></span></div> </div> </div> </div> </header> <div class="vector-page-toolbar"> <div 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style="padding-left:0.5em;padding-right:0.5em;"> <ul><li><a href="/wiki/Asset_(economics)" title="Asset (economics)">Asset (economics)</a></li> <li><a href="/wiki/Bond_market" title="Bond market">Bond</a></li> <li><a href="/wiki/Capital_appreciation" title="Capital appreciation">Asset growth</a></li> <li><a href="/wiki/Capital_asset" title="Capital asset">Capital asset</a></li> <li><a href="/wiki/Commodity_market" title="Commodity market">Commodity</a></li> <li><a href="/wiki/Derivatives_market" title="Derivatives market">Derivatives</a></li> <li><a href="/wiki/Domain_name_speculation" title="Domain name speculation">Domains</a></li> <li><a href="/wiki/Equity_(finance)" title="Equity (finance)">Equity</a></li> <li><a href="/wiki/Foreign_exchange_market" title="Foreign exchange market">Foreign exchange</a></li> <li><a href="/wiki/Money_market" title="Money market">Money</a></li> <li><span class="nowrap"><a href="/wiki/Over-the-counter_(finance)" title="Over-the-counter (finance)">Over-the-counter</a></span></li> <li><a href="/wiki/Private_equity" title="Private equity">Private equity</a></li> <li><a href="/wiki/Real_estate" title="Real estate">Real estate</a></li> <li><a href="/wiki/Spot_market" title="Spot market">Spot</a></li> <li><a href="/wiki/Stock_market" title="Stock market">Stock</a></li></ul></td> </tr><tr><th class="sidebar-heading" style="background:#e9e9ff;font-weight:normal;font-style:italic;"> <a href="/wiki/Financial_market_participants" title="Financial market participants">Participants</a></th></tr><tr><td class="sidebar-content hlist" style="padding-top:0.15em;"> <ul><li><a href="/wiki/Angel_investor" title="Angel investor">Angel investor</a></li> <li><a href="/wiki/Bull_(stock_market_speculator)" title="Bull (stock market speculator)">Bull (stock market speculator)</a></li> <li><a href="/wiki/Financial_planner" title="Financial planner">Financial planner</a></li> <li><a href="/wiki/Investor" title="Investor">Investor</a> <ul><li><a href="/wiki/Institutional_investor" title="Institutional investor">institutional</a></li></ul></li> <li><a href="/wiki/Retail" title="Retail">Retail</a></li> <li><a href="/wiki/Speculation" title="Speculation">Speculator</a></li></ul></td> </tr><tr><th class="sidebar-heading" style="background:#e9e9ff;font-weight:normal;font-style:italic;"> <a href="/wiki/Financial_centre" title="Financial centre">Locations</a></th></tr><tr><td class="sidebar-content hlist" style="padding-top:0.15em;"> <ul><li><a href="/wiki/Financial_centre" title="Financial centre">Financial centres</a></li> <li><a href="/wiki/Offshore_financial_centre" title="Offshore financial centre">Offshore financial centres</a></li> <li><a href="/wiki/Conduit_and_sink_OFCs" title="Conduit and sink OFCs">Conduit and sink OFCs</a></li></ul></td> </tr></tbody></table></div></div></td> </tr><tr><td class="sidebar-content"> <div class="sidebar-list mw-collapsible mw-collapsed"><div class="sidebar-list-title" style="background:#efefef;;color: var(--color-base)"><a href="/wiki/Financial_instrument" title="Financial instrument">Instruments</a></div><div class="sidebar-list-content mw-collapsible-content" style="padding-left:2.0em;padding-right:2.0em;"><div class="hlist"> <ul><li><a href="/wiki/Bond_(finance)" title="Bond (finance)">Bond</a></li> <li><a href="/wiki/Cash" title="Cash">Cash</a></li> <li><a href="/wiki/Collateralised_debt_obligation" class="mw-redirect" title="Collateralised debt obligation">Collateralised debt obligation</a></li> <li><a href="/wiki/Credit_default_swap" title="Credit default swap">Credit default swap</a></li> <li><a href="/wiki/Time_deposit" title="Time deposit">Time deposit</a> (<a href="/wiki/Certificate_of_deposit" title="Certificate of deposit">certificate of deposit</a>)</li> <li><a href="/wiki/Line_of_credit" title="Line of credit">Credit line</a></li> <li><a href="/wiki/Deposit_account" title="Deposit account">Deposit</a></li> <li><a href="/wiki/Derivative_(finance)" title="Derivative (finance)">Derivative</a></li> <li><a href="/wiki/Futures_contract" title="Futures contract">Futures contract</a></li> <li><a href="/wiki/Indemnity" title="Indemnity">Indemnity</a></li> <li><a href="/wiki/Insurance" title="Insurance">Insurance</a></li> <li><a href="/wiki/Letter_of_credit" title="Letter of credit">Letter of credit</a></li> <li><a href="/wiki/Loan" title="Loan">Loan</a></li> <li><a href="/wiki/Mortgage" title="Mortgage">Mortgage</a></li></ul> <div class="hlist"><ul><li><a href="/wiki/Option_(finance)" title="Option (finance)">Option</a> (<a href="/wiki/Call_option" title="Call option">call</a></li><li><a href="/wiki/Exotic_option" title="Exotic option">exotic</a></li><li><a href="/wiki/Put_option" title="Put option">put</a>)</li></ul></div> <ul><li><a href="/wiki/Performance_bonds" class="mw-redirect" title="Performance bonds">Performance bonds</a></li> <li><a href="/wiki/Repurchase_agreement" title="Repurchase agreement">Repurchase agreement</a></li> <li><a href="/wiki/Stock" title="Stock">Stock</a></li> <li><a href="/wiki/Security_(finance)" title="Security (finance)">Security</a></li> <li><a href="/wiki/Syndicated_loan" title="Syndicated loan">Syndicated loan</a></li> <li><a href="/wiki/Synthetic_CDO" title="Synthetic CDO">Synthetic CDO</a></li></ul> </div></div></div></td> </tr><tr><td class="sidebar-content"> <div class="sidebar-list mw-collapsible mw-collapsed"><div class="sidebar-list-title" style="background:#efefef;;color: var(--color-base)"><a href="/wiki/Corporate_finance" title="Corporate finance">Corporate</a></div><div class="sidebar-list-content mw-collapsible-content"><table class="sidebar nomobile nowraplinks" style="background-color: transparent; color: var( --color-base ); border-collapse:collapse; border-spacing:0px; border:none; width:100%; margin:0px; font-size:100%; clear:none; float:none"><tbody><tr><th class="sidebar-heading" style="background:#e9e9ff;font-weight:normal;font-style:italic;"> General</th></tr><tr><td class="sidebar-content hlist" style="padding-left:0.5em;padding-right:0.5em;"> <ul><li><a href="/wiki/Accounting" title="Accounting">Accounting</a></li> <li><a href="/wiki/Audit" title="Audit">Audit</a></li> <li><a href="/wiki/Capital_budgeting" title="Capital budgeting">Capital budgeting</a></li> <li><a href="/wiki/Capital_structure" title="Capital structure">Capital structure</a></li> <li><a href="/wiki/Corporate_finance" title="Corporate finance">Corporate finance</a></li> <li><a href="/wiki/Credit_rating_agency" title="Credit rating agency">Credit rating agency</a></li> <li><a href="/wiki/Enterprise_risk_management" title="Enterprise risk management">Enterprise risk management</a></li> <li><a href="/wiki/Enterprise_value" title="Enterprise value">Enterprise value</a></li> <li><a href="/wiki/Financial_risk_management" title="Financial risk management">Risk management</a></li> <li><a href="/wiki/Financial_statement" title="Financial statement">Financial statements</a></li></ul></td> </tr><tr><th class="sidebar-heading" style="background:#e9e9ff;font-weight:normal;font-style:italic;"> Transactions</th></tr><tr><td class="sidebar-content hlist" style="padding-left:0.5em;padding-right:0.5em;"> <ul><li><a href="/wiki/Leveraged_buyout" title="Leveraged buyout">Leveraged buyout</a></li> <li><a href="/wiki/Mergers_and_acquisitions" title="Mergers and acquisitions">Mergers and acquisitions</a></li> <li><a href="/wiki/Structured_finance" title="Structured finance">Structured finance</a></li> <li><a href="/wiki/Venture_capital" title="Venture capital">Venture capital</a></li></ul></td> </tr><tr><th class="sidebar-heading" style="background:#e9e9ff;font-weight:normal;font-style:italic;"> <a href="/wiki/Corporate_tax" title="Corporate tax">Taxation</a></th></tr><tr><td class="sidebar-content hlist" style="padding-left:0.5em;padding-right:0.5em;"> <ul><li><a href="/wiki/Base_erosion_and_profit_shifting" title="Base erosion and profit shifting">Base erosion and profit shifting</a> (BEPS)</li> <li><a href="/wiki/Corporate_tax_haven" class="mw-redirect" title="Corporate tax haven">Corporate tax haven</a></li> <li><a href="/wiki/Tax_inversion" title="Tax inversion">Tax inversion</a></li> <li><a href="/wiki/Tax_haven" title="Tax haven">Tax haven</a></li> <li><a href="/wiki/Transfer_pricing" title="Transfer pricing">Transfer pricing</a></li></ul></td> </tr></tbody></table></div></div></td> </tr><tr><td class="sidebar-content"> <div class="sidebar-list mw-collapsible mw-collapsed"><div class="sidebar-list-title" style="background:#efefef;;color: var(--color-base)"><a href="/wiki/Personal_finance" title="Personal finance">Personal</a></div><div class="sidebar-list-content mw-collapsible-content"> <ul><li><a href="/wiki/Credit_(finance)" class="mw-redirect" title="Credit (finance)">Credit</a> / <a href="/wiki/Consumer_debt" title="Consumer debt">Debt</a></li> <li><a href="/wiki/Employment_contract" title="Employment contract">Employment contract</a></li> <li><a href="/wiki/Financial_planner" title="Financial planner">Financial planning</a></li> <li><div class="hlist"><ul><li><a href="/wiki/Retirement" title="Retirement">Retirement</a></li><li><a href="/wiki/Student_loan" title="Student loan">Student loan</a></li></ul></div></li></ul></div></div></td> </tr><tr><td class="sidebar-content"> <div class="sidebar-list mw-collapsible mw-collapsed"><div class="sidebar-list-title" style="background:#efefef;;color: var(--color-base)"><a href="/wiki/Public_finance" title="Public finance">Public</a></div><div class="sidebar-list-content mw-collapsible-content"><table class="sidebar nomobile nowraplinks" style="background-color: transparent; color: var( --color-base ); border-collapse:collapse; border-spacing:0px; border:none; width:100%; margin:0px; font-size:100%; clear:none; float:none"><tbody><tr><th class="sidebar-heading" style="background:#e9e9ff;font-weight:normal;font-style:italic;;display:block;margin-top:0.15em;"> <a href="/wiki/Government_spending" title="Government spending">Government spending</a></th></tr><tr><td class="sidebar-content" style="padding-top:0.15em;"> <ul><li><a href="/wiki/Government_final_consumption_expenditure" title="Government final consumption expenditure">Final consumption expenditure</a></li> <li><div class="hlist"><ul><li><a href="/wiki/Government_operations" class="mw-redirect" title="Government operations">Operations</a></li><li><a href="/wiki/Redistribution_of_income_and_wealth" title="Redistribution of income and wealth">Redistribution</a></li></ul></div></li> <li><a href="/wiki/Transfer_payment" title="Transfer payment">Transfer payment</a></li></ul></td> </tr><tr><th class="sidebar-heading" style="background:#e9e9ff;font-weight:normal;font-style:italic;"> <a href="/wiki/Government_revenue" title="Government revenue">Government revenue</a></th></tr><tr><td class="sidebar-content" style="padding-top:0.15em;;padding-left:0.5em;padding-right:0.5em;"> <ul><li><div class="hlist"><ul><li><a href="/wiki/Tax" title="Tax">Taxation</a></li><li><a href="/wiki/Deficit_spending" title="Deficit spending">Deficit spending</a></li></ul></div></li> <li><div class="hlist"><ul><li><a href="/wiki/Government_budget" title="Government budget">Budget</a> (<a href="/wiki/Government_budget_balance" title="Government budget balance">balance</a>)</li><li><a href="/wiki/Government_debt" title="Government debt">Debt</a></li></ul></div></li> <li><a href="/wiki/Non-tax_revenue" title="Non-tax revenue">Non-tax revenue</a></li> <li><a href="/wiki/Warrant_of_payment" title="Warrant of payment">Warrant of payment</a></li></ul></td> </tr></tbody></table></div></div></td> </tr><tr><td class="sidebar-content"> <div class="sidebar-list mw-collapsible mw-collapsed"><div class="sidebar-list-title" style="background:#efefef;;color: var(--color-base)"><a href="/wiki/Bank" title="Bank">Banking</a></div><div class="sidebar-list-content mw-collapsible-content"><div class="hlist"> <ul><li><a href="/wiki/Central_bank" title="Central bank">Central bank</a></li> <li><a href="/wiki/Deposit_account" title="Deposit account">Deposit account</a></li> <li><a href="/wiki/Fractional-reserve_banking" title="Fractional-reserve banking">Fractional-reserve</a></li> <li><a href="/wiki/Full-reserve_banking" title="Full-reserve banking">Full-reserve</a></li> <li><a href="/wiki/Investment_banking" title="Investment banking">Investment banking</a></li> <li><a href="/wiki/Loan" title="Loan">Loan</a></li> <li><a href="/wiki/Money_supply" title="Money supply">Money supply</a></li></ul> </div> <ul><li><a href="/wiki/Lists_of_banks" title="Lists of banks">Lists of banks</a></li></ul> <table class="sidebar nomobile nowraplinks" style="background-color: transparent; color: var( --color-base ); border-collapse:collapse; border-spacing:0px; border:none; width:100%; margin:0px; font-size:100%; clear:none; float:none"><tbody><tr><th class="sidebar-heading" style="background:#e9e9ff;font-weight:normal;font-style:italic;;display:block;margin-top:0.15em;"> <a href="/wiki/Bank_regulation" class="mw-redirect" title="Bank regulation">Bank regulation</a></th></tr><tr><td class="sidebar-content" style="padding-top:0.15em;"> <ul><li><a href="/wiki/Banking_license" title="Banking license">Banking license</a></li> <li><a href="/wiki/Basel_Accords" title="Basel Accords">Basel Accords</a></li> <li><a href="/wiki/Bank_for_International_Settlements" title="Bank for International Settlements">Bank for International Settlements</a></li> <li><a href="/wiki/Financial_Stability_Board" title="Financial Stability Board">Financial Stability Board</a></li> <li><a href="/wiki/Deposit_insurance" title="Deposit insurance">Deposit insurance</a></li> <li><a href="/wiki/Separation_of_investment_and_retail_banking" title="Separation of investment and retail banking">Separation of investment and retail banking</a></li></ul></td> </tr></tbody></table></div></div></td> </tr><tr><td class="sidebar-content"> <div class="sidebar-list mw-collapsible mw-collapsed"><div class="sidebar-list-title" style="background:#efefef;;color: var(--color-base)"><a href="/wiki/Financial_regulation" title="Financial regulation">Regulation</a> <b>·</b> <a class="mw-selflink selflink">Financial law</a></div><div class="sidebar-list-content mw-collapsible-content"><table class="sidebar nomobile nowraplinks" style="background-color: transparent; color: var( --color-base ); border-collapse:collapse; border-spacing:0px; border:none; width:100%; margin:0px; font-size:100%; clear:none; float:none"><tbody><tr><td class="sidebar-content"> <ul><li><a href="/wiki/International_Financial_Reporting_Standards" title="International Financial Reporting Standards">International Financial Reporting Standards</a></li> <li><a href="/wiki/ISO_31000" title="ISO 31000">ISO 31000</a></li> <li><a href="/wiki/Professional_certification_in_financial_services" title="Professional certification in financial services">Professional certification</a></li> <li><a href="/wiki/Fund_governance" title="Fund governance">Fund governance</a></li></ul></td> </tr></tbody></table></div></div></td> </tr><tr><td class="sidebar-content"> <div class="sidebar-list mw-collapsible mw-collapsed"><div class="sidebar-list-title" style="background:#efefef;;color: var(--color-base)"><a href="/wiki/Economic_history" title="Economic history">Economic history</a></div><div class="sidebar-list-content mw-collapsible-content"> <ul><li><a href="/wiki/History_of_private_equity_and_venture_capital" title="History of private equity and venture capital">Private equity and venture capital</a></li> <li><a href="/wiki/Recession" title="Recession">Recession</a></li> <li><a href="/wiki/Stock_market_bubble" title="Stock market bubble">Stock market bubble</a></li> <li><a href="/wiki/Stock_market_crash" title="Stock market crash">Stock market crash</a></li> <li><a href="/wiki/Accounting_scandals" title="Accounting scandals">Accounting scandals</a></li></ul></div></div></td> </tr><tr><td class="sidebar-below"> <ul><li><a href="/wiki/Outline_of_finance" title="Outline of finance">Outline</a></li> <li><span class="nowrap"><span class="noviewer" typeof="mw:File"><a href="/wiki/File:Emblem-money.svg" class="mw-file-description"><img alt="icon" src="//upload.wikimedia.org/wikipedia/commons/thumb/f/f3/Emblem-money.svg/16px-Emblem-money.svg.png" decoding="async" width="16" height="16" class="mw-file-element" srcset="//upload.wikimedia.org/wikipedia/commons/thumb/f/f3/Emblem-money.svg/24px-Emblem-money.svg.png 1.5x, //upload.wikimedia.org/wikipedia/commons/thumb/f/f3/Emblem-money.svg/32px-Emblem-money.svg.png 2x" data-file-width="48" data-file-height="48" /></a></span> </span><a href="/wiki/Portal:Business_and_Economics" class="mw-redirect" title="Portal:Business and Economics">Business and Economics portal</a></li> <li><span class="nowrap"><span class="noviewer" typeof="mw:File"><span><img alt="icon" src="//upload.wikimedia.org/wikipedia/commons/thumb/5/55/Bills_and_coins.svg/16px-Bills_and_coins.svg.png" decoding="async" width="16" height="8" class="mw-file-element" srcset="//upload.wikimedia.org/wikipedia/commons/thumb/5/55/Bills_and_coins.svg/24px-Bills_and_coins.svg.png 1.5x, //upload.wikimedia.org/wikipedia/commons/thumb/5/55/Bills_and_coins.svg/32px-Bills_and_coins.svg.png 2x" data-file-width="960" data-file-height="465" /></span></span> </span><a href="/wiki/Portal:Money" title="Portal:Money">Money portal</a></li></ul></td></tr><tr><td class="sidebar-navbar"><link rel="mw-deduplicated-inline-style" href="mw-data:TemplateStyles:r1129693374"><style data-mw-deduplicate="TemplateStyles:r1239400231">.mw-parser-output .navbar{display:inline;font-size:88%;font-weight:normal}.mw-parser-output .navbar-collapse{float:left;text-align:left}.mw-parser-output .navbar-boxtext{word-spacing:0}.mw-parser-output .navbar ul{display:inline-block;white-space:nowrap;line-height:inherit}.mw-parser-output .navbar-brackets::before{margin-right:-0.125em;content:"[ "}.mw-parser-output .navbar-brackets::after{margin-left:-0.125em;content:" ]"}.mw-parser-output .navbar li{word-spacing:-0.125em}.mw-parser-output .navbar a>span,.mw-parser-output .navbar a>abbr{text-decoration:inherit}.mw-parser-output .navbar-mini abbr{font-variant:small-caps;border-bottom:none;text-decoration:none;cursor:inherit}.mw-parser-output .navbar-ct-full{font-size:114%;margin:0 7em}.mw-parser-output .navbar-ct-mini{font-size:114%;margin:0 4em}html.skin-theme-clientpref-night .mw-parser-output .navbar li a abbr{color:var(--color-base)!important}@media(prefers-color-scheme:dark){html.skin-theme-clientpref-os .mw-parser-output .navbar li a abbr{color:var(--color-base)!important}}@media print{.mw-parser-output .navbar{display:none!important}}</style><div class="navbar plainlinks hlist navbar-mini"><ul><li class="nv-view"><a href="/wiki/Template:Finance_sidebar" title="Template:Finance sidebar"><abbr title="View this template">v</abbr></a></li><li class="nv-talk"><a href="/wiki/Template_talk:Finance_sidebar" title="Template talk:Finance sidebar"><abbr title="Discuss this template">t</abbr></a></li><li class="nv-edit"><a href="/wiki/Special:EditPage/Template:Finance_sidebar" title="Special:EditPage/Template:Finance sidebar"><abbr title="Edit this template">e</abbr></a></li></ul></div></td></tr></tbody></table> <style data-mw-deduplicate="TemplateStyles:r1236090951">.mw-parser-output .hatnote{font-style:italic}.mw-parser-output div.hatnote{padding-left:1.6em;margin-bottom:0.5em}.mw-parser-output .hatnote i{font-style:normal}.mw-parser-output .hatnote+link+.hatnote{margin-top:-0.5em}@media print{body.ns-0 .mw-parser-output .hatnote{display:none!important}}</style><div role="note" class="hatnote navigation-not-searchable">For the regulation of the financial markets, see <a href="/wiki/Financial_regulation" title="Financial regulation">Financial regulation</a>.</div> <p><b>Financial law</b> is the law and regulation of the commercial banking, capital markets, insurance, derivatives and investment management sectors.<sup id="cite_ref-1" class="reference"><a href="#cite_note-1"><span class="cite-bracket">[</span>1<span class="cite-bracket">]</span></a></sup> Understanding financial law is crucial to appreciating the creation and formation of <a href="/wiki/Banking_regulation" class="mw-redirect" title="Banking regulation">banking</a> and <a href="/wiki/Financial_regulation" title="Financial regulation">financial</a> regulation, as well as the legal framework for <a href="/wiki/Finance" title="Finance">finance</a> generally. Financial law forms a substantial portion of <a href="/wiki/Commercial_law" title="Commercial law">commercial law</a>, and notably a substantial proportion of the global economy, and legal billables are dependent on sound and clear legal policy pertaining to financial transactions.<sup id="cite_ref-2" class="reference"><a href="#cite_note-2"><span class="cite-bracket">[</span>2<span class="cite-bracket">]</span></a></sup><sup id="cite_ref-UK_Legal_Services_2020_3-0" class="reference"><a href="#cite_note-UK_Legal_Services_2020-3"><span class="cite-bracket">[</span>3<span class="cite-bracket">]</span></a></sup><sup id="cite_ref-4" class="reference"><a href="#cite_note-4"><span class="cite-bracket">[</span>4<span class="cite-bracket">]</span></a></sup> Therefore financial law as the law for financial industries involves public and private law matters.<sup id="cite_ref-5" class="reference"><a href="#cite_note-5"><span class="cite-bracket">[</span>5<span class="cite-bracket">]</span></a></sup> Understanding the legal implications of transactions and structures such as an <a href="/wiki/Indemnity" title="Indemnity">indemnity</a>, or <a href="/wiki/Overdraft" title="Overdraft">overdraft</a> is crucial to appreciating their effect in financial transactions. This is the core of financial law. Thus, financial law draws a narrower distinction than commercial or corporate law by focusing primarily on financial transactions, the financial market, and its participants; for example, the sale of <a href="/wiki/Goods" title="Goods">goods</a> may be part of commercial law but is not financial law. Financial law may be understood as being formed of three overarching methods, or <i>pillars</i> of law formation and categorised into five <i>transaction silos</i> which form the various financial positions prevalent in finance. </p><p><a href="/wiki/Financial_regulation" title="Financial regulation">Financial regulation</a> can be distinguished from financial law in that regulation sets out the guidelines, framework and participatory rules of the financial markets, their stability and protection of consumers, whereas financial law describes the law pertaining to all aspects of finance, including the law which controls party behaviour in which financial regulation forms an aspect of that law.<sup id="cite_ref-6" class="reference"><a href="#cite_note-6"><span class="cite-bracket">[</span>6<span class="cite-bracket">]</span></a></sup> </p><p>Financial law is understood as consisting of three pillars of law formation, these serve as the operating mechanisms on which the law interacts with the financial system and financial transactions generally. These three components, being market practices, case law, and regulation; work collectively to set a framework upon which financial markets operate. Whilst regulation experienced a resurgence following the <a href="/wiki/Financial_crisis_of_2007%E2%80%932008" class="mw-redirect" title="Financial crisis of 2007–2008">financial crisis of 2007–2008</a>, the role of case law and market practices cannot be understated. Further, whilst regulation is often formulated through legislative practices; market norms and case law serve as primary architects to the current financial system and provide the pillars upon which the markets depend. It is crucial for strong markets to be capable of utilising both self-regulation and conventions as well as commercially mined case law. This must be in addition to regulation. An improper balance of the three pillars is likely to result in instability and rigidity within the market contributing to <a href="/wiki/Illiquidity" class="mw-redirect" title="Illiquidity">illiquidity</a>.<sup id="cite_ref-auto_7-0" class="reference"><a href="#cite_note-auto-7"><span class="cite-bracket">[</span>7<span class="cite-bracket">]</span></a></sup> For example, the <i>soft law</i> of the <i>Potts QC Opinion</i> in 1997<sup id="cite_ref-8" class="reference"><a href="#cite_note-8"><span class="cite-bracket">[</span>8<span class="cite-bracket">]</span></a></sup> reshaped the derivatives market and helped expand the prevalence of derivatives. These three pillars are underpinned by several legal concepts upon which financial law depends, notably, <a href="/wiki/Legal_personality" class="mw-redirect" title="Legal personality">legal personality</a>, <a href="/wiki/Set-off_(law)" title="Set-off (law)">set-off</a>, and <a href="/wiki/Payment" title="Payment">payment</a> which allows legal scholars to categorise financial instruments and financial market structures into five legal <a href="/wiki/Position_(finance)" title="Position (finance)">silos</a>; those being (1) simple positions, (2) funded positions, (3) asset-backed positions, (4) net positions, and (5) combined positions. These are used by academic Joanna Benjamin to highlight the distinctions between various groupings of transaction structures based on common underpinnings of treatment under the law.<sup id="cite_ref-auto_7-1" class="reference"><a href="#cite_note-auto-7"><span class="cite-bracket">[</span>7<span class="cite-bracket">]</span></a></sup> The five position types are used as a framework to understand the legal treatment and corresponding constraints of instruments used in finance (such as, for example, a <a href="/wiki/Guarantee" title="Guarantee">guarantee</a> or <a href="/wiki/Asset-backed_security" title="Asset-backed security">asset-backed security</a>). </p> <meta property="mw:PageProp/toc" /> <div class="mw-heading mw-heading2"><h2 id="Three_pillars_of_financial_law_formation">Three pillars of financial law formation</h2><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=Financial_law&action=edit&section=1" title="Edit section: Three pillars of financial law formation"><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <p>Three different (and indeed inconsistent) regulatory projects exist which form the law within financial law. These are based on three different views of the proper nature of financial market relationships.<sup id="cite_ref-auto_7-2" class="reference"><a href="#cite_note-auto-7"><span class="cite-bracket">[</span>7<span class="cite-bracket">]</span></a></sup> </p> <div class="mw-heading mw-heading3"><h3 id="Market_practices">Market practices</h3><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=Financial_law&action=edit&section=2" title="Edit section: Market practices"><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <p>The market practices in the financial field constitute a core aspect of the source of law of the financial markets, primarily within <a href="/wiki/England_%26_Wales" class="mw-redirect" title="England & Wales">England & Wales</a>.<sup id="cite_ref-9" class="reference"><a href="#cite_note-9"><span class="cite-bracket">[</span>9<span class="cite-bracket">]</span></a></sup> The actions and norms of parties in creating standard practices creates a fundamental aspect of how those parties self-regulate. These market practices create internal norms which parties abide by, correspondingly influencing legal rules which result when the market norms are either broken or are disputed through formal, court, judgments.<sup id="cite_ref-10" class="reference"><a href="#cite_note-10"><span class="cite-bracket">[</span>10<span class="cite-bracket">]</span></a></sup> </p><p>The principle role is to form <i>soft-law</i>; as a source of rules of conduct which in principle have no legally binding force but have practical effects.<sup id="cite_ref-11" class="reference"><a href="#cite_note-11"><span class="cite-bracket">[</span>11<span class="cite-bracket">]</span></a></sup> This has created standard form of contracts for various financial trade associations such as <a href="/wiki/Loan_Market_Association" title="Loan Market Association">Loan Market Association</a>, which seeks to set guidance, codes of practice, and legal opinions. It is these norms, particularly those provided by Financial Market Law Committees, and City of London Law Societies which the financial market operates and therefore the courts are often quick to uphold their validity. Oftentimes "soft law" defines the nature and incidents of the relationships that participants of particular types of transactions expect.<sup id="cite_ref-12" class="reference"><a href="#cite_note-12"><span class="cite-bracket">[</span>12<span class="cite-bracket">]</span></a></sup> </p><p>The implementation and value of <i>soft law</i> within the system, is particularly notable in its relationship with globalisation, consumer rights, and regulation. The <a href="/wiki/Financial_Conduct_Authority" title="Financial Conduct Authority">FCA</a> plays a central role in regulating the <a href="/wiki/Financial_markets" class="mw-redirect" title="Financial markets">financial markets</a> but soft law, voluntary or practice created legal schemes play a vital role. Soft law can fill market uncertainties what are produced by common law schemes. Obvious risk that that participants become lulled into believing statements of soft law is the law. However, the perception that an opinion constitutes <i>ipso facto</i> a clear and widely held opinion is wrong.<sup id="cite_ref-:0_13-0" class="reference"><a href="#cite_note-:0-13"><span class="cite-bracket">[</span>13<span class="cite-bracket">]</span></a></sup> For example, the consumer relationship in the case of Office of <i>Fair Trading v Abbey National</i> [2009] UKSC 6 where the bank was fined by the FSA for failing to handle complaints set out in <i>soft law</i> principle practices on broadly worded business principles which state that the bank must pay due regard to the interests of its customers and treat them fairly.<sup id="cite_ref-:0_13-1" class="reference"><a href="#cite_note-:0-13"><span class="cite-bracket">[</span>13<span class="cite-bracket">]</span></a></sup> Oftentimes the self-regulation of <i>soft law</i> can be problematic for consumer protection policies. </p><p>Another example of the expansiveness of soft law in the financial market is the explosion of <a href="/wiki/Credit_Derivatives" class="mw-redirect" title="Credit Derivatives">Credit Derivatives</a> in London, which has flourished on the back of the characteristically robust opinion of Potts for <a href="/wiki/Allen_%26_Overy" title="Allen & Overy">Allen & Overy</a> regarding the <a href="/wiki/International_Swaps_and_Derivatives_Association" title="International Swaps and Derivatives Association">ISDA</a> Master Agreement in 1990 which helped the industry separate itself from current market restrictions. A the time, it was unclear whether Credit Derivatives were to be categorised as insurance contracts under English legislation of the Insurance Companies Act 1982. ISDA was firm in rejecting a statutory definition of insurance, stating that </p> <style data-mw-deduplicate="TemplateStyles:r1244412712">.mw-parser-output .templatequote{overflow:hidden;margin:1em 0;padding:0 32px}.mw-parser-output .templatequotecite{line-height:1.5em;text-align:left;margin-top:0}@media(min-width:500px){.mw-parser-output .templatequotecite{padding-left:1.6em}}</style><blockquote class="templatequote"><p>In practice market participants have had few concerns as to the impacts of boundary issues between CD's and contracts of insurance.<sup id="cite_ref-14" class="reference"><a href="#cite_note-14"><span class="cite-bracket">[</span>14<span class="cite-bracket">]</span></a></sup></p></blockquote><p> This was crucial as Insurance companies were restricted from participating in other financial market activities and a licence needed to be granted to participate in the financial market. As a result of the Potts Opinion, credit derivatives were categorised as outside of insurance contracts, which allowed them to expand without the limitations set in place by insurance legislation. </p><p>Soft law has practical effects in that it is liable in many cases to be turned into "hard law", but with verified and experienced practice evidence.<sup id="cite_ref-15" class="reference"><a href="#cite_note-15"><span class="cite-bracket">[</span>15<span class="cite-bracket">]</span></a></sup> In the case <i>Vanheath Turner (1622)</i> the court remarked that custom of merchants is part of the common law of the United Kingdom. This highlights a long history of incorporating and accounting for the <a href="/wiki/Lex_mercatoria" title="Lex mercatoria">lex mercatoria</a> into the English law in order to facilitate financial markets. Law merchant had been so absorbed by the 18th century that the Bills of Exchange Act 1882 could provide common law rules and merchant law in tandem. We might consider <i>Tidal Energy Ltd v Bank of Scotland</i>, where Lord dyson held that "a many who employee a banker is bound by the usages of bankers"<sup id="cite_ref-16" class="reference"><a href="#cite_note-16"><span class="cite-bracket">[</span>16<span class="cite-bracket">]</span></a></sup> meaning that if a sort code and account number was correct, it did not matter if the name did not match. </p><p>There are risks on over-reliance on soft law sources, however.<sup id="cite_ref-17" class="reference"><a href="#cite_note-17"><span class="cite-bracket">[</span>17<span class="cite-bracket">]</span></a></sup> English law makes it difficult to create a type of security and reliance on rules may result in established views which reinforce errors. This could result in unacceptable security even if legally valid. </p> <div class="mw-heading mw-heading3"><h3 id="Case_law">Case law</h3><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=Financial_law&action=edit&section=3" title="Edit section: Case law"><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <link rel="mw-deduplicated-inline-style" href="mw-data:TemplateStyles:r1236090951"><div role="note" class="hatnote navigation-not-searchable">Further information: <a href="/wiki/Case_law" title="Case law">case law</a></div> <p>The second category which financial law draws most of its pragmatism with regard to the standards of the markets originates in litigation. Often, courts seek to reverse engineer matters to make commercially beneficial outcomes and so case law operates in a similar manner to market practice in producing efficient results.<sup id="cite_ref-18" class="reference"><a href="#cite_note-18"><span class="cite-bracket">[</span>18<span class="cite-bracket">]</span></a></sup> </p><p> There are two exceptions, attempting to limit the expectations to reasonable commercial men and uphold the freedom of contract. Autonomy is at the heart of commercial law and there is the strong case for autonomy in complex financial instruments.<sup id="cite_ref-19" class="reference"><a href="#cite_note-19"><span class="cite-bracket">[</span>19<span class="cite-bracket">]</span></a></sup> <a href="/wiki/Re_Bank_of_Credit_and_Commerce_International_SA_(No_8)" title="Re Bank of Credit and Commerce International SA (No 8)">Re Bank of Credit and Commerce International SA (No 8)</a> highlights the striking effect a commercially beneficial practice can have on financial law. Lord Hoffman upheld the validity of a <a href="/wiki/Equitable_charge" class="mw-redirect" title="Equitable charge">security charge</a> over a <i><a href="/wiki/Chose_in_action" class="mw-redirect" title="Chose in action">chose in action</a></i> the bank held which it owed to a client. Despite the formidable conceptual problems in allowing a bank to place a charge over a debt the bank itself owed to another party, the courts have been driven to facilitate market practices as best as possible. Thus, they are careful to declare practices as conceptually impossible. In <i>BCCI</i>, the court held that a charge was no more than labels to self-consistent rules of law, an opinion shared Lord Goff in <i>Clough Mill v Martin</i> where he wrote <link rel="mw-deduplicated-inline-style" href="mw-data:TemplateStyles:r1244412712"></p><blockquote class="templatequote"><p>concepts such as bailment and fiduciary duty must not be allowed to be our masters, but tools of the trade fashioning to aspects of life</p><div class="templatequotecite">— <cite>Clough Mill v Martin [1985] 1 WLR 111, Lord Goff</cite></div></blockquote> <p>Unfortunately, case coverage is unsystematic. Wholesale and international finance is patchy as a result of a preference to settle disputes through arbitration rather than through the courts.<sup id="cite_ref-20" class="reference"><a href="#cite_note-20"><span class="cite-bracket">[</span>20<span class="cite-bracket">]</span></a></sup> This has the potential to be detrimental to advancing the law regulating finance. Market participants generally prefer to settle disputes than litigate, this places a greater level of importance onto the "soft law" of market practices.<sup id="cite_ref-:1_21-0" class="reference"><a href="#cite_note-:1-21"><span class="cite-bracket">[</span>21<span class="cite-bracket">]</span></a></sup> However, in face of disaster, litigation is essential, especially surrounding major insolvencies, market collapse, wars, and frauds.<sup id="cite_ref-:1_21-1" class="reference"><a href="#cite_note-:1-21"><span class="cite-bracket">[</span>21<span class="cite-bracket">]</span></a></sup> The collapse of <a href="/wiki/Lehman_Brothers" title="Lehman Brothers">Lehman Brothers</a> provides a good example, with 50 judgments from the <a href="/wiki/English_Court_of_Appeal" class="mw-redirect" title="English Court of Appeal">English Court of Appeal</a> and 5 from the <a href="/wiki/Supreme_Court_of_the_United_Kingdom" title="Supreme Court of the United Kingdom">Supreme Court of the United Kingdom</a>. Despite these problems, there is a new breed of litigious lenders, primarily <a href="/wiki/Hedge_funds" class="mw-redirect" title="Hedge funds">hedge funds</a>, which has helped propel the pragmatic nature of financial case law past the 2008 crisis.<sup id="cite_ref-22" class="reference"><a href="#cite_note-22"><span class="cite-bracket">[</span>22<span class="cite-bracket">]</span></a></sup> </p> <div class="mw-heading mw-heading3"><h3 id="Regulation_and_legislation">Regulation and legislation</h3><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=Financial_law&action=edit&section=4" title="Edit section: Regulation and legislation"><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <link rel="mw-deduplicated-inline-style" href="mw-data:TemplateStyles:r1236090951"><div role="note" class="hatnote navigation-not-searchable">Main article: <a href="/wiki/Financial_Regulation" class="mw-redirect" title="Financial Regulation">Financial Regulation</a></div> <link rel="mw-deduplicated-inline-style" href="mw-data:TemplateStyles:r1236090951"><div role="note" class="hatnote navigation-not-searchable">Further information: <a href="/wiki/Bank_regulation" class="mw-redirect" title="Bank regulation">Bank regulation</a></div> <p>The third category of law formation within the financial markets are those deriving from national and international regulatory and legislative regimes, which operate to regulate the practice of financial services. Three regulatory lenses ought to be highlighted namely arm's length, fiduciary, and consumerist approaches to financial relationships. </p><p>In the EU these might be exampled by MiFiD II, payment services directive, Securities settlement regulations and others which have resulted from the financial crisis or regulate financial trade.<sup id="cite_ref-23" class="reference"><a href="#cite_note-23"><span class="cite-bracket">[</span>23<span class="cite-bracket">]</span></a></sup> Regulatory control by the Financial Conduct Authority and Office of Fair trading set out clear rules replacing extra-statutory codes of conduct and has seen recent resurgence following the <a href="/wiki/2008_financial_crisis" class="mw-redirect" title="2008 financial crisis">2008 financial crisis</a>. The regulatory policies have not all been rectified in regard to how they the new rules will be coherent with current market practices. We may consider <i>In Re Lehman Brothers</i> [2012] EWHC(Extended liens case) where Briggs J struggled to determine the legislative intent of the Financial Collateral Directive. </p> <div class="mw-heading mw-heading4"><h4 id="Financial_collateral_regulations">Financial collateral regulations</h4><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=Financial_law&action=edit&section=5" title="Edit section: Financial collateral regulations"><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <p>In addition to national and cross-national regulations on finance, additional rules are put into place in order to stabilise the financial markets by reinforcing the utility of <a href="/wiki/Collateral_(finance)" title="Collateral (finance)">collateral</a>. In Europe, two regimes of collateral carve-outs exist; the Financial Collateral Directive, and the Financial Collateral Arrangement (No 2) Regulations 2003. The <a href="/wiki/EU" class="mw-redirect" title="EU">EU</a>'s development of the Financial Collateral Directive is curious if we view it through the lens of <i>only</i> a regulatory matter. It is clear that the law here developed through market practice <i>and</i> private law statutory reform. The EU has played a substantial role in this field to induce and encourage the ease of transfer & realisation of assets and liquidity within markets. The provisions are well adapted to short term transactions such as repos or derivatives. </p><p>Further harmonisation rules pertaining to commercial <a href="/wiki/Conflict_of_laws" title="Conflict of laws">conflict of laws</a> matters were clarified. The additional <a href="/wiki/Geneva_Securities_Convention" title="Geneva Securities Convention">Geneva Securities Convention</a> set by <a href="/wiki/UNIDROIT" title="UNIDROIT">UNIDROIT</a> provides a basic framework for minimum harmonised provisions governing rights conferred by the credit of securities to an account with an intermediary. However, this international project has as of late been ineffective with only Bangladesh signing. </p> <div class="mw-heading mw-heading2"><h2 id="Legal_concepts_prevalent_in_financial_law">Legal concepts prevalent in financial law</h2><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=Financial_law&action=edit&section=6" title="Edit section: Legal concepts prevalent in financial law"><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <link rel="mw-deduplicated-inline-style" href="mw-data:TemplateStyles:r1236090951"><div role="note" class="hatnote navigation-not-searchable">Main article: <a href="/wiki/Credit_risk" title="Credit risk">Credit risk</a></div> <link rel="mw-deduplicated-inline-style" href="mw-data:TemplateStyles:r1236090951"><div role="note" class="hatnote navigation-not-searchable">Further information: <a href="/wiki/Financial_risk" title="Financial risk">Financial risk</a></div> <p>Several legal concepts underpin the law of finance. Of these, perhaps the most central concept is that of <a href="/wiki/Legal_personality" class="mw-redirect" title="Legal personality">legal personality</a>, the idea that the law can create non-natural persons is one of the most important common myths and among the most ingenious inventions for financial practice because it facilitates the ability to limit risk by creating legal persons which are separate. Other legal concepts, such as set-off and payment are crucial to preventing systemic risk by lessening the level of gross exposure of <a href="/wiki/Credit_risk" title="Credit risk">credit risk</a> a financial participant might be exposed to on any given transaction. This is often mitigated through the use of <a href="/wiki/Collateral_(finance)" title="Collateral (finance)">collateral</a>. If financial law is centrally concerned with the law pertaining to financial instruments or transactions, then it can be said that the legal effect of those transactions is to allocate <a href="/wiki/Financial_risk" title="Financial risk">risk</a>. </p> <div class="mw-heading mw-heading3"><h3 id="Limited_liability_and_legal_personality">Limited liability and legal personality</h3><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=Financial_law&action=edit&section=7" title="Edit section: Limited liability and legal personality"><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <link rel="mw-deduplicated-inline-style" href="mw-data:TemplateStyles:r1236090951"><div role="note" class="hatnote navigation-not-searchable">Main article: <a href="/wiki/Legal_personality" class="mw-redirect" title="Legal personality">legal personality</a></div> <link rel="mw-deduplicated-inline-style" href="mw-data:TemplateStyles:r1236090951"><div role="note" class="hatnote navigation-not-searchable">Further information: <a href="/wiki/Limited_liability" title="Limited liability">Limited liability</a></div><p> A limited liability company is an artificial creation of <a href="/wiki/Legislature" title="Legislature">legislature</a> which operates to limit the level of credit risk and exposure a person, natural or legal, will participate within. <a href="/wiki/Lord_Sumption" class="mw-redirect" title="Lord Sumption">Lord Sumption</a> summarised the position by stating <link rel="mw-deduplicated-inline-style" href="mw-data:TemplateStyles:r1244412712"></p><blockquote class="templatequote"><p>Subject to very limited exceptions, most of which are statutory, a company is a legal entity distinct from its shareholders. It has rights and liabilities of its own which are distinct from those of its shareholders. Its property is its own, and not that of its shareholders [...] [T]hese principles appl[y] as much to a company that [i]s wholly owned and controlled by one man as to any other company<sup id="cite_ref-auto2_24-0" class="reference"><a href="#cite_note-auto2-24"><span class="cite-bracket">[</span>24<span class="cite-bracket">]</span></a></sup></p></blockquote><p> For financial markets, the allocation of <a href="/wiki/Financial_risk" title="Financial risk">financial risk</a> through separate <a href="/wiki/Legal_personality" class="mw-redirect" title="Legal personality">legal personality</a> allows for parties to participate in financial contracts and transfer <a href="/wiki/Credit_risk" title="Credit risk">credit risk</a> between parties. The ambition of measuring the likelihood of future loss, that is of identifying <a href="/wiki/Risk" title="Risk">risk</a>, is a central part of the role legal liability plays in <a href="/wiki/Economics" title="Economics">economics</a>. Risk is a crucial part of financial market sectors: <link rel="mw-deduplicated-inline-style" href="mw-data:TemplateStyles:r1244412712"></p><blockquote class="templatequote"><p>[I]t is not just legally but economically fundamental, since limited companies have been the principal unit of commercial life for more than a century. Their separate personality and property are the basis on which third parties are entitled to deal with them and commonly do deal with them.<sup id="cite_ref-auto2_24-1" class="reference"><a href="#cite_note-auto2-24"><span class="cite-bracket">[</span>24<span class="cite-bracket">]</span></a></sup></p></blockquote> <div class="mw-heading mw-heading3"><h3 id="Financial_collateral">Financial collateral</h3><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=Financial_law&action=edit&section=8" title="Edit section: Financial collateral"><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <p>Financial markets have developed particular methods for taking security in relation to transactions, this is because collateral operates as a central method for parties to mitigate the <a href="/wiki/Credit_risk" title="Credit risk">credit risk</a> of transacting with others. Derivatives frequently utilise collateral to secure transactions. Large notional exposures can be reduced to smaller, single net amounts. Often, these are designed to mitigate the credit risk one party is exposed to. Two forms of financial collateralization have been developed from the <i>Lex Mercatoria</i>; </p> <ol><li><a href="/wiki/Title_(property)" title="Title (property)">Title transfer</a>; or</li> <li>By granting a <a href="/wiki/Security_interest" title="Security interest">security interest</a></li></ol> <p>A security interest may be granted with a right of use, conferring disposal powers. There is an increasing reliance on collateral in financial markets, and in particular, this is driven by regulatory margin requirements set out for derivatives transactions and financial institution borrowing from the <a href="/wiki/European_Central_Bank" title="European Central Bank">European Central Bank</a>. The higher the collateral requirements, the greater demand for quality exists. For lending, it is generally regarded that there are three criteria for determining high-quality collateral. Those being assets which are or can be: </p> <ul><li>Liquid; and</li> <li>Easily priced; and</li> <li>Of Low credit risk</li></ul> <p>There are several benefits to having financial collateral provisions. Namely, financial reduces credit risk, meaning the cost of credit and the cost of transacting will be lowered. The reduced <a href="/wiki/Bankruptcy_law" class="mw-redirect" title="Bankruptcy law">insolvency risk</a> of the counter-party, combined with more credit being available to the collateral taker will mean the collateral taker can take additional risk without having to rely on a counter-party.<sup id="cite_ref-auto11_25-0" class="reference"><a href="#cite_note-auto11-25"><span class="cite-bracket">[</span>25<span class="cite-bracket">]</span></a></sup> Systemic risk will be reduced by increased liquidity,<sup id="cite_ref-auto11_25-1" class="reference"><a href="#cite_note-auto11-25"><span class="cite-bracket">[</span>25<span class="cite-bracket">]</span></a></sup> This produces "knock-on effects" by increasing the number of transactions a collateral taker can safely enter, freeing up capital for other uses.<sup id="cite_ref-auto11_25-2" class="reference"><a href="#cite_note-auto11-25"><span class="cite-bracket">[</span>25<span class="cite-bracket">]</span></a></sup> However, there is a need for balance; the removal of limitations on insolvency rules and security registration requirements, as observed in the FCARs, is dangerous as it degrades powers and protections which have been conferred deliberately by the law.<sup id="cite_ref-auto11_25-3" class="reference"><a href="#cite_note-auto11-25"><span class="cite-bracket">[</span>25<span class="cite-bracket">]</span></a></sup> </p> <div class="mw-heading mw-heading4"><h4 id="Financial_collateral_regulations_2">Financial collateral regulations</h4><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=Financial_law&action=edit&section=9" title="Edit section: Financial collateral regulations"><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <p>The primary objective of the Financial Collateral Directive was to reduce systemic risk, harmonise transactions and reduce <a href="/wiki/Legal_certainty" title="Legal certainty">legal uncertainty</a>. It achieved this by exempting qualified "Financial collateral arrangements" from the performance of formal legal requirements; notably <a href="/wiki/Land_registration" title="Land registration">registration</a> and notification. Second, the collateral taker is provided effective right of use and said arrangements are exempted from being re-characterised as different security arrangements. Perhaps most significantly, traditional insolvency rules which may invalidate a financial collateral arrangement; such as <a href="/wiki/United_Kingdom_insolvency_law" title="United Kingdom insolvency law">freezing assets</a> upon entering into <a href="/wiki/Insolvency" title="Insolvency">insolvency</a>, are suspended. This allows a collateral taker to act without the limitation which may arise from a collateral provider entering bankruptcy. The FCARs<sup id="cite_ref-26" class="reference"><a href="#cite_note-26"><span class="cite-bracket">[</span>26<span class="cite-bracket">]</span></a></sup> focus on outlining when a financial collateral arrangement will be exempted from national insolvency and registration rules. In England, the requirements that a financial collateral arrangements only applies between non-natural persons with one being a financial institution, central bank, or public body; the FCAR has been "gold-platted"<sup id="cite_ref-27" class="reference"><a href="#cite_note-27"><span class="cite-bracket">[</span>27<span class="cite-bracket">]</span></a></sup> by allowing any non-natural person to benefit. Thus, to qualify as a "financial collateral arrangement" under the FCARs, a transaction must be in writing and regard "relevant financial obligations".<sup id="cite_ref-28" class="reference"><a href="#cite_note-28"><span class="cite-bracket">[</span>28<span class="cite-bracket">]</span></a></sup> The criteria for a "relevant financial obligations" is set out in Part I Paragraph 3 </p> <blockquote class="quote-frame pullquote" style="font-size: 95%; padding: 0.5em 2em; background-color: var( --background-color-neutral-subtle, #f8f9fa ); color: var( --color-base, black ); border: 1px solid #aaa; display:table; float:none;"><div style="padding: 0.6em 1em;">Security financial collateral arrangement mean[s] any agreement or arrangement, evidenced in writing, where - <ul><li>(a) the purpose of the agreement or arrangement is to secure the relevant financial obligations<sup id="cite_ref-29" class="reference"><a href="#cite_note-29"><span class="cite-bracket">[</span>29<span class="cite-bracket">]</span></a></sup> vowed to the collateral-taker,</li> <li>(b) Collateral Provider creates or there arises a "security interest in financial collateral"<sup id="cite_ref-30" class="reference"><a href="#cite_note-30"><span class="cite-bracket">[</span>30<span class="cite-bracket">]</span></a></sup> to secure those obligations;</li> <li>(c) FC is delivered, transferred, held, registered, or otherwise designated so as to be in the possession or under the control<sup id="cite_ref-31" class="reference"><a href="#cite_note-31"><span class="cite-bracket">[</span>31<span class="cite-bracket">]</span></a></sup> of the Collateral Taker; any right of the Collateral Provider to substitute equivalent financial collateral or withdraw excess,<sup id="cite_ref-32" class="reference"><a href="#cite_note-32"><span class="cite-bracket">[</span>32<span class="cite-bracket">]</span></a></sup> financial collateral shall not prevent the financial collateral being in the possession or under the control of the Collateral Taker; and</li> <li>(d) Collateral Provider and Collateral Taker are both non-natural persons<sup id="cite_ref-33" class="reference"><a href="#cite_note-33"><span class="cite-bracket">[</span>33<span class="cite-bracket">]</span></a></sup></li></ul></div></blockquote> <p>The purpose of the provision is to increase the efficiency of markets and lower the transaction costs. The disapplied formal and perfection requirements accelerates the effectiveness of security through FCAR Reg 4(1),(2),(3) and 4(4). Two things might be said of this. Firstly, academics<sup id="cite_ref-34" class="reference"><a href="#cite_note-34"><span class="cite-bracket">[</span>34<span class="cite-bracket">]</span></a></sup> have highlighted the risk of dappling statute of frauds and other requirements. It runs real risk of repealing substantial protections which were developed, at least in English common law, because of real risks of exploitation.<sup id="cite_ref-35" class="reference"><a href="#cite_note-35"><span class="cite-bracket">[</span>35<span class="cite-bracket">]</span></a></sup> Other forms of protection which has been repealed includes the ability to allow parties to implement Appropriation if expressly agreed is permitted.<sup id="cite_ref-36" class="reference"><a href="#cite_note-36"><span class="cite-bracket">[</span>36<span class="cite-bracket">]</span></a></sup> </p><p> Extensive litigation has resulted from the determination of the FCAR regulations, specifically the meaning of "<i>possession or control</i>" as set out in paragraph 3.<sup id="cite_ref-37" class="reference"><a href="#cite_note-37"><span class="cite-bracket">[</span>37<span class="cite-bracket">]</span></a></sup> Recital 10 states that possession or control is for the safety of third parties, however, the type of mischief this is seeking to remove is unclear.<sup id="cite_ref-38" class="reference"><a href="#cite_note-38"><span class="cite-bracket">[</span>38<span class="cite-bracket">]</span></a></sup> In <i>C-156/15 Swedbank</i>, the <a href="/wiki/CJEU" class="mw-redirect" title="CJEU">CJEU</a> enforced the requirement that practical control was that of legal negative control. <link rel="mw-deduplicated-inline-style" href="mw-data:TemplateStyles:r1244412712"></p><blockquote class="templatequote"><p>second sentence of Article 2(2) provides that any right of substation or to withdraw excess financial collateral in favour of the collateral provider must not prejudice the FC having been provided to the collateral taker. That right would lack any force if the taker of collateral consisting in monies deposited in a bank account were also to be regarded as having acquired <i>"possession or control"</i> of the monies where the account holder may freely dispose of them […] it follows that the taker of collateral in the form of money lodged in an ordinary bank account may be regarded as having acquired 'possession or control' of the monies only if the collateral provider is prevented from disposing of them</p></blockquote><p> What is clear is that (1) possession is more than merely <a href="/w/index.php?title=Custodial&action=edit&redlink=1" class="new" title="Custodial (page does not exist)">custodial</a> and <a href="/wiki/Possession_(law)" title="Possession (law)">dispossession</a> is mandatory. Some legal control is also crucial, meaning practical or administrative control is insufficient. </p><div class="mw-heading mw-heading5"><h5 id="Possession">Possession</h5><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=Financial_law&action=edit&section=10" title="Edit section: Possession"><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <p>Requirement that collateral must be in possession is unclear. Is it one, two things? Does possession apply to intangibles? We do know that you cant. Is the requirement of control the same as the test for fixed charges. The scope of the regime is not clear. There are several unanswered questions. Only the collateral providers can have is right of substitution and right to withdraw surplus. Possession applies to intigble if it is credited to an account. Gullifer suggests that this is a redundant definition. The directive drafted with English and Irish laws not being centrally in mind. It was about disposition. To some extent, ownership discourages transactions for the risk of ostensible wealth. </p><p>It was held that the phrase was to be construed in a manner consistent with meaning and purpose.<sup id="cite_ref-39" class="reference"><a href="#cite_note-39"><span class="cite-bracket">[</span>39<span class="cite-bracket">]</span></a></sup> This is not merely a matter of English law,<sup id="cite_ref-40" class="reference"><a href="#cite_note-40"><span class="cite-bracket">[</span>40<span class="cite-bracket">]</span></a></sup><sup id="cite_ref-auto12_41-0" class="reference"><a href="#cite_note-auto12-41"><span class="cite-bracket">[</span>41<span class="cite-bracket">]</span></a></sup> Lord Briggs' judgment in Client Money [2009] EWHC 3228 held that to interpret the meaning of the directive a court ought to 1. Interpret the directive. We can look at different language texts and cases if any. 2. Interpret domestic legislation in light of the directive (as interpreted through stage 1) This is not restricted by conventional rules. Meaning that the court can and will depart from literal meaning and may imply words as necessary however, one cannot go against domestic legislation, nor require the court to make decisions it is not prepared to make. Repercussions must be and are considered by the court. </p> <div class="mw-heading mw-heading5"><h5 id="Control">Control</h5><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=Financial_law&action=edit&section=11" title="Edit section: Control"><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <link rel="mw-deduplicated-inline-style" href="mw-data:TemplateStyles:r1236090951"><div role="note" class="hatnote navigation-not-searchable">Further information: <a href="/wiki/Cukurova_Finance_International_Ltd_v_Alfa_Telecom_Turkey_Ltd" title="Cukurova Finance International Ltd v Alfa Telecom Turkey Ltd">Cukurova Finance International Ltd v Alfa Telecom Turkey Ltd</a></div> <p>By contrast, Control has been shown to not be that of practical (Administrative) control.<sup id="cite_ref-auto12_41-1" class="reference"><a href="#cite_note-auto12-41"><span class="cite-bracket">[</span>41<span class="cite-bracket">]</span></a></sup> It is clear that FCARs require a standard of negative legal control. Practical control, is the Collateral Taker's exclusive ability to dispose and it is suggested this will additionally be required if the parties are to avoid fraud. It is established by the rights and prohibitions in the security agreement but there is limited case-law on the matter<sup id="cite_ref-42" class="reference"><a href="#cite_note-42"><span class="cite-bracket">[</span>42<span class="cite-bracket">]</span></a></sup> Scholars<sup id="cite_ref-43" class="reference"><a href="#cite_note-43"><span class="cite-bracket">[</span>43<span class="cite-bracket">]</span></a></sup> identify two forms of control: </p> <ul><li>positive</li> <li>negative (Collateral Provider has no rights in relation to dealing with or disposal of collateral)</li></ul> <p>Positive and Negative control differ where one either has the right to dispose without reference to the collateral provider, or where collateral provider is able to do so without collateral taker. What is undeniable however, is that dispossession is central to both possession and control. Rights of the Collateral taker must be beyond merely custodial; he must be able to refuse to hand collateral back. </p><p>There are a handful of risks to these arrangements - as previously outlined - the ill definition of what constitutes the activation of the FCAR arrangements creates a danger. However, within the context of appropriation, a provider only has a personal right against a taker for the surplus. There is no proprietary right. Should a taker (like Lehman) become <a href="/wiki/Bankruptcy" title="Bankruptcy">insolvent</a>, a provider may well be at a loss for the excess. It encourages the party to reclaim excess value whenever possible/reasonably practical. This is not always possible due to the variation of the markets. Further, the risk of appropriation is that these can be used for ulterior purposes. Which as created the Cukurova problem;<sup id="cite_ref-44" class="reference"><a href="#cite_note-44"><span class="cite-bracket">[</span>44<span class="cite-bracket">]</span></a></sup> there parties had constructed a scheme to capture shares with a clause preventing the collateral taker from selling large securities at once and spooking the market, but valuation is not linear which made it difficult, if not impossible to determine what a commercially reasonable price for securities would be in an illiquid market. </p> <div class="mw-heading mw-heading3"><h3 id="Set_off">Set off</h3><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=Financial_law&action=edit&section=12" title="Edit section: Set off"><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <link rel="mw-deduplicated-inline-style" href="mw-data:TemplateStyles:r1236090951"><div role="note" class="hatnote navigation-not-searchable">Main article: <a href="/wiki/Set-off_(law)" title="Set-off (law)">Set-off (law)</a></div> <p>Other concepts, crucial to financial markets include <a href="/wiki/Contingent_liability" title="Contingent liability">contingent obligations</a>, the fact that bank debts operate as money; and <a href="/wiki/Set-off_(law)" title="Set-off (law)">set-off</a> designed to mitigate the net exposure of transactions. Set-off as a legal concept is crucial part of reducing credit risk and reducing the knock-on effects of insolvency.<sup id="cite_ref-auto3_45-0" class="reference"><a href="#cite_note-auto3-45"><span class="cite-bracket">[</span>45<span class="cite-bracket">]</span></a></sup><sup id="cite_ref-auto4_46-0" class="reference"><a href="#cite_note-auto4-46"><span class="cite-bracket">[</span>46<span class="cite-bracket">]</span></a></sup> Collectively, these concepts operate to underpin financial transactions by further dividing risk. Various combinations of these legal methods are used to produce various allocations of risk.<sup id="cite_ref-auto5_47-0" class="reference"><a href="#cite_note-auto5-47"><span class="cite-bracket">[</span>47<span class="cite-bracket">]</span></a></sup> For example, the <a href="/wiki/International_Swaps_and_Derivatives_Association" title="International Swaps and Derivatives Association">ISDA</a> 2002 master agreement utilises contingent obligations, set-off, and legal personality to reduce the liabilities of non-defaulting parties in the event of default.<sup id="cite_ref-48" class="reference"><a href="#cite_note-48"><span class="cite-bracket">[</span>48<span class="cite-bracket">]</span></a></sup> The effect of Clause 2(a)(iii) of the <a href="/wiki/ISDA_Master_Agreement" title="ISDA Master Agreement">ISDA agreement</a> is to suspend the payment obligations of parties until the <a href="/wiki/Event_of_default" title="Event of default">event of default</a> has been cured. Such a cure may not ever occur. There is substantial academic caution<sup id="cite_ref-auto5_47-1" class="reference"><a href="#cite_note-auto5-47"><span class="cite-bracket">[</span>47<span class="cite-bracket">]</span></a></sup><sup id="cite_ref-auto3_45-1" class="reference"><a href="#cite_note-auto3-45"><span class="cite-bracket">[</span>45<span class="cite-bracket">]</span></a></sup><sup id="cite_ref-auto4_46-1" class="reference"><a href="#cite_note-auto4-46"><span class="cite-bracket">[</span>46<span class="cite-bracket">]</span></a></sup><sup id="cite_ref-auto6_49-0" class="reference"><a href="#cite_note-auto6-49"><span class="cite-bracket">[</span>49<span class="cite-bracket">]</span></a></sup> that such a suspension acts to circumvent insolvency <a href="/wiki/Pari_passu" title="Pari passu">pari passu</a> objectives.<sup id="cite_ref-auto6_49-1" class="reference"><a href="#cite_note-auto6-49"><span class="cite-bracket">[</span>49<span class="cite-bracket">]</span></a></sup> However, there is equal evidence that the clause provides substantial market stability as a result of the standardisation and universality that the <a href="/wiki/ISDA_Master_Agreement" title="ISDA Master Agreement">ISDA Master Agreement</a> has within the derivatives market.<sup id="cite_ref-auto6_49-2" class="reference"><a href="#cite_note-auto6-49"><span class="cite-bracket">[</span>49<span class="cite-bracket">]</span></a></sup> It further provides the involved parties to suspend the swap (and any other transactions within the master agreement), providing them the time to understand the overall effect the event of default has had on the agreement and the market.<sup id="cite_ref-auto6_49-3" class="reference"><a href="#cite_note-auto6-49"><span class="cite-bracket">[</span>49<span class="cite-bracket">]</span></a></sup> In other words, it provides a breather.<sup id="cite_ref-auto6_49-4" class="reference"><a href="#cite_note-auto6-49"><span class="cite-bracket">[</span>49<span class="cite-bracket">]</span></a></sup> </p> <div class="mw-heading mw-heading3"><h3 id="Payment">Payment</h3><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=Financial_law&action=edit&section=13" title="Edit section: Payment"><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <link rel="mw-deduplicated-inline-style" href="mw-data:TemplateStyles:r1236090951"><div role="note" class="hatnote navigation-not-searchable">Main article: <a href="/wiki/Payment" title="Payment">Payment</a></div> <p>Payment operates as another core legal concept which underpins financial law. It is crucial because it determines the point at which a party discharges their obligation to another party. In finance, particularly relating to <a href="/wiki/Set-off_(law)" title="Set-off (law)">set-off</a>, <a href="/wiki/Guarantee" title="Guarantee">guarantees</a>, or other simple and funded positions; the definition of payment is <i>crucial</i> to determining the legal exposure of parties. Several of the cases derive predominately from English and U.S. law, pertaining to the <a href="/wiki/Lex_mercatoria" title="Lex mercatoria">Lex mercatoria</a>, and was developed when financial law historically focused on <a href="/wiki/Maritime_trade" class="mw-redirect" title="Maritime trade">maritime trade</a>. </p><p> In English and U.S. law, payment is consensual, requiring acceptance from both payee and payer.<sup id="cite_ref-50" class="reference"><a href="#cite_note-50"><span class="cite-bracket">[</span>50<span class="cite-bracket">]</span></a></sup> Roy Goode suggests that Payment is a; <link rel="mw-deduplicated-inline-style" href="mw-data:TemplateStyles:r1244412712"></p><blockquote class="templatequote"><p>consensual act and thus requires the accord of both creditor and debtor</p><div class="templatequotecite">— <cite>Roy Goode, Goode on <i>Legal Problems of Credit and Security</i> (Sweet & Maxwell, 6th ed 2013</cite></div></blockquote><p>. Payment as a legal concept is underpinned by the <a href="/wiki/Law_of_contract" class="mw-redirect" title="Law of contract">law of contract</a>. In most common law jurisdictions, a valid contract requires sufficient <a href="/wiki/Consideration" title="Consideration">consideration</a>.<sup id="cite_ref-51" class="reference"><a href="#cite_note-51"><span class="cite-bracket">[</span>51<span class="cite-bracket">]</span></a></sup><sup id="cite_ref-52" class="reference"><a href="#cite_note-52"><span class="cite-bracket">[</span>52<span class="cite-bracket">]</span></a></sup> Payment plays a crucial role in financial law because it determines when parties are able to discharge duties. In <i><a href="/wiki/Lomas_v_JFB_Firth_Rixson_Inc" title="Lomas v JFB Firth Rixson Inc">Lomas v JFB Firth Rixson Inc</a></i> [2012] EWCA Civ 419, the issue concerned when a debtor was able to discharge the duty to pay under the ISDA Master Agreement (1992). The requirement for payment arises in English law from a duty in performance of a money obligation. Whilst normally described and fulfilled in monetary terms, payment need only satisfy the creditor and does not necessarily involve the delivery of money,<sup id="cite_ref-53" class="reference"><a href="#cite_note-53"><span class="cite-bracket">[</span>53<span class="cite-bracket">]</span></a></sup> but it cannot constitute payment unless money is involved, even if performance is fulfilled by some other act.<sup id="cite_ref-auto3_45-2" class="reference"><a href="#cite_note-auto3-45"><span class="cite-bracket">[</span>45<span class="cite-bracket">]</span></a></sup> <link rel="mw-deduplicated-inline-style" href="mw-data:TemplateStyles:r1244412712"></p><blockquote class="templatequote"><p>a gift or loan of money or any act offered and accepted in performance of a money obligation.</p><div class="templatequotecite">— <cite>Brindle and Cox, <i>Law of Bank Payments</i> (Sweet & Maxwell, 4th ed, 2010), [1-001]</cite></div></blockquote><p> Obligation to pay or <a href="/wiki/Legal_tender" title="Legal tender">tender</a> the <a href="/wiki/Debt" title="Debt">debt</a> is balanced by the obligation on the part of the seller not to refuse the whole or part of the debt. This is underpinned by limitations on part-payment.<sup id="cite_ref-54" class="reference"><a href="#cite_note-54"><span class="cite-bracket">[</span>54<span class="cite-bracket">]</span></a></sup><sup id="cite_ref-55" class="reference"><a href="#cite_note-55"><span class="cite-bracket">[</span>55<span class="cite-bracket">]</span></a></sup><sup id="cite_ref-56" class="reference"><a href="#cite_note-56"><span class="cite-bracket">[</span>56<span class="cite-bracket">]</span></a></sup><sup id="cite_ref-57" class="reference"><a href="#cite_note-57"><span class="cite-bracket">[</span>57<span class="cite-bracket">]</span></a></sup> This traditionally operates in order to proffering money to fulfil obligations within a contract.<sup id="cite_ref-58" class="reference"><a href="#cite_note-58"><span class="cite-bracket">[</span>58<span class="cite-bracket">]</span></a></sup> In taking it, it is an affirmation of said contract and the debtor is discharged of his obligation to the creditor.<sup id="cite_ref-59" class="reference"><a href="#cite_note-59"><span class="cite-bracket">[</span>59<span class="cite-bracket">]</span></a></sup> This is crucial. In contracts where A ('the debtor') owes money to B ('the creditor'), payment operates as the terminus for A's obligation to B. It was crucially held in <i>Societe des Hotel Le Touquet Paris-Plage v Cummings</i><sup id="cite_ref-60" class="reference"><a href="#cite_note-60"><span class="cite-bracket">[</span>60<span class="cite-bracket">]</span></a></sup> that the bilateral contractual process did not require "accord and satisfaction" to achieve discharge of a debt by payment. The operation of payment therefore requires mutual <a href="/wiki/Acceptance" title="Acceptance">compliance</a> from "both creditor and debtor".<sup id="cite_ref-auto3_45-3" class="reference"><a href="#cite_note-auto3-45"><span class="cite-bracket">[</span>45<span class="cite-bracket">]</span></a></sup> </p><div class="mw-heading mw-heading4"><h4 id="Two_conceptual_points_of_mutual_consent">Two conceptual points of mutual consent</h4><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=Financial_law&action=edit&section=14" title="Edit section: Two conceptual points of mutual consent"><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <p>Mutual consent must thus occur at two points, <i>ex ante</i> and <i>ex post</i> of the contract between parties and at what we might call "point Z" for situations where an obligation to pay does not result from contractual duties. (such as a debt owed to a non-adjusting creditor, cf Bebchuk and Fried). At both points, mutual consent required from both parties. First, <i>ex ante</i> consent occurs at the time where parties agree on the obligation. If a party has specified a method for discharging an obligation through a specific means, then the parties must have contemplated the sufficiency of the tender to discharge the debt and therefore consensually agreed to payment of a specified way.<sup id="cite_ref-auto7_61-0" class="reference"><a href="#cite_note-auto7-61"><span class="cite-bracket">[</span>61<span class="cite-bracket">]</span></a></sup><sup id="cite_ref-auto3_45-4" class="reference"><a href="#cite_note-auto3-45"><span class="cite-bracket">[</span>45<span class="cite-bracket">]</span></a></sup> This will likely provide specification on when tender may be rejected. Chen-Wishart's discussion of the importance of consideration within the bargain theory of contracts enunciates the emphasis the English law has placed on benefit and deliberateness when contracting.<sup id="cite_ref-62" class="reference"><a href="#cite_note-62"><span class="cite-bracket">[</span>62<span class="cite-bracket">]</span></a></sup><sup id="cite_ref-63" class="reference"><a href="#cite_note-63"><span class="cite-bracket">[</span>63<span class="cite-bracket">]</span></a></sup><sup id="cite_ref-64" class="reference"><a href="#cite_note-64"><span class="cite-bracket">[</span>64<span class="cite-bracket">]</span></a></sup><sup id="cite_ref-auto7_61-1" class="reference"><a href="#cite_note-auto7-61"><span class="cite-bracket">[</span>61<span class="cite-bracket">]</span></a></sup> Contracting parties must have contemplated, negotiated, and reached mutual agreement in regard to how the obligation would be discharged. This does not, however, prevent or impede the occurrence of "point Z". Parties may duly agree on payment in principle prior to the execution of the contract and subsequently still fail to effect payment.<sup id="cite_ref-auto8_65-0" class="reference"><a href="#cite_note-auto8-65"><span class="cite-bracket">[</span>65<span class="cite-bracket">]</span></a></sup><sup id="cite_ref-auto9_66-0" class="reference"><a href="#cite_note-auto9-66"><span class="cite-bracket">[</span>66<span class="cite-bracket">]</span></a></sup><sup id="cite_ref-auto10_67-0" class="reference"><a href="#cite_note-auto10-67"><span class="cite-bracket">[</span>67<span class="cite-bracket">]</span></a></sup> Functionally agreement results in questioning whether or not payment has been made by the debtor. The debtor must commit a certain level of formality to proffering the obligation. This formality may take the form of complying with a contract. Failure to comply, is not payment. </p><p>Second, <i>ex post</i>, regardless of whether parties have <a href="/wiki/Offer_and_acceptance" title="Offer and acceptance">mutually agreed</a> and specified a method, or a money of payment, the parties (notably the creditor) must consent to the debtor's tender in order to crystallise payment and sever the demand for payment.<sup id="cite_ref-auto8_65-1" class="reference"><a href="#cite_note-auto8-65"><span class="cite-bracket">[</span>65<span class="cite-bracket">]</span></a></sup> Discharge of a debt is automatic. In other words, a payment of a contractual obligation requires mutual consent of payment at both the stage of formation and at the conclusion/distribution to be recognised as 'payment', but upon acceptance of payment the debt is discharged. In <i>Colley v Overseas Exporters</i><sup id="cite_ref-68" class="reference"><a href="#cite_note-68"><span class="cite-bracket">[</span>68<span class="cite-bracket">]</span></a></sup> it was shown that even where tender complies with the contract, it is not payment until the creditor (or Payer) accepts. This is regardless of whether the creditor's rejection frustrates the contract and is a breach of their duty. The law does not allow the debtor to coerce the creditor into accepting a tender.<sup id="cite_ref-69" class="reference"><a href="#cite_note-69"><span class="cite-bracket">[</span>69<span class="cite-bracket">]</span></a></sup> This is the case, even when the debtor has forwarded <a href="/wiki/Legal_tender" title="Legal tender">valid tender</a>.<sup id="cite_ref-:2_70-0" class="reference"><a href="#cite_note-:2-70"><span class="cite-bracket">[</span>70<span class="cite-bracket">]</span></a></sup> It is the subsequent acceptance or non-acceptance of the tender from the creditor which crystallises payment and effects discharge.<sup id="cite_ref-:2_70-1" class="reference"><a href="#cite_note-:2-70"><span class="cite-bracket">[</span>70<span class="cite-bracket">]</span></a></sup> Mere receipt will not suffice. However, mutual consent is of a lower standard than that in contractual formation. In <i>TSB Bank of Scotland plc v Welwyn Hatfield District Council</i> [1993] Bank LR 267, Hobhouse J held that acceptance of payment need not be communicated and his judgment provides a clear, two-stage test for determining whether payment has been made. If A; </p> <ul><li>places the money unconditionally at the disposal of his creditor; and</li> <li>the conduct of the creditor, viewed objectively, amounts to acceptance, then payment has passed.</li></ul> <p>Thus, in <i>Libyan Arab Bank v Bankers Trust Co</i><sup id="cite_ref-71" class="reference"><a href="#cite_note-71"><span class="cite-bracket">[</span>71<span class="cite-bracket">]</span></a></sup> the court held that when the collecting bank decided unconditionally to credit the creditor's account, the payment is completed. Presentation and subsequent rejection of payment provides an absolute defence for to an action brought by the creditor, but without the action (and opportunity to pay into the court) and with exceptions,<sup id="cite_ref-72" class="reference"><a href="#cite_note-72"><span class="cite-bracket">[</span>72<span class="cite-bracket">]</span></a></sup> the debtor's <a href="/wiki/Tendering" class="mw-redirect" title="Tendering">proffering</a> of payment does not discharge the money obligation nor does it constitute as payment. In the case of <i>The Laconia</i>, the English <a href="/wiki/House_of_Lords" title="House of Lords">House of Lords</a> set out clear conditions on timing of payment in relation to the debtor proffering payment. The charterers had procured a vessel for 3 months, 15 days with a payment due on April 12, a Sunday. The charterers delivered payment on Monday. The vessel owners rejected the payment, which was sent back the following day.<sup id="cite_ref-auto9_66-1" class="reference"><a href="#cite_note-auto9-66"><span class="cite-bracket">[</span>66<span class="cite-bracket">]</span></a></sup> Primarily, <i>The Laconia</i> regards the requirement for a tender to be congruent with the conditions in order to amount to a tendering of payment. However, the case might also be used to highlight the necessity for the creditor to accept such tendering. Had the vessel owners merely taken receipt of the payment and not instructed their bank to return the money, then it seems likely that payment was accepted. The consensual nature of payment thus derives from the requirement that both debtor must offer, and creditor must accept, the medium of payment; and secondly from the fact that creditor rejection of procurement, even if his agent is in receipt of the payment, results in a failure to effect payment.<sup id="cite_ref-auto9_66-2" class="reference"><a href="#cite_note-auto9-66"><span class="cite-bracket">[</span>66<span class="cite-bracket">]</span></a></sup> Goode discusses two forms where receipt does not take effect as acceptance that fall into the second aforementioned stage of mutual consent; </p> <ol><li>Conditional acceptance. Where a cheque is accepted it is conditional on such a cheque being met. Here, letters of Credit come to mind in that their conditional nature is dependent on the bank effecting payment. In <i>The Chikuma</i> and <i>The Brimnes</i> the court examined whether payment was fulfilled on the side of the payer. From that perspective, it was necessary for the court to analyse whether the payer had fulfilled the conditions in order to effect discharge.<sup id="cite_ref-auto8_65-2" class="reference"><a href="#cite_note-auto8-65"><span class="cite-bracket">[</span>65<span class="cite-bracket">]</span></a></sup><sup id="cite_ref-auto10_67-1" class="reference"><a href="#cite_note-auto10-67"><span class="cite-bracket">[</span>67<span class="cite-bracket">]</span></a></sup></li> <li>Receipt by creditor's agent. <i>The Laconia</i> falls within this category. This is primarily because it is not always clear whether the agent lacked the authority to accept the payment.<sup id="cite_ref-73" class="reference"><a href="#cite_note-73"><span class="cite-bracket">[</span>73<span class="cite-bracket">]</span></a></sup></li></ol> <p>The fact that rejection of tender is sufficient to prevent 'payment' derives from the fact that payment is the conferral of property to fulfil the obligation. Property and obligation aspects of the transaction cannot be separated without the transaction ceasing to be "payment".<sup id="cite_ref-74" class="reference"><a href="#cite_note-74"><span class="cite-bracket">[</span>74<span class="cite-bracket">]</span></a></sup> </p> <div class="mw-heading mw-heading2"><h2 id="Financial_law_transactional_categories">Financial law transactional categories</h2><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=Financial_law&action=edit&section=15" title="Edit section: Financial law transactional categories"><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <p>As well as being fragmented, financial law is often muddled. Historical segregation of the industry into sectors has meant each has been regulated and conducted by different institutions.<sup id="cite_ref-75" class="reference"><a href="#cite_note-75"><span class="cite-bracket">[</span>75<span class="cite-bracket">]</span></a></sup> The approach to financial law is unique depending on the structure of the financial instrument. The historical development of various financial instruments explains the legal protections which differ between, say, <a href="/wiki/Guarantees" class="mw-redirect" title="Guarantees">guarantees</a> and <a href="/wiki/Indemnity" title="Indemnity">indemnities</a>. Due to the limited cross-sectoral legal awareness, innovations in finance have been associated with varying levels of risk. Several different legal "wrappers" provide different structured products, each with differing levels of risk allocation, for example, funded positions consist of bank <a href="/wiki/Loans" class="mw-redirect" title="Loans">loans</a>, <a href="/wiki/Capital_market" title="Capital market">capital market</a> <a href="/wiki/Securities" class="mw-redirect" title="Securities">securities</a>, and <a href="/wiki/Managed_funds" class="mw-redirect" title="Managed funds">managed funds</a>. </p><p>The primary purpose of financial law is to allocate risk from one person to another and change the nature of risk being run by the protection buyer into the 'credit risk' of the risk taker. Five categories of market structures are divided according to how the contract deals with the credit risk of the risk taker. </p> <div class="mw-heading mw-heading3"><h3 id="Simple_financial_positions">Simple financial positions</h3><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=Financial_law&action=edit&section=16" title="Edit section: Simple financial positions"><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <p><a href="/wiki/Guarantees" class="mw-redirect" title="Guarantees">Guarantees</a>, <a href="/wiki/Insurance" title="Insurance">insurance</a>, standby <a href="/wiki/Letters_of_credit" class="mw-redirect" title="Letters of credit">letters of credit</a> and <a href="/wiki/Performance_bond" title="Performance bond">performance bonds</a>. The terms <i>Simple</i> can often be misleading, as often the transactions which fall within this category are often complicated. They are termed simple not because of the lack of sophistication but because the transactions do not address the credit exposure of the protection buyer. Rather, as with a guarantee, the protection buyer simply takes the risk of protection seller. <a href="/wiki/Derivative_(finance)" title="Derivative (finance)">Derivatives</a> often fall within this regulatory category because they transfer risk from one party to another. </p> <div class="mw-heading mw-heading4"><h4 id="Derivatives_law">Derivatives law</h4><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=Financial_law&action=edit&section=17" title="Edit section: Derivatives law"><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <link rel="mw-deduplicated-inline-style" href="mw-data:TemplateStyles:r1236090951"><div role="note" class="hatnote navigation-not-searchable">Main article: <a href="/wiki/Derivative_(finance)" title="Derivative (finance)">Derivative (finance)</a></div><p> The second portion of simple transactions are derivatives, specifically unfunded <a href="/wiki/Derivative_(finance)" title="Derivative (finance)">derivatives</a> of which, four basic types exist. At law, the primary risk of a derivative is the risk of a transaction being re-characterised as another legal structure. Thus, the courts have been cautious to make clear definitions of what amounts to a derivative at law. Fundamentally, a derivative is a contract for difference, it utilises <a href="/wiki/Netting" class="mw-redirect" title="Netting">netting</a> to set obligations between parties. Rarely does delivery of the asset occur.<sup id="cite_ref-76" class="reference"><a href="#cite_note-76"><span class="cite-bracket">[</span>76<span class="cite-bracket">]</span></a></sup> In English law, the judgment of <i>Lomas v JFB Firth Rixson</i> [2012] EWCA Civ, quotes the leading test <i>Firth on Derivatives</i>, characterising a derivative as a <link rel="mw-deduplicated-inline-style" href="mw-data:TemplateStyles:r1244412712"></p><blockquote class="templatequote"><p>transaction under which the future obligations are linked to another asset or index. Delivery of the asset is calculated by reference to said asset. Derives from the value of the underlying asset. This creates another asset out of the first type. It is a chose in action with reference to the value of the underlying asset. They are separate and can be traded accordingly</p></blockquote> <p>As legal instruments, derivatives are bilateral contracts which rights and obligations of the parties are derived from, or defined by, reference to a specified asset type, entity, or benchmark and the performance of which is agreed to take place on a date significantly later than the date in which the contract is concluded.<sup id="cite_ref-auto_7-3" class="reference"><a href="#cite_note-auto-7"><span class="cite-bracket">[</span>7<span class="cite-bracket">]</span></a></sup> </p><p>Types Various <a href="/wiki/Derivative_(finance)#Types" title="Derivative (finance)">types</a> of derivatives exist with even greater variance of reference assets. English law in particular has been clear to distinguish between two types of basic derivatives: Forwards and Options.<sup id="cite_ref-77" class="reference"><a href="#cite_note-77"><span class="cite-bracket">[</span>77<span class="cite-bracket">]</span></a></sup><sup id="cite_ref-78" class="reference"><a href="#cite_note-78"><span class="cite-bracket">[</span>78<span class="cite-bracket">]</span></a></sup> Often parties will place limits on the interest rate differentials when engaging in trades. At law, these are known as "Caps & Collars", these reduce the cost of the transaction. Regulation has been a key component in making the market more transparent, this has been particularly useful in protecting small and medium sized businesses.<sup id="cite_ref-79" class="reference"><a href="#cite_note-79"><span class="cite-bracket">[</span>79<span class="cite-bracket">]</span></a></sup> </p><p> Swaps and Credit derivatives also differ in legal function. A credit derivative describes various contracts designed to assume or distribute credit risk on loans or other financial instruments. Payment obligations of a seller is triggered by specified credit events affective defined assets or entities. In a <i>swap</i>, it was held in <i>Hazell v Hammersmith and Fulham London Borough Council</i><sup id="cite_ref-80" class="reference"><a href="#cite_note-80"><span class="cite-bracket">[</span>80<span class="cite-bracket">]</span></a></sup> by Woolf LJ that equity swaps were developed under ISDA's guidance and might be defined as <link rel="mw-deduplicated-inline-style" href="mw-data:TemplateStyles:r1244412712"></p><blockquote class="templatequote"><p>A transaction in which one party pays periodic amounts of a currency based on a fixed price/rate and the other party pays periodic amounts of the same currency or different currency based on the performance of a share of an issuer, an index or a basket of several issuers.</p></blockquote><p> These are differentiated from <i>credit derivatives</i>, which reference the credit risk of specified credit event; usually a bankruptcy, failure to make payment, or a breach of a condition such as a debt-to-equity ratio. Payment as a core concept in finance is crucial to the operation of derivatives.<sup id="cite_ref-81" class="reference"><a href="#cite_note-81"><span class="cite-bracket">[</span>81<span class="cite-bracket">]</span></a></sup> Credit derivatives which are "self-referenced", i.e. referencing the parties own credit worthiness have been considered by the courts as capable of involving <a href="/wiki/Fraud" title="Fraud">fraud</a>.<sup id="cite_ref-82" class="reference"><a href="#cite_note-82"><span class="cite-bracket">[</span>82<span class="cite-bracket">]</span></a></sup> </p><div class="mw-heading mw-heading5"><h5 id="Legal_issues">Legal issues</h5><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=Financial_law&action=edit&section=18" title="Edit section: Legal issues"><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <p>A swap derivative with negative interest rates highlights particularly issues at law. It is unclear how a party pays a negative number. Does it reverse the obligations? According to the <a href="/wiki/ISDA_Master_Agreement" title="ISDA Master Agreement">ISDA Master Agreement</a> variation in 2006, a swap has a "zero floor" which means that if interest rates reverse, the obligations do not reverse. Without the 2006 variation, the negative interest rate is a deduction off what is owed. An additional area of relevant derivatives law is shown in the cases of <i>Dharmala</i><sup id="cite_ref-83" class="reference"><a href="#cite_note-83"><span class="cite-bracket">[</span>83<span class="cite-bracket">]</span></a></sup> and <i>Peekay</i>,<sup id="cite_ref-84" class="reference"><a href="#cite_note-84"><span class="cite-bracket">[</span>84<span class="cite-bracket">]</span></a></sup> both of which involved arguments of mis-selling derivative transactions.<sup id="cite_ref-85" class="reference"><a href="#cite_note-85"><span class="cite-bracket">[</span>85<span class="cite-bracket">]</span></a></sup> This is closely related with the argument that parties, particularly government bodies lack the power to enter into derivative contracts.<sup id="cite_ref-86" class="reference"><a href="#cite_note-86"><span class="cite-bracket">[</span>86<span class="cite-bracket">]</span></a></sup> In <i>Dharmala,</i> the claimant argued unsuccessfully that the bank misrepresented the transaction. It was held that they did misrepresent but for the misrepresentation to effect a claim, it was necessary to induce someone to enter into the contract, which was unable to be proven. In <i>Peekay</i>, the Court of Appeal rejected the suit for <a href="/wiki/Misrepresentation" title="Misrepresentation">misrepresentation</a> when the defendant mis-sold a synthetic <a href="/wiki/Credit_derivative" title="Credit derivative">credit derivative</a> to Peekay which had its reference assets in Russian investments. The Peekay director ought to have read the documents rather than relying on the defendant's oral representation. This is a pro-market approach with marked Judaical disinclination to not strike down transactions, substantial problems exist with enforcing a contract against a party which argues it lacks the power to enter into an agreement, it has been likened to <i>pulling oneself up by the bootstraps</i> as the party cannot warrant that it has the power if it truly does not.<sup id="cite_ref-87" class="reference"><a href="#cite_note-87"><span class="cite-bracket">[</span>87<span class="cite-bracket">]</span></a></sup><sup id="cite_ref-88" class="reference"><a href="#cite_note-88"><span class="cite-bracket">[</span>88<span class="cite-bracket">]</span></a></sup> </p><p>Documentation of derivatives often utilises standard forms to increase liquidity, this is particularly the case in exchange traded, or "over the counter" derivatives which are predominately documented using the <a href="/wiki/ISDA_Master_Agreement" title="ISDA Master Agreement">ISDA Master Agreement</a>. These agreements operate to create a singular transaction which lasts the duration of the trading relationship. Confirmation of trades can be codified by oral contracts made over the phone. This is only possible because interpretation of the standard form documentation is done in a manner so that the terms of art used within the documents have their own autonomous meaning separate from the <a href="/wiki/Lex_fori" class="mw-redirect" title="Lex fori">law of the forum</a>. Flexibility within the contract, and a court appreciation for the commercial objectives of the master agreements is a crucial aspect of the long-term operation of the financial markets which they support.<sup id="cite_ref-89" class="reference"><a href="#cite_note-89"><span class="cite-bracket">[</span>89<span class="cite-bracket">]</span></a></sup><sup id="cite_ref-90" class="reference"><a href="#cite_note-90"><span class="cite-bracket">[</span>90<span class="cite-bracket">]</span></a></sup> The ISDA Master Agreement is dependent on market practices, which attach to interpretations of intention within a context of long term relationships. The aim is to differentiate relational contracts from one-off contracts. The concept of a single agreement is not new. It is an artificial line to sum-off and default netting practices.<sup id="cite_ref-91" class="reference"><a href="#cite_note-91"><span class="cite-bracket">[</span>91<span class="cite-bracket">]</span></a></sup> Payment of a derivative contract, particularly those of standardised forms, use <a href="/wiki/Netting" class="mw-redirect" title="Netting">netting</a>. This minimises credit risk. </p> <div class="mw-heading mw-heading4"><h4 id="Recharacterisation">Recharacterisation</h4><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=Financial_law&action=edit&section=19" title="Edit section: Recharacterisation"><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <p>In being similar to one another in terms of economic market effects, simple positions are particularly susceptible to being re-characterised. When this happens, substantial legal consequences can result, as each legal instrument has different consequences. Whilst a guarantee and an indemnity have, in substance, the same economic result; the law characterises each differently because it affords an indemnifier less protection than a guarantor. Similarly, a derivative or guarantee must not be recharacterised as an insurance contract, as such contracts are strictly regulated by government regulation. A re-characterisation into an insurance contract would be fatal to the contract, as only licensed parties can issue such terms. The characterisation of financial transactions by the court takes the form of two stages; examining the legal substance, not the form of the agreement. Thus, stating that a contract is a derivative, does not make it a derivative. As held by Lord Millet in <i>Agnew v Commissioners of Inland Revenue (<a href="/wiki/Re_Brumark_Investments_Ltd" title="Re Brumark Investments Ltd">Re Brumark Investments Ltd</a></i>,<sup id="cite_ref-92" class="reference"><a href="#cite_note-92"><span class="cite-bracket">[</span>92<span class="cite-bracket">]</span></a></sup> characterisation interprets the document and then categorises it within one of the existing legal doctrines. Intention is not relevant, however, there are sensitivities to this matter, primarily concerning the insurance markets. Three key types of recharacterisation can occur to simple positions </p> <ol><li>Guarantees or Indemnities: In <i>Yeoman Credit Ltd v Latter</i><sup id="cite_ref-93" class="reference"><a href="#cite_note-93"><span class="cite-bracket">[</span>93<span class="cite-bracket">]</span></a></sup> the court held perhaps the most important distinction. The distinction between the two is that a guarantee is a secondary obligation to pay whilst an indemnity is a primary obligation.<sup id="cite_ref-94" class="reference"><a href="#cite_note-94"><span class="cite-bracket">[</span>94<span class="cite-bracket">]</span></a></sup><sup id="cite_ref-95" class="reference"><a href="#cite_note-95"><span class="cite-bracket">[</span>95<span class="cite-bracket">]</span></a></sup></li> <li>Guarantees or Performance bonds: Performance bonds are similar to a promissory note, this turns again upon the primacy of the obligations. The courts have been extremely hesitant to implement a performance bond onto parties which are not banks.</li> <li>Guarantees or Insurance: Both are protecting creditors from loss, however a guarantee is narrower. Romer LJ set out three variables to differentiate the two:<sup id="cite_ref-96" class="reference"><a href="#cite_note-96"><span class="cite-bracket">[</span>96<span class="cite-bracket">]</span></a></sup> (1) the motives of the parties differ, insurance is a business contract and cover is provided in consideration for a premium. Guarantees are provided without payment. (2) The manner of dealings differ; an insurer usually deals with the insured and not the reference entity. (3) The means of knowledge which is disclosed. The insured <i>must</i> disclose material facts, why a guarantor is left to himself to determine facts. A guarantee thus is traditionally drafted to stand behind the debtor rather than be payable on the occurrence of an event. In England, prior to the <i>Gambling Act 2005</i>, the courts often interpreted contracts as gambling and avoided them. Any contract which exists under the purview of the <i>Financial Services and Markets Act 2000</i> is not avoided by the <i>Gambling Act 1845</i> provisions. This is, in part, due to the <i>Potts Opinion</i> which argued the legal distinctiveness of derivatives from <a href="/wiki/Gambling" title="Gambling">gambling</a> and <a href="/wiki/Insurance" title="Insurance">insurance</a> contracts. This was argued by stating that the payment obligation was not conditional on loss and rights were not dependent on an insurable interest.</li></ol> <div class="mw-heading mw-heading3"><h3 id="Funded_positions">Funded positions</h3><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=Financial_law&action=edit&section=20" title="Edit section: Funded positions"><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <link rel="mw-deduplicated-inline-style" href="mw-data:TemplateStyles:r1236090951"><div role="note" class="hatnote navigation-not-searchable">Further information: <a href="/wiki/Syndicated_loan" title="Syndicated loan">Syndicated loan</a></div> <p>Lending is perhaps the most central aspect of the financial system. As discussed by Benjamin, the law attempts to allocate risk in ways which is acceptable to the parties involved. Bank <a href="/wiki/Loans" class="mw-redirect" title="Loans">loans</a> and <a href="/wiki/Capital_market" title="Capital market">capital market</a> transactions fall within this category. It may be defined as situations where the risk-taker is the provider of capital to another party. If the risk materialise, the exposure is not merely an obligation to pay, but rather the exposure of the risk-taker is the risk of losing its previously committed capital. That is to say, a funded position is the risk of repayment. When a bank makes a loan, it pays money and runs the risk of a lack of repayment. </p> <div class="mw-heading mw-heading4"><h4 id="Difference_between_funded_positions_and_other_positions">Difference between funded positions and other positions</h4><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=Financial_law&action=edit&section=21" title="Edit section: Difference between funded positions and other positions"><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <link rel="mw-deduplicated-inline-style" href="mw-data:TemplateStyles:r1236090951"><div role="note" class="hatnote navigation-not-searchable">Further information: <a href="/wiki/Lending" class="mw-redirect" title="Lending">lending</a></div> <p>One might ask what the difference between an asset-backed security and funded positions. The answer is that funded positions are positions which are acquired without backing of other assets. </p><p>The true difference is that of funded positions and simple positions. Simple positions, such as guarantees, insurance, standby credits and derivatives. Funded positions differ from simple positions in that simple positions expose risk as a form of a promise. The risk taker agrees to pay the beneficiary upon certain events. This relies upon exposure to credit risk. Funded positions have the risk exposure has the form of a payment, which is to be restored. The risk exists in that it may not be repaid. It is funding a party with the risk being a lack of repayment. This includes the bank and non-bank lending including <a href="/wiki/Syndicated_loans" class="mw-redirect" title="Syndicated loans">syndicated loans</a>. </p><p>Two overarching forms of funded positions exist between debt and equity, and there are several ways to raise capital. This might be broken down into Bank loans (<a href="/wiki/Debt_finance" class="mw-redirect" title="Debt finance">debt financing</a>) and equity issuing (<a href="/wiki/Capital_markets" class="mw-redirect" title="Capital markets">capital markets</a>). Alternatively, a company may retain profits internally. This may be summarised as: </p> <ul><li>Equity shares</li> <li>Debt financing</li> <li>Retained profits</li></ul> <p>Few companies can use equity and retained profits entirely. It would not be good business to do so either; debt is a crucial aspect for corporate finance. This relates to the gearing advantages of taking on debt and maximising the value of <a href="/wiki/Debt-to-equity_ratio" title="Debt-to-equity ratio">debt-to-equity</a> to allow equity to gain maximum returns.<sup id="cite_ref-97" class="reference"><a href="#cite_note-97"><span class="cite-bracket">[</span>97<span class="cite-bracket">]</span></a></sup> Debt is repayable in accordance with the terms; whereas equity instruments, typically includes rights of <a href="/wiki/Shareholders" class="mw-redirect" title="Shareholders">shareholders</a>, rights to receive reports, accounts, pre-emptions (where the company proposes issuing new shares), and the right to vote on strategic decisions affecting the company. </p> <div class="mw-heading mw-heading4"><h4 id="Debt_financing">Debt financing</h4><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=Financial_law&action=edit&section=22" title="Edit section: Debt financing"><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <link rel="mw-deduplicated-inline-style" href="mw-data:TemplateStyles:r1236090951"><div role="note" class="hatnote navigation-not-searchable">Main article: <a href="/wiki/Debt_finance" class="mw-redirect" title="Debt finance">debt finance</a></div> <p>Bank lending may be categorised according to a large number of variables including the type of borrower, the purpose and the form of the loan facility. Where a bank makes a loan it will typically require a business plan and require security where it has credit concerns. A commitment letter may be produced during the negotiations for a loan. In general these are not legally binding. </p><p>A loan facility is an agreement where a bank agrees to lend. It is distinct from the loan itself. Using a loan facility it writes to the bank and the bank makes the loan. LMA syndicated single currency term facility distinguishes between 1. commitment to lend to each lender, 2. average of each; and 3. the loan made under the agreement and the draw down. Three important forms of these are: </p> <ul><li><a href="/wiki/Overdraft" title="Overdraft">Overdraft</a> facilities<sup id="cite_ref-98" class="reference"><a href="#cite_note-98"><span class="cite-bracket">[</span>98<span class="cite-bracket">]</span></a></sup></li> <li><a href="/wiki/Term_loan" title="Term loan">term loan</a> facilities<sup id="cite_ref-99" class="reference"><a href="#cite_note-99"><span class="cite-bracket">[</span>99<span class="cite-bracket">]</span></a></sup></li> <li><a href="/wiki/Revolving_credit" title="Revolving credit">revolving</a> facilities<sup id="cite_ref-100" class="reference"><a href="#cite_note-100"><span class="cite-bracket">[</span>100<span class="cite-bracket">]</span></a></sup></li></ul> <p>These may be further categorised into two overarching forms of bank <a href="/wiki/Loan" title="Loan">lending</a>, organised based on the term/repayment criteria of the loan. These are: </p> <ul><li>on-demand lending (overdraft and other short term) and;<sup id="cite_ref-101" class="reference"><a href="#cite_note-101"><span class="cite-bracket">[</span>101<span class="cite-bracket">]</span></a></sup></li> <li>committed lending (revolving facility or a term loan)<sup id="cite_ref-102" class="reference"><a href="#cite_note-102"><span class="cite-bracket">[</span>102<span class="cite-bracket">]</span></a></sup></li></ul> <p>Economist and finance lawyers categories these and further categorise syndication separately but within committed lending. This has been a traditional driver for lending within the debt financing market. </p> <div class="mw-heading mw-heading5"><h5 id="On-demand_lending">On-demand lending</h5><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=Financial_law&action=edit&section=23" title="Edit section: On-demand lending"><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <p>Where express terms state that it is repayable one demand, it will be so repayable even if both bank and borrower envisaged that it would be last for some time.<sup id="cite_ref-103" class="reference"><a href="#cite_note-103"><span class="cite-bracket">[</span>103<span class="cite-bracket">]</span></a></sup> This must be an express term. In England & Wales, because of S6 Limitation Act 1980, time for repayment does not start running until the demand is made. This means that the debt, for example an overdraft, is not repayable without demand but will become repayable if requested; even if the parties thought it would not be repayable for some time.<sup id="cite_ref-104" class="reference"><a href="#cite_note-104"><span class="cite-bracket">[</span>104<span class="cite-bracket">]</span></a></sup> </p><p>In <i>Sheppard & Cooper Ltd v TSB Bank Plc (No 2)</i> [1996] BCC 965; [1996] 2 ALL ER 654, the plaintiff granted a fixed and floating charge over its assets. He then covenanted to pay or discharge indebtedness on-demand. At any time after indebtedness should become immediately payable, the debtor was authorised to appoint administrative receivers. Soon after a demand was made by the defendant. The plaintiff said that the best that could be done was repayment of half. The defendant appointed administrative receivers to recover the debt as outlined by the charge. The plaintiff sued and claimed claim the time was insufficient. The court held that; "It is physically impossible in most cases for a person to keep the money required to discharge the debt about his person. Must have had reasonable opportunity of implementing reasonable mechanics of payment he may need to employ to discharge the debt." But a "reasonable time" overarching doctrine was found to be too commercially difficult. The courts have held short timelines as being more than sufficient to satisfy the request of on-demand. Walton J only accepted 45 minutes as being a reasonable period of time and in <i>Cripps</i> it was 60 minutes. Therefore the timing of repayment depends on circumstances but is, in commercial matters, extremely quick. If the sum demanded is of an amount which the debtor has, the time must be reasonable to enable the debtor to contact his bank and make necessary arrangements. However, if the party, as in <i>Sheppard</i> admits his inability to pay, Kelly CB believed that seizure was justified immediately stating "If personal service is made and the defendants may have seized immediately afterwards."<sup id="cite_ref-105" class="reference"><a href="#cite_note-105"><span class="cite-bracket">[</span>105<span class="cite-bracket">]</span></a></sup> </p><p>Parties will want to avoid insolvency consequences. A bank will normally freeze a customer's account when a winding up petition occurs to avoid dispositions within insolvency.<sup id="cite_ref-106" class="reference"><a href="#cite_note-106"><span class="cite-bracket">[</span>106<span class="cite-bracket">]</span></a></sup> A payment into an overdrawn account is probably a disposition of the company's property in favour of the bank. This is crucial differentiation as the money of an overdrawn account is going directly to a creditor. Payment into an account in credit is not a disposition of the company's property in favour of the bank, however.<sup id="cite_ref-107" class="reference"><a href="#cite_note-107"><span class="cite-bracket">[</span>107<span class="cite-bracket">]</span></a></sup> </p><p>The bank makes a payment out of the company's account in accordance with a valid payment instruction - there is no disposition in favour of the bank.<sup id="cite_ref-108" class="reference"><a href="#cite_note-108"><span class="cite-bracket">[</span>108<span class="cite-bracket">]</span></a></sup> As a result, banks traditionally freeze accounts and force insolvent parties to open new accounts. </p> <div class="mw-heading mw-heading6"><h6 id="Overdraft">Overdraft</h6><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=Financial_law&action=edit&section=24" title="Edit section: Overdraft"><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <link rel="mw-deduplicated-inline-style" href="mw-data:TemplateStyles:r1236090951"><div role="note" class="hatnote navigation-not-searchable">Main article: <a href="/wiki/Overdraft" title="Overdraft">Overdraft</a></div> <p>An overdraft constitutes a loan, traditionally repayable on demand.<sup id="cite_ref-109" class="reference"><a href="#cite_note-109"><span class="cite-bracket">[</span>109<span class="cite-bracket">]</span></a></sup> It is a <a href="/wiki/Current_account_(banking)" class="mw-redirect" title="Current account (banking)">running account</a> facility (categorising alongside revolving loans) where its on-demand nature of repayment meant immediately.<sup id="cite_ref-110" class="reference"><a href="#cite_note-110"><span class="cite-bracket">[</span>110<span class="cite-bracket">]</span></a></sup> A bank is only obliged to provide an overdraft if the bank has expressly or impliedly agreed to do so.<sup id="cite_ref-111" class="reference"><a href="#cite_note-111"><span class="cite-bracket">[</span>111<span class="cite-bracket">]</span></a></sup> Legally, where a client overdraws his account, the client is not in breach of contract with the bank; if it did constitute a breach, then the fees charged by the bank would be penalties and correspondingly not allowed.<sup id="cite_ref-112" class="reference"><a href="#cite_note-112"><span class="cite-bracket">[</span>112<span class="cite-bracket">]</span></a></sup> If requesting payment when there is no money in the bank account, the customer is merely requesting an overdraft.<sup id="cite_ref-113" class="reference"><a href="#cite_note-113"><span class="cite-bracket">[</span>113<span class="cite-bracket">]</span></a></sup> This should be noted that this is separate and distinct from credit cards; as credit cards invariably say a client must not go over the credit limit. With overdraft requests, the bank has the option not to comply with the request, although this is rare, as the bankss reputations are built upon a willingness and ability to pay on behalf of clients.<sup id="cite_ref-:3_114-0" class="reference"><a href="#cite_note-:3-114"><span class="cite-bracket">[</span>114<span class="cite-bracket">]</span></a></sup> Often however, the bank complies and then charges a fee to 'create a loan'.<sup id="cite_ref-:3_114-1" class="reference"><a href="#cite_note-:3-114"><span class="cite-bracket">[</span>114<span class="cite-bracket">]</span></a></sup> </p><p><i>OFT v Abbey National</i> held that "if a bank does pay, customer has taken to have agreed to accept the bank's standards", which means that they have asked and the bank has provided a loan. Banks may charge interest on an overdraft and may compound that interest<sup id="cite_ref-115" class="reference"><a href="#cite_note-115"><span class="cite-bracket">[</span>115<span class="cite-bracket">]</span></a></sup> The point of an overdraft at law is that it is repayable on demand, however, payment instructions within the agreed overdraft limit must be honoured until notice has been given that the facility (the overdraft) is withdrawn.<sup id="cite_ref-116" class="reference"><a href="#cite_note-116"><span class="cite-bracket">[</span>116<span class="cite-bracket">]</span></a></sup> </p> <div class="mw-heading mw-heading5"><h5 id="Committed_lending">Committed lending</h5><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=Financial_law&action=edit&section=25" title="Edit section: Committed lending"><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <link rel="mw-deduplicated-inline-style" href="mw-data:TemplateStyles:r1236090951"><div role="note" class="hatnote navigation-not-searchable">Main article: <a href="/wiki/Loan" title="Loan">loan</a></div> <p>A committed facility is where the bank is committed to lend throughout a certain period. </p> <ul><li>Term loan; all at once or in successive tranches. Can be repayable at once (bullet); or according to a payment scheme (amortising)</li> <li>Revolving facility; borrow repay and reborrow.</li> <li>swingline facility; Which is a committed facility providing for short term advances</li></ul> <p>Most committed lending facilities will be documented, either by: </p> <ul><li>A facility letter or</li> <li>A loan agreement</li></ul> <p>These may be more or less complex, depending on the size of the loan. Oral assurance can give rise to an obligation to lend prior to any documentation being signed. 'A statement made by a bank employee over the telephone that approval' had been given.<sup id="cite_ref-117" class="reference"><a href="#cite_note-117"><span class="cite-bracket">[</span>117<span class="cite-bracket">]</span></a></sup> Most facility letters and loan agreements will contain contractual provisions designed to protect the lender against the credit risk of the borrower. This requires several aspects. Normally it will require <a href="/wiki/Conditions_precedent" class="mw-redirect" title="Conditions precedent">conditions precedent</a>, restrictions on the borrower's activities, information <a href="/wiki/Covenant_(law)" title="Covenant (law)">covenants</a>, <a href="/wiki/Set-off_(law)" title="Set-off (law)">set-off</a> provisions, stipulations for events of default. Lenders will also traditionally take real or personal security. These are designed to protect the lender against: </p> <ol><li>Non Payment of both interest and capital; and</li> <li>Insolvency</li></ol> <p>These two objectives are achieved by providing for events that make non-payment or insolvency unappealing or transfer the risk associated with said events to third party. This highlights the difference between risk as assessed and actual risk. </p> <div class="mw-heading mw-heading6"><h6 id="Material_adverse_change_clauses">Material adverse change clauses</h6><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=Financial_law&action=edit&section=26" title="Edit section: Material adverse change clauses"><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <link rel="mw-deduplicated-inline-style" href="mw-data:TemplateStyles:r1236090951"><div role="note" class="hatnote navigation-not-searchable">Main article: <a href="/wiki/Material_adverse_change" title="Material adverse change">material adverse change</a></div> <p>A common provision relates to material adverse change clauses. The borrow represents/warrants that there has been no material adverse change in its financial condition since the date of the loan agreement. This is a clause which is not often invoked or litigated and therefore the interpretation is uncertain and proof of breach is difficult. Consequences of wrongful invocation by the lender are severe. </p><p>Interpretation depends on the terms of the particular clause and is up to lender to prove breach. Cannot be triggered on basis of things lender knew when making the agreement. Normally done by comparing borrower's accounts or other financial information then and now. Other compelling evidence may be enough. Will be material if it significantly affects the borrower's ability to repay the loan in question. We may examine one of the leading authorities on material adverse change clauses in committed lending, Grupo Hotelero Urvasco SA v Carey Value Added [2013] EWHC 1039 (Comm), per Blair J </p> <blockquote class="quote-frame pullquote" style="font-size: 95%; padding: 0.5em 2em; background-color: var( --background-color-neutral-subtle, #f8f9fa ); color: var( --color-base, black ); border: 1px solid #aaa; display:table; float:none;"><div style="padding: 0.6em 1em;">[334] The use of material adverse change clauses is common in financial documentation in differing contexts, including takeovers and mergers, and loan agreements, as in the present case. In the latter context, they may relieve a lender of its continuing obligations in the event of a significant deterioration in the financial condition of the borrower which threatens its ability to repay but which is short of an insolvency. However, there is little case law, perhaps reflecting the fact that (unlike an insolvency event which is usually clear cut) the interpretation of such provisions may be uncertain, proof of breach difficult, and the consequences of wrongful invocation by the lender severe, both in terms of reputation, and legal liability to the borrower. <p>[351] In my opinion, an assessment of the financial condition of the company should normally begin with its financial information at the relevant times, and a lender seeking to demonstrate a MAC should show an adverse change over the period in question by reference to that information. The financial condition of a company during the course of an accounting year will usually be capable of being established from interim financial information and/or management accounts. </p><p>[352] I agree with the lender however that the enquiry is not necessarily limited to the company's financial information. There may be compelling evidence to show that an adverse change sufficient to satisfy a MAC clause has occurred, even if an analysis limited to the company's financial information might suggest otherwise. [357] [...] Unless the adverse change in its financial condition significantly affects the borrower's ability to perform its obligations, and in particular its ability to repay the loan, it is not a material change. [Similarly, it has been said that:] the lender cannot trigger the clause on the basis of circumstances of which it was aware at the date of the contract since it will be assumed that the parties intended to enter into the agreement in spite of those conditions, although it will be possible to invoke the clause where conditions worsen in a way that makes them materially different in nature"<sup id="cite_ref-118" class="reference"><a href="#cite_note-118"><span class="cite-bracket">[</span>118<span class="cite-bracket">]</span></a></sup> In my view, this states the law correctly. [363] Finally, I should note one construction point which was not in dispute. <i>In order to be material, any change must not merely be temporary.</i> </p> [364] In summary, authority supports the following conclusions. The interpretation of a "material adverse change" clause depends on the terms of the clause construed according to well established principles. In the present case, the clause is in simple form, the borrower representing that there has been no material adverse change in its financial condition since the date of the loan agreement. Under such terms, the assessment of the financial condition of the borrower should normally begin with its financial information at the relevant times, and a lender seeking to demonstrate a MAC should show an adverse change over the period in question by reference to that information. However the enquiry is not necessarily limited to the financial information if there is other compelling evidence. The adverse change will be material if it significantly affects the borrower's ability to repay the loan in question. However, a lender cannot trigger such a clause on the basis of circumstances of which it was aware at the time of the agreement [...] Finally, it is up to the lender to prove the breach.</div></blockquote> <p>Therefore, a change will be material if it significantly affects the borrower's ability to repay the loan in question. Normally this is done by comparing borrower's accounts or other financial information then and now. </p> <div class="mw-heading mw-heading3"><h3 id="Net_positions">Net positions</h3><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=Financial_law&action=edit&section=27" title="Edit section: Net positions"><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <link rel="mw-deduplicated-inline-style" href="mw-data:TemplateStyles:r1236090951"><div role="note" class="hatnote navigation-not-searchable">Further information: <a href="/wiki/Set-off_(law)" title="Set-off (law)">Set-off (law)</a></div> <p>A net position represents a financial position in which a debtor may "off-set" his obligation to the creditor with a mutual obligation which has arisen and is owed from the creditor to the debtor. In financial law, this may often take the form of a simple or funded position such as a <a href="/wiki/Securities_lending" title="Securities lending">securities lending</a> transaction where mutual obligations set-off one another. Three crucial types of netting exists: </p> <ul><li>Novation Netting</li> <li>Settlement Netting</li> <li>Transaction Netting</li></ul> <p>Each party can use its own claim against the other to discharge. Each party bears credit risk which may be offset. For example, a guarantor who is a depositor with a banking institution can set-off obligations he may owe to the bank under the guarantee against the bank's obligation to repay his deposited assets. </p> <div class="mw-heading mw-heading3"><h3 id="Asset-backed_positions">Asset-backed positions</h3><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=Financial_law&action=edit&section=28" title="Edit section: Asset-backed positions"><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <link rel="mw-deduplicated-inline-style" href="mw-data:TemplateStyles:r1236090951"><div role="note" class="hatnote navigation-not-searchable">Main article: <a href="/wiki/Secured_loan" title="Secured loan">secured loan</a></div> <link rel="mw-deduplicated-inline-style" href="mw-data:TemplateStyles:r1236090951"><div role="note" class="hatnote navigation-not-searchable">Further information: <a href="/wiki/Asset-backed_security" title="Asset-backed security">asset-backed security</a></div> <p>Propriety securities like <a href="/wiki/Mortgages" class="mw-redirect" title="Mortgages">mortgages</a>, charges, <a href="/wiki/Liens" class="mw-redirect" title="Liens">liens</a>, <a href="/wiki/Pledge_(law)" title="Pledge (law)">pledges</a> and <a href="/wiki/Retention_of_title" class="mw-redirect" title="Retention of title">retention of title</a> clauses are financial positions which are collateralised using proprietary assets to mitigate the risk exposure of the collateral-taker. The core purpose it to Manage credit risk by identifying certain assets and ear-marking claims to those assets. </p> <div class="mw-heading mw-heading3"><h3 id="Combined_positions">Combined positions</h3><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=Financial_law&action=edit&section=29" title="Edit section: Combined positions"><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <link rel="mw-deduplicated-inline-style" href="mw-data:TemplateStyles:r1236090951"><div role="note" class="hatnote navigation-not-searchable">Further information: <a href="/wiki/Structured_finance" title="Structured finance">structured finance</a></div> <p>Combined positions use multiple facets of the other four positions, assembling them in various combinations to produce large, often complex, transactional structures. Examples of this category are primarily <a href="/wiki/Collateralized_debt_obligations" class="mw-redirect" title="Collateralized debt obligations">CDOs</a> and other <a href="/wiki/Structured_finance" title="Structured finance">structured products</a>.<sup id="cite_ref-auto_7-4" class="reference"><a href="#cite_note-auto-7"><span class="cite-bracket">[</span>7<span class="cite-bracket">]</span></a></sup> For example, a <a href="/wiki/Synthetic_CDO" title="Synthetic CDO">synthetic collateralised debt obligation</a> will draw upon derivatives, syndicated lending, and asset-backed positions to distinguish the risk of the reference asset from other risks. The law pertaining to CDOs is particularly noteworthy, primarily for its use of legal concepts such as legal personality, and risk transfer to develop new products. The prevalence and importance of combined positions within the financial markets, has meant that the legal underpinnings of the transactional structures are highly relevant to their enforcement and effectiveness. </p> <div class="mw-heading mw-heading2"><h2 id="References">References</h2><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=Financial_law&action=edit&section=30" title="Edit section: References"><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <style data-mw-deduplicate="TemplateStyles:r1239543626">.mw-parser-output .reflist{margin-bottom:0.5em;list-style-type:decimal}@media screen{.mw-parser-output .reflist{font-size:90%}}.mw-parser-output .reflist .references{font-size:100%;margin-bottom:0;list-style-type:inherit}.mw-parser-output .reflist-columns-2{column-width:30em}.mw-parser-output .reflist-columns-3{column-width:25em}.mw-parser-output .reflist-columns{margin-top:0.3em}.mw-parser-output .reflist-columns ol{margin-top:0}.mw-parser-output .reflist-columns li{page-break-inside:avoid;break-inside:avoid-column}.mw-parser-output .reflist-upper-alpha{list-style-type:upper-alpha}.mw-parser-output .reflist-upper-roman{list-style-type:upper-roman}.mw-parser-output .reflist-lower-alpha{list-style-type:lower-alpha}.mw-parser-output .reflist-lower-greek{list-style-type:lower-greek}.mw-parser-output .reflist-lower-roman{list-style-type:lower-roman}</style><div class="reflist reflist-columns references-column-width" style="column-width: 30em;"> <ol class="references"> <li id="cite_note-1"><span class="mw-cite-backlink"><b><a href="#cite_ref-1">^</a></b></span> <span class="reference-text">Joanna Benjamin, 'Financial Law' (2007) OUP</span> </li> <li id="cite_note-2"><span class="mw-cite-backlink"><b><a href="#cite_ref-2">^</a></b></span> <span class="reference-text"><style data-mw-deduplicate="TemplateStyles:r1238218222">.mw-parser-output cite.citation{font-style:inherit;word-wrap:break-word}.mw-parser-output .citation q{quotes:"\"""\"""'""'"}.mw-parser-output .citation:target{background-color:rgba(0,127,255,0.133)}.mw-parser-output .id-lock-free.id-lock-free a{background:url("//upload.wikimedia.org/wikipedia/commons/6/65/Lock-green.svg")right 0.1em center/9px no-repeat}.mw-parser-output .id-lock-limited.id-lock-limited a,.mw-parser-output .id-lock-registration.id-lock-registration a{background:url("//upload.wikimedia.org/wikipedia/commons/d/d6/Lock-gray-alt-2.svg")right 0.1em center/9px no-repeat}.mw-parser-output .id-lock-subscription.id-lock-subscription a{background:url("//upload.wikimedia.org/wikipedia/commons/a/aa/Lock-red-alt-2.svg")right 0.1em center/9px no-repeat}.mw-parser-output .cs1-ws-icon a{background:url("//upload.wikimedia.org/wikipedia/commons/4/4c/Wikisource-logo.svg")right 0.1em center/12px no-repeat}body:not(.skin-timeless):not(.skin-minerva) .mw-parser-output .id-lock-free a,body:not(.skin-timeless):not(.skin-minerva) .mw-parser-output .id-lock-limited a,body:not(.skin-timeless):not(.skin-minerva) .mw-parser-output .id-lock-registration a,body:not(.skin-timeless):not(.skin-minerva) .mw-parser-output .id-lock-subscription a,body:not(.skin-timeless):not(.skin-minerva) .mw-parser-output .cs1-ws-icon a{background-size:contain;padding:0 1em 0 0}.mw-parser-output .cs1-code{color:inherit;background:inherit;border:none;padding:inherit}.mw-parser-output .cs1-hidden-error{display:none;color:var(--color-error,#d33)}.mw-parser-output .cs1-visible-error{color:var(--color-error,#d33)}.mw-parser-output .cs1-maint{display:none;color:#085;margin-left:0.3em}.mw-parser-output .cs1-kern-left{padding-left:0.2em}.mw-parser-output .cs1-kern-right{padding-right:0.2em}.mw-parser-output .citation .mw-selflink{font-weight:inherit}@media screen{.mw-parser-output .cs1-format{font-size:95%}html.skin-theme-clientpref-night .mw-parser-output .cs1-maint{color:#18911f}}@media screen and (prefers-color-scheme:dark){html.skin-theme-clientpref-os .mw-parser-output .cs1-maint{color:#18911f}}</style><cite id="CITEREFBoard2009" class="citation web cs1">Board, Legal Services (January 2, 2009). <a rel="nofollow" class="external text" href="https://web.archive.org/web/20180430181705/https://research.legalservicesboard.org.uk/analysis/supply/market-financials/turnover-and-profitability/">"Legal Services Board"</a>. <i>research.legalservicesboard.org.uk</i>. Archived from <a rel="nofollow" class="external text" href="https://research.legalservicesboard.org.uk/analysis/supply/market-financials/turnover-and-profitability/">the original</a> on April 30, 2018<span class="reference-accessdate">. Retrieved <span class="nowrap">April 30,</span> 2018</span>.</cite><span title="ctx_ver=Z39.88-2004&rft_val_fmt=info%3Aofi%2Ffmt%3Akev%3Amtx%3Ajournal&rft.genre=unknown&rft.jtitle=research.legalservicesboard.org.uk&rft.atitle=Legal+Services+Board&rft.date=2009-01-02&rft.aulast=Board&rft.aufirst=Legal+Services&rft_id=https%3A%2F%2Fresearch.legalservicesboard.org.uk%2Fanalysis%2Fsupply%2Fmarket-financials%2Fturnover-and-profitability%2F&rfr_id=info%3Asid%2Fen.wikipedia.org%3AFinancial+law" class="Z3988"></span></span> </li> <li id="cite_note-UK_Legal_Services_2020-3"><span class="mw-cite-backlink"><b><a href="#cite_ref-UK_Legal_Services_2020_3-0">^</a></b></span> <span class="reference-text"><link rel="mw-deduplicated-inline-style" href="mw-data:TemplateStyles:r1238218222"><cite class="citation web cs1"><a rel="nofollow" class="external text" href="https://www.thecityuk.com/media/hllopd1i/legal-excellence-internationally-renowned-uk-legal-services-2020.pdf">"Legal Services 2020"</a> <span class="cs1-format">(PDF)</span>. TheCityUK. 20 November 2020<span class="reference-accessdate">. Retrieved <span class="nowrap">4 July</span> 2023</span>.</cite><span title="ctx_ver=Z39.88-2004&rft_val_fmt=info%3Aofi%2Ffmt%3Akev%3Amtx%3Abook&rft.genre=unknown&rft.btitle=Legal+Services+2020&rft.pub=TheCityUK&rft.date=2020-11-20&rft_id=https%3A%2F%2Fwww.thecityuk.com%2Fmedia%2Fhllopd1i%2Flegal-excellence-internationally-renowned-uk-legal-services-2020.pdf&rfr_id=info%3Asid%2Fen.wikipedia.org%3AFinancial+law" class="Z3988"></span></span> </li> <li id="cite_note-4"><span class="mw-cite-backlink"><b><a href="#cite_ref-4">^</a></b></span> <span class="reference-text">The Law Society<i>Economic value of the legal sector services</i> (March 2016)</span> </li> <li id="cite_note-5"><span class="mw-cite-backlink"><b><a href="#cite_ref-5">^</a></b></span> <span class="reference-text"><link rel="mw-deduplicated-inline-style" href="mw-data:TemplateStyles:r1238218222"><cite id="CITEREFVértesy2007" class="citation journal cs1 cs1-prop-long-vol">Vértesy, László (2007). "The Place and Theory of Banking Law - Or Arising of a New Branch of Law: Law of Financial Industries". <i>Collega</i>. 2-3. XI. <a href="/wiki/SSRN_(identifier)" class="mw-redirect" title="SSRN (identifier)">SSRN</a> <a rel="nofollow" class="external text" href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3198092">3198092</a>.</cite><span title="ctx_ver=Z39.88-2004&rft_val_fmt=info%3Aofi%2Ffmt%3Akev%3Amtx%3Ajournal&rft.genre=article&rft.jtitle=Collega&rft.atitle=The+Place+and+Theory+of+Banking+Law+-+Or+Arising+of+a+New+Branch+of+Law%3A+Law+of+Financial+Industries&rft.volume=2-3.+XI.&rft.date=2007&rft_id=https%3A%2F%2Fpapers.ssrn.com%2Fsol3%2Fpapers.cfm%3Fabstract_id%3D3198092%23id-name%3DSSRN&rft.aulast=V%C3%A9rtesy&rft.aufirst=L%C3%A1szl%C3%B3&rfr_id=info%3Asid%2Fen.wikipedia.org%3AFinancial+law" class="Z3988"></span></span> </li> <li id="cite_note-6"><span class="mw-cite-backlink"><b><a href="#cite_ref-6">^</a></b></span> <span class="reference-text">Vértesy, László (2007). "The Place and Theory of Banking Law - Or Arising of a New Branch of Law: Law of Financial Industries". Collega. 2-3. XI. See also the extensive discussion outlined by Goode and Payne in <i>Corporate Finance Law</i> (Second Ed, Hart Publishing, 2015) which highlights the broader role of law, particularly market practice and case law, on the financial markets.</span> </li> <li id="cite_note-auto-7"><span class="mw-cite-backlink">^ <a href="#cite_ref-auto_7-0"><sup><i><b>a</b></i></sup></a> <a href="#cite_ref-auto_7-1"><sup><i><b>b</b></i></sup></a> <a href="#cite_ref-auto_7-2"><sup><i><b>c</b></i></sup></a> <a href="#cite_ref-auto_7-3"><sup><i><b>d</b></i></sup></a> <a href="#cite_ref-auto_7-4"><sup><i><b>e</b></i></sup></a></span> <span class="reference-text">Benjamin <i>Financial Law</i>(2007 OUP) 6</span> </li> <li id="cite_note-8"><span class="mw-cite-backlink"><b><a href="#cite_ref-8">^</a></b></span> <span class="reference-text"><link rel="mw-deduplicated-inline-style" href="mw-data:TemplateStyles:r1238218222"><cite class="citation web cs1"><a rel="nofollow" class="external text" href="https://www.mayerbrown.com/files/Publication/9bc23406-673b-4d5a-a911-a9ed98d9fc49/Presentation/PublicationAttachment/1845d4ff-ce0f-4f68-b677-46a4083a3990/art_structuredfinance_8oct08.PDF">"Structured finance update"</a> <span class="cs1-format">(PDF)</span>. <i>www.mayerbrown.com</i>. October 8, 2008.</cite><span title="ctx_ver=Z39.88-2004&rft_val_fmt=info%3Aofi%2Ffmt%3Akev%3Amtx%3Ajournal&rft.genre=unknown&rft.jtitle=www.mayerbrown.com&rft.atitle=Structured+finance+update&rft.date=2008-10-08&rft_id=https%3A%2F%2Fwww.mayerbrown.com%2Ffiles%2FPublication%2F9bc23406-673b-4d5a-a911-a9ed98d9fc49%2FPresentation%2FPublicationAttachment%2F1845d4ff-ce0f-4f68-b677-46a4083a3990%2Fart_structuredfinance_8oct08.PDF&rfr_id=info%3Asid%2Fen.wikipedia.org%3AFinancial+law" class="Z3988"></span></span> </li> <li id="cite_note-9"><span class="mw-cite-backlink"><b><a href="#cite_ref-9">^</a></b></span> <span class="reference-text">Goodwin v Robarts (1875) LR 10 Exch 337, 346</span> </li> <li id="cite_note-10"><span class="mw-cite-backlink"><b><a href="#cite_ref-10">^</a></b></span> <span class="reference-text">GOOD ON COMMERCIAL LAW (5TH ED 2016, EWAN MCKENDRICK CH 1</span> </li> <li id="cite_note-11"><span class="mw-cite-backlink"><b><a href="#cite_ref-11">^</a></b></span> <span class="reference-text">(SNYDER 'EFFECTIVENESS OF EC LAW')</span> </li> <li id="cite_note-12"><span class="mw-cite-backlink"><b><a href="#cite_ref-12">^</a></b></span> <span class="reference-text">McCormick Legal Risk in Financial Markets (Oxford University Press 2006), 145</span> </li> <li id="cite_note-:0-13"><span class="mw-cite-backlink">^ <a href="#cite_ref-:0_13-0"><sup><i><b>a</b></i></sup></a> <a href="#cite_ref-:0_13-1"><sup><i><b>b</b></i></sup></a></span> <span class="reference-text">Benjamin (18.56)</span> </li> <li id="cite_note-14"><span class="mw-cite-backlink"><b><a href="#cite_ref-14">^</a></b></span> <span class="reference-text"><link rel="mw-deduplicated-inline-style" href="mw-data:TemplateStyles:r1238218222"><cite class="citation web cs1"><a rel="nofollow" class="external text" href="https://www.bvca.co.uk/Policy/Tax-Legal-and-Regulatory/Industry-guidance-standardised-documents/Other/Potts-opinion">"Potts opinion"</a>. <i>www.bvca.co.uk</i>.</cite><span title="ctx_ver=Z39.88-2004&rft_val_fmt=info%3Aofi%2Ffmt%3Akev%3Amtx%3Ajournal&rft.genre=unknown&rft.jtitle=www.bvca.co.uk&rft.atitle=Potts+opinion&rft_id=https%3A%2F%2Fwww.bvca.co.uk%2FPolicy%2FTax-Legal-and-Regulatory%2FIndustry-guidance-standardised-documents%2FOther%2FPotts-opinion&rfr_id=info%3Asid%2Fen.wikipedia.org%3AFinancial+law" class="Z3988"></span></span> </li> <li id="cite_note-15"><span class="mw-cite-backlink"><b><a href="#cite_ref-15">^</a></b></span> <span class="reference-text">Goodwin v Robarts (1875) LR 10 Exch 337</span> </li> <li id="cite_note-16"><span class="mw-cite-backlink"><b><a href="#cite_ref-16">^</a></b></span> <span class="reference-text">Hare v Hently [1861] EngR 575, (1861) 10 CB NS 65, (1861) 142 ER 374</span> </li> <li id="cite_note-17"><span class="mw-cite-backlink"><b><a href="#cite_ref-17">^</a></b></span> <span class="reference-text">McCormick, <i>Legal Risk in the Financial Market</i> (Oxford: Oxford University Press, 2006)</span> </li> <li id="cite_note-18"><span class="mw-cite-backlink"><b><a href="#cite_ref-18">^</a></b></span> <span class="reference-text">Cf Petrofina (UK) Ltd v Magnaload Ltd [1984] AC 127</span> </li> <li id="cite_note-19"><span class="mw-cite-backlink"><b><a href="#cite_ref-19">^</a></b></span> <span class="reference-text">Belmont Park Investments pty ltd v BNY Corporate Trustee Services 2011 UKSC 38 per Lord Collins.</span> </li> <li id="cite_note-20"><span class="mw-cite-backlink"><b><a href="#cite_ref-20">^</a></b></span> <span class="reference-text">Macmillan Inc v Bishopsgate Investment Trust plc (no 3) [1995] 1 WLR 978</span> </li> <li id="cite_note-:1-21"><span class="mw-cite-backlink">^ <a href="#cite_ref-:1_21-0"><sup><i><b>a</b></i></sup></a> <a href="#cite_ref-:1_21-1"><sup><i><b>b</b></i></sup></a></span> <span class="reference-text">Benjamin Financial Law, 1.06, p5</span> </li> <li id="cite_note-22"><span class="mw-cite-backlink"><b><a href="#cite_ref-22">^</a></b></span> <span class="reference-text">M Hughes, Legal Principles in Banking and Structured Finance, 2nd Ed, (Haywards Heath, Tottel, 2006)</span> </li> <li id="cite_note-23"><span class="mw-cite-backlink"><b><a href="#cite_ref-23">^</a></b></span> <span class="reference-text">Lamfalussy Report, 22</span> </li> <li id="cite_note-auto2-24"><span class="mw-cite-backlink">^ <a href="#cite_ref-auto2_24-0"><sup><i><b>a</b></i></sup></a> <a href="#cite_ref-auto2_24-1"><sup><i><b>b</b></i></sup></a></span> <span class="reference-text">Prest v Prest [2013] UKSC 34, [2013] 2 AC 415 at 476, at [8] per Lord Sumption JSC.</span> </li> <li id="cite_note-auto11-25"><span class="mw-cite-backlink">^ <a href="#cite_ref-auto11_25-0"><sup><i><b>a</b></i></sup></a> <a href="#cite_ref-auto11_25-1"><sup><i><b>b</b></i></sup></a> <a href="#cite_ref-auto11_25-2"><sup><i><b>c</b></i></sup></a> <a href="#cite_ref-auto11_25-3"><sup><i><b>d</b></i></sup></a></span> <span class="reference-text">Lousie Gullifer <i>What should we do about Financial Collateral?</i> (2012) Current Legal Problems Vol 65.1, 377,410</span> </li> <li id="cite_note-26"><span class="mw-cite-backlink"><b><a href="#cite_ref-26">^</a></b></span> <span class="reference-text">Financial Collateral Arrangement No 2 Regulations 2003 and 2010 Financial Markets and Insolvency Amendment Regulation</span> </li> <li id="cite_note-27"><span class="mw-cite-backlink"><b><a href="#cite_ref-27">^</a></b></span> <span class="reference-text">USA v Nolan [2016] UKSC 63</span> </li> <li id="cite_note-28"><span class="mw-cite-backlink"><b><a href="#cite_ref-28">^</a></b></span> <span class="reference-text">FCARs Regulation 3</span> </li> <li id="cite_note-29"><span class="mw-cite-backlink"><b><a href="#cite_ref-29">^</a></b></span> <span class="reference-text">"The obligation which are secured or otherwise covered by the FCA and such obligations may consist of or include <ol><li>present or future, actual or contingent or prospective obligations</li> <li>obligations owed to the CT by a person other than the CP</li> <li>obligations of a specified class or kind arising from time to time"</li></ol> </span></li> <li id="cite_note-30"><span class="mw-cite-backlink"><b><a href="#cite_ref-30">^</a></b></span> <span class="reference-text">Several types of security interests are set out to be entrapped by the FCAR regime. This means any legal or equitable interest or any right in security, other than a title transfer financial collateral arrangement, created or otherwise arising by way of security including: <ul><li>pledge</li> <li>mortgage</li> <li>lien</li> <li>fixed charge</li> <li>charge created as a floating charge where the FC charged is delivered, transferred, held, registered or otherwise designated so as to be in possession and under the control of the collateral taker. Where there is a right to withdrawal etc.</li></ul> </span></li> <li id="cite_note-31"><span class="mw-cite-backlink"><b><a href="#cite_ref-31">^</a></b></span> <span class="reference-text"><i>In the matter of Lehman Brothers International (Europe) (In administration)</i> [2012] EWHC 2997 (CH) [74] - [160]</span> </li> <li id="cite_note-32"><span class="mw-cite-backlink"><b><a href="#cite_ref-32">^</a></b></span> <span class="reference-text">Private Equity Insurance Group Sia v Swedbank AS (C-156/15)</span> </li> <li id="cite_note-33"><span class="mw-cite-backlink"><b><a href="#cite_ref-33">^</a></b></span> <span class="reference-text">meaning "any corporate body, unincorporated firm, partnership or body with legal personality…"</span> </li> <li id="cite_note-34"><span class="mw-cite-backlink"><b><a href="#cite_ref-34">^</a></b></span> <span class="reference-text">Riz Mokal, <i>Liquidity, Systemic Risk, and the Bankruptcy Treatment of Financial Contracts</i> 10 Brooklyn Journal of Corporate, Financial, and Commercial Law (2015)</span> </li> <li id="cite_note-35"><span class="mw-cite-backlink"><b><a href="#cite_ref-35">^</a></b></span> <span class="reference-text">Louise Gullifer, Jennifer Payne <i>Corporate Finance: Principles and Policy</i> (2015) Hart Publishing, 310</span> </li> <li id="cite_note-36"><span class="mw-cite-backlink"><b><a href="#cite_ref-36">^</a></b></span> <span class="reference-text">FCAR Regulation 17</span> </li> <li id="cite_note-37"><span class="mw-cite-backlink"><b><a href="#cite_ref-37">^</a></b></span> <span class="reference-text">The definition in para 3 is rather unhelpful: Possession: of financial collateral in the form of cash or financial instruments includes the case where financial collateral has been credited to an account in the name of the CT provided that any rights the collateral provider may have in relation to the FC are limited to the right to substitute FC of the same or greater value or withdraw excess FC.</span> </li> <li id="cite_note-38"><span class="mw-cite-backlink"><b><a href="#cite_ref-38">^</a></b></span> <span class="reference-text">cf Youngna Choi <i>Ostensible Financial Stability Caused by Wealth Inequality</i> (March 23, 2018). Available at SSRN: <a rel="nofollow" class="external free" href="https://ssrn.com/abstract=3147465">https://ssrn.com/abstract=3147465</a> or <a rel="nofollow" class="external free" href="https://dx.doi.org/10.2139/ssrn.3147465">https://dx.doi.org/10.2139/ssrn.3147465</a></span> </li> <li id="cite_note-39"><span class="mw-cite-backlink"><b><a href="#cite_ref-39">^</a></b></span> <span class="reference-text"><i>In the matter of Lehman Brothers International (Europe) (In administration)</i> [2012] EWHC 2997 (CH), [76] Briggs J</span> </li> <li id="cite_note-40"><span class="mw-cite-backlink"><b><a href="#cite_ref-40">^</a></b></span> <span class="reference-text">In the matter of Lehman Brothers International (Europe) (In administration) [2012] EWHC 2997 (CH) [105]</span> </li> <li id="cite_note-auto12-41"><span class="mw-cite-backlink">^ <a href="#cite_ref-auto12_41-0"><sup><i><b>a</b></i></sup></a> <a href="#cite_ref-auto12_41-1"><sup><i><b>b</b></i></sup></a></span> <span class="reference-text">Gray v GTP Group Limited [2010] EWHC 1772 Ch, Los J</span> </li> <li id="cite_note-42"><span class="mw-cite-backlink"><b><a href="#cite_ref-42">^</a></b></span> <span class="reference-text">Limited to <i>Gray v GTP Group Limited</i> [2010] EWHC 1772 Ch, Los J and <i><a href="/wiki/Cukurova_Finance_International_Ltd_v_Alfa_Telecom_Turkey_Ltd" title="Cukurova Finance International Ltd v Alfa Telecom Turkey Ltd">Cukurova Finance International Ltd v Alfa Telecom Turkey Ltd</a></i> [2009] UKPC 19</span> </li> <li id="cite_note-43"><span class="mw-cite-backlink"><b><a href="#cite_ref-43">^</a></b></span> <span class="reference-text">Louise Gullifer ^</span> </li> <li id="cite_note-44"><span class="mw-cite-backlink"><b><a href="#cite_ref-44">^</a></b></span> <span class="reference-text"><a href="/wiki/Cukurova_Finance_International_Ltd_v_Alfa_Telecom_Turkey_Ltd" title="Cukurova Finance International Ltd v Alfa Telecom Turkey Ltd">Cukurova Finance International Ltd v Alfa Telecom Turkey Ltd</a> [2009] UKPC 19</span> </li> <li id="cite_note-auto3-45"><span class="mw-cite-backlink">^ <a href="#cite_ref-auto3_45-0"><sup><i><b>a</b></i></sup></a> <a href="#cite_ref-auto3_45-1"><sup><i><b>b</b></i></sup></a> <a href="#cite_ref-auto3_45-2"><sup><i><b>c</b></i></sup></a> <a href="#cite_ref-auto3_45-3"><sup><i><b>d</b></i></sup></a> <a href="#cite_ref-auto3_45-4"><sup><i><b>e</b></i></sup></a></span> <span class="reference-text">Goode and Gullifer on <i>Legal Problems of Credit and Security</i> (Sweet & Maxwell, 7th ed 2017)</span> </li> <li id="cite_note-auto4-46"><span class="mw-cite-backlink">^ <a href="#cite_ref-auto4_46-0"><sup><i><b>a</b></i></sup></a> <a href="#cite_ref-auto4_46-1"><sup><i><b>b</b></i></sup></a></span> <span class="reference-text">P Wood Title Finance, Derivatives, Securitisation, Set off and Netting, (London: Sweet & Maxwell, 1995), 189</span> </li> <li id="cite_note-auto5-47"><span class="mw-cite-backlink">^ <a href="#cite_ref-auto5_47-0"><sup><i><b>a</b></i></sup></a> <a href="#cite_ref-auto5_47-1"><sup><i><b>b</b></i></sup></a></span> <span class="reference-text">Benjamin, <i>Financial Law</i> (2007 Oxford University Press), 13</span> </li> <li id="cite_note-48"><span class="mw-cite-backlink"><b><a href="#cite_ref-48">^</a></b></span> <span class="reference-text">ISDA Master Agreement Clause 2(a)(iii)</span> </li> <li id="cite_note-auto6-49"><span class="mw-cite-backlink">^ <a href="#cite_ref-auto6_49-0"><sup><i><b>a</b></i></sup></a> <a href="#cite_ref-auto6_49-1"><sup><i><b>b</b></i></sup></a> <a href="#cite_ref-auto6_49-2"><sup><i><b>c</b></i></sup></a> <a href="#cite_ref-auto6_49-3"><sup><i><b>d</b></i></sup></a> <a href="#cite_ref-auto6_49-4"><sup><i><b>e</b></i></sup></a></span> <span class="reference-text"><i><a href="/wiki/Lomas_v_JFB_Firth_Rixson_Inc" title="Lomas v JFB Firth Rixson Inc">Lomas v JFB Firth Rixson Inc</a></i> [2012] EWCA Civ 419</span> </li> <li id="cite_note-50"><span class="mw-cite-backlink"><b><a href="#cite_ref-50">^</a></b></span> <span class="reference-text">Gloster J in <i>Canmer International v UK Mutual Steamship "The Rays"</i></span> </li> <li id="cite_note-51"><span class="mw-cite-backlink"><b><a href="#cite_ref-51">^</a></b></span> <span class="reference-text"><i><a href="/wiki/Foakes_v_Beer" title="Foakes v Beer">Foakes v Beer</a></i> [1884] UKHL 1</span> </li> <li id="cite_note-52"><span class="mw-cite-backlink"><b><a href="#cite_ref-52">^</a></b></span> <span class="reference-text"><i><a href="/w/index.php?title=Chappell_%26_Co_Ltd_v_Nestl%C3%A9_Co_Ltd&action=edit&redlink=1" class="new" title="Chappell & Co Ltd v Nestlé Co Ltd (page does not exist)">Chappell & Co Ltd v Nestlé Co Ltd</a></i> [1960] AC 87</span> </li> <li id="cite_note-53"><span class="mw-cite-backlink"><b><a href="#cite_ref-53">^</a></b></span> <span class="reference-text">Charter Reinsurance Co v Fagan</span> </li> <li id="cite_note-54"><span class="mw-cite-backlink"><b><a href="#cite_ref-54">^</a></b></span> <span class="reference-text">Lord Steyn 'Contract Law: Fulfilling the Reasonable Expectations of Honest Men' (1997) 113 Law Quarterly Review 433, 437</span> </li> <li id="cite_note-55"><span class="mw-cite-backlink"><b><a href="#cite_ref-55">^</a></b></span> <span class="reference-text">Williams v Roffey Bros & Nicholls (Contractors) Ltd [1990] 2 WLR 1153; [1989] EWCA Civ 5</span> </li> <li id="cite_note-56"><span class="mw-cite-backlink"><b><a href="#cite_ref-56">^</a></b></span> <span class="reference-text">Williams v Williams [1957] 1 WLR 14</span> </li> <li id="cite_note-57"><span class="mw-cite-backlink"><b><a href="#cite_ref-57">^</a></b></span> <span class="reference-text">MWB Business Exchange Centers Ltd v Rock Advertising Ltd [2016] EWCA Civ 553 (Kitchin LJ);</span> </li> <li id="cite_note-58"><span class="mw-cite-backlink"><b><a href="#cite_ref-58">^</a></b></span> <span class="reference-text">Alan Brudner 'Reconstructing Contracts' (1993) 43:1 University of Toronto Law Journal, 1</span> </li> <li id="cite_note-59"><span class="mw-cite-backlink"><b><a href="#cite_ref-59">^</a></b></span> <span class="reference-text">Chen-Wishart A Bird in the Hand: Consideration and One-Sided Contract modifications' in Contract Formation and Parties (AS Burrows, ed and E Peel, ed Oxford University Press 2010) 109</span> </li> <li id="cite_note-60"><span class="mw-cite-backlink"><b><a href="#cite_ref-60">^</a></b></span> <span class="reference-text">(1922) 1 KB 451</span> </li> <li id="cite_note-auto7-61"><span class="mw-cite-backlink">^ <a href="#cite_ref-auto7_61-0"><sup><i><b>a</b></i></sup></a> <a href="#cite_ref-auto7_61-1"><sup><i><b>b</b></i></sup></a></span> <span class="reference-text">Mindy Chen-Wishart <i>In defence of consideration</i>(2013) Oxford Commonwealth Law Journal, Vol 13.1</span> </li> <li id="cite_note-62"><span class="mw-cite-backlink"><b><a href="#cite_ref-62">^</a></b></span> <span class="reference-text">Jefferson Cumberbatch 'On Bargains, Gifts and Extortion: An Essay on the Function of Consideration in the Law of Contract' (1990) 19:3 Anglo-American Law Review 239</span> </li> <li id="cite_note-63"><span class="mw-cite-backlink"><b><a href="#cite_ref-63">^</a></b></span> <span class="reference-text">Charles Fried Contract as Promise: A theory of contractual obligation (Harvard University Press 1981) 38</span> </li> <li id="cite_note-64"><span class="mw-cite-backlink"><b><a href="#cite_ref-64">^</a></b></span> <span class="reference-text">P.S. Atiyah 'Consideration in Contract: A fundamental Restatement (1971); 'Consideration: A Restatement' in Essays on Contract (Oxford: Clarendon Press 1986) 179</span> </li> <li id="cite_note-auto8-65"><span class="mw-cite-backlink">^ <a href="#cite_ref-auto8_65-0"><sup><i><b>a</b></i></sup></a> <a href="#cite_ref-auto8_65-1"><sup><i><b>b</b></i></sup></a> <a href="#cite_ref-auto8_65-2"><sup><i><b>c</b></i></sup></a></span> <span class="reference-text"><i><a href="/wiki/The_Brimnes" title="The Brimnes">The Brimnes</a></i> <i>Tenax Steamship Co v Owners of the Motor Vessel Brimnes</i> [1974] EWCA Civ 15</span> </li> <li id="cite_note-auto9-66"><span class="mw-cite-backlink">^ <a href="#cite_ref-auto9_66-0"><sup><i><b>a</b></i></sup></a> <a href="#cite_ref-auto9_66-1"><sup><i><b>b</b></i></sup></a> <a href="#cite_ref-auto9_66-2"><sup><i><b>c</b></i></sup></a></span> <span class="reference-text"><i>Mardorf Peach & Co v Attica Sea Carriers Corp of Liberia (The Laconia)</i> [1977] AC 850</span> </li> <li id="cite_note-auto10-67"><span class="mw-cite-backlink">^ <a href="#cite_ref-auto10_67-0"><sup><i><b>a</b></i></sup></a> <a href="#cite_ref-auto10_67-1"><sup><i><b>b</b></i></sup></a></span> <span class="reference-text"><i>The Chikuma</i> [1981] 1 All ER 652</span> </li> <li id="cite_note-68"><span class="mw-cite-backlink"><b><a href="#cite_ref-68">^</a></b></span> <span class="reference-text">[1921] 3 KB 302</span> </li> <li id="cite_note-69"><span class="mw-cite-backlink"><b><a href="#cite_ref-69">^</a></b></span> <span class="reference-text">Mann on the Legal Aspect of Money (OUP, 7th ed 2012 by Charles Proctor) Chapter 1</span> </li> <li id="cite_note-:2-70"><span class="mw-cite-backlink">^ <a href="#cite_ref-:2_70-0"><sup><i><b>a</b></i></sup></a> <a href="#cite_ref-:2_70-1"><sup><i><b>b</b></i></sup></a></span> <span class="reference-text">Cf Hobhouse J in <i>TSB Bank of Scotland plc v Welwyn Hatfield District Council</i> [1993] Bank LR 267</span> </li> <li id="cite_note-71"><span class="mw-cite-backlink"><b><a href="#cite_ref-71">^</a></b></span> <span class="reference-text">[1989] QB 728</span> </li> <li id="cite_note-72"><span class="mw-cite-backlink"><b><a href="#cite_ref-72">^</a></b></span> <span class="reference-text"><i>Sale of Goods Act 1979</i> c.54 Section 38 which states; "Unpaid seller defined. (1)The seller of goods is an unpaid seller within the meaning of this Act— (a)when the whole of the price has not been paid or tendered; (b)when a bill of exchange or other negotiable instrument has been received as conditional payment, and the condition on which it was received has not been fulfilled by reason of the dishonour of the instrument or otherwise. (2)In this Part of this Act "seller" includes any person who is in the position of a seller, as, for instance, an agent of the seller to whom the bill of lading has been indorsed, or a consignor or agent who has himself paid (or is directly responsible for) the price."</span> </li> <li id="cite_note-73"><span class="mw-cite-backlink"><b><a href="#cite_ref-73">^</a></b></span> <span class="reference-text">Cleveland v Muslim Commercial Bank [1981] 2 Lloyd's Rep 646</span> </li> <li id="cite_note-74"><span class="mw-cite-backlink"><b><a href="#cite_ref-74">^</a></b></span> <span class="reference-text">See <i>Algoa Milling Co Ltd v Arkell and Douglas</i> 1918 AD 145 at 158</span> </li> <li id="cite_note-75"><span class="mw-cite-backlink"><b><a href="#cite_ref-75">^</a></b></span> <span class="reference-text">Benjamin, Financial Law (Oxford University Press), 9</span> </li> <li id="cite_note-76"><span class="mw-cite-backlink"><b><a href="#cite_ref-76">^</a></b></span> <span class="reference-text">S85 Financial Services and Markets Act 2000</span> </li> <li id="cite_note-77"><span class="mw-cite-backlink"><b><a href="#cite_ref-77">^</a></b></span> <span class="reference-text">Tullett Prebon Group [2008] EWHC</span> </li> <li id="cite_note-78"><span class="mw-cite-backlink"><b><a href="#cite_ref-78">^</a></b></span> <span class="reference-text">Sunrise Brokers v Rogers [2014] EWCH 2633 (QB) at [7]</span> </li> <li id="cite_note-79"><span class="mw-cite-backlink"><b><a href="#cite_ref-79">^</a></b></span> <span class="reference-text"><i>Dexia Crediop S.p.A. v Commune di Prato</i> [2017] EWCA Civ 428 <i>per</i> Paul Walker J</span> </li> <li id="cite_note-80"><span class="mw-cite-backlink"><b><a href="#cite_ref-80">^</a></b></span> <span class="reference-text">[1992] 2 AC 1, [739]-[740]</span> </li> <li id="cite_note-81"><span class="mw-cite-backlink"><b><a href="#cite_ref-81">^</a></b></span> <span class="reference-text">P Ali & de Vires Robbe <i>Synthetic, Insurance, and Hedge Fund Securitisation</i> (2004 OUP), 11</span> </li> <li id="cite_note-82"><span class="mw-cite-backlink"><b><a href="#cite_ref-82">^</a></b></span> <span class="reference-text"><i>Money Markets International Stockbrokers Ltd v London Stock Exchange Ltd</i> [2001] Ch D 223</span> </li> <li id="cite_note-83"><span class="mw-cite-backlink"><b><a href="#cite_ref-83">^</a></b></span> <span class="reference-text"><i>Bankers Trust International PLC v PT Dharmala Sakti Sejahtera</i> [1996] CLC 518</span> </li> <li id="cite_note-84"><span class="mw-cite-backlink"><b><a href="#cite_ref-84">^</a></b></span> <span class="reference-text"><i>Peekay Intermark Ltd and Another v Australia and New Zealand Banking Group Ltd CA</i> [2006] EWCA Civ 386</span> </li> <li id="cite_note-85"><span class="mw-cite-backlink"><b><a href="#cite_ref-85">^</a></b></span> <span class="reference-text">Alistar Hudson <i>The Uses and Abuses of Derivatives</i> (1998) Cambridge Symposium on Economic Crime</span> </li> <li id="cite_note-86"><span class="mw-cite-backlink"><b><a href="#cite_ref-86">^</a></b></span> <span class="reference-text"><i>Hazell v Hammersmith and Fulham London Borough Council</i> [1992] 2 AC 1</span> </li> <li id="cite_note-87"><span class="mw-cite-backlink"><b><a href="#cite_ref-87">^</a></b></span> <span class="reference-text"><i>Credit Suisse International v Stichting Vestia Group</i> [2014] EWHC</span> </li> <li id="cite_note-88"><span class="mw-cite-backlink"><b><a href="#cite_ref-88">^</a></b></span> <span class="reference-text"><i>UBS AG v KOMMUNALE WASSERWERKE LEIPZIG GMBH</i> [2014] EWHC 3615</span> </li> <li id="cite_note-89"><span class="mw-cite-backlink"><b><a href="#cite_ref-89">^</a></b></span> <span class="reference-text"><i>Lomas v JFB Firth Rixon</i> [2012] EWCA Civ</span> </li> <li id="cite_note-90"><span class="mw-cite-backlink"><b><a href="#cite_ref-90">^</a></b></span> <span class="reference-text"><i>Standard Chartered Bank v Ceylon Petroleum</i> [2011] EWHC 1785 [27] - [36]</span> </li> <li id="cite_note-91"><span class="mw-cite-backlink"><b><a href="#cite_ref-91">^</a></b></span> <span class="reference-text"><i>BNP Paribas v Wockhardt EU Operations (Swiss) AG</i> [2009] EWHC 3116 (Comm)</span> </li> <li id="cite_note-92"><span class="mw-cite-backlink"><b><a href="#cite_ref-92">^</a></b></span> <span class="reference-text">[2001] UKPC 28</span> </li> <li id="cite_note-93"><span class="mw-cite-backlink"><b><a href="#cite_ref-93">^</a></b></span> <span class="reference-text">(1961) WLR 828 per Harman LJ</span> </li> <li id="cite_note-94"><span class="mw-cite-backlink"><b><a href="#cite_ref-94">^</a></b></span> <span class="reference-text">Birkmyr v. Darnell, 1704 91 ER 27 1 Salk, 27 & 28</span> </li> <li id="cite_note-95"><span class="mw-cite-backlink"><b><a href="#cite_ref-95">^</a></b></span> <span class="reference-text">Stadium Finance Co v Helm</span> </li> <li id="cite_note-96"><span class="mw-cite-backlink"><b><a href="#cite_ref-96">^</a></b></span> <span class="reference-text">Seaton v Heath [1899] 1 QB 782</span> </li> <li id="cite_note-97"><span class="mw-cite-backlink"><b><a href="#cite_ref-97">^</a></b></span> <span class="reference-text">Benjamin, Financial Law (2007 OUP) Chapter 8, 149</span> </li> <li id="cite_note-98"><span class="mw-cite-backlink"><b><a href="#cite_ref-98">^</a></b></span> <span class="reference-text">Cunliffe Brooks v Blackburn and District Benefit BS (1884)</span> </li> <li id="cite_note-99"><span class="mw-cite-backlink"><b><a href="#cite_ref-99">^</a></b></span> <span class="reference-text">LORDSVALE FINANCE V BANK OF ZAMBIA [1996] 3 ALL ER 156</span> </li> <li id="cite_note-100"><span class="mw-cite-backlink"><b><a href="#cite_ref-100">^</a></b></span> <span class="reference-text">Grupo Hotelero Urvasco SA v Carey Value Added [2013] EWHC 1039 (Comm)</span> </li> <li id="cite_note-101"><span class="mw-cite-backlink"><b><a href="#cite_ref-101">^</a></b></span> <span class="reference-text">SHEPPARD & COOPER LTD V TSB BANK PLC (NO 2) P1996] BCC 965; [1996] 2 ALL ER 654</span> </li> <li id="cite_note-102"><span class="mw-cite-backlink"><b><a href="#cite_ref-102">^</a></b></span> <span class="reference-text">CARLYLE v RBS [2015] UKSC 13</span> </li> <li id="cite_note-103"><span class="mw-cite-backlink"><b><a href="#cite_ref-103">^</a></b></span> <span class="reference-text">Lloyds Bank v Lampert (1999)</span> </li> <li id="cite_note-104"><span class="mw-cite-backlink"><b><a href="#cite_ref-104">^</a></b></span> <span class="reference-text">Titford Property Co v Cannon Street Acceptances (1975) distinguished for Lloyds Bank plc v Lampert (1999)</span> </li> <li id="cite_note-105"><span class="mw-cite-backlink"><b><a href="#cite_ref-105">^</a></b></span> <span class="reference-text">Sheppard & Cooper Ltd v TSB Bank Plc (No 2) [1996] BCC 965</span> </li> <li id="cite_note-106"><span class="mw-cite-backlink"><b><a href="#cite_ref-106">^</a></b></span> <span class="reference-text">in the Insolvency Act 1986 s127 limitations on dissipation of assets after winding-up. This was seen within <i>Re Grays Inn's Construction Ltd</i> (1980)</span> </li> <li id="cite_note-107"><span class="mw-cite-backlink"><b><a href="#cite_ref-107">^</a></b></span> <span class="reference-text">Re Barn Crown 1995</span> </li> <li id="cite_note-108"><span class="mw-cite-backlink"><b><a href="#cite_ref-108">^</a></b></span> <span class="reference-text">HOLLICOURT (CONTRACTS) LTD V BANK OF IRELAND (2001)</span> </li> <li id="cite_note-109"><span class="mw-cite-backlink"><b><a href="#cite_ref-109">^</a></b></span> <span class="reference-text">RE HONE (1951) Ch 852 All per Harman J.</span> </li> <li id="cite_note-110"><span class="mw-cite-backlink"><b><a href="#cite_ref-110">^</a></b></span> <span class="reference-text">LLOYDS BANK v LAMPERT [1999] 1 All ER (Comm) 161</span> </li> <li id="cite_note-111"><span class="mw-cite-backlink"><b><a href="#cite_ref-111">^</a></b></span> <span class="reference-text"><i>Cunliffe Brooks v Blackburn and District Benefit BS</i> (1884)</span> </li> <li id="cite_note-112"><span class="mw-cite-backlink"><b><a href="#cite_ref-112">^</a></b></span> <span class="reference-text">Parking Eye [2015] UKSC</span> </li> <li id="cite_note-113"><span class="mw-cite-backlink"><b><a href="#cite_ref-113">^</a></b></span> <span class="reference-text">Lloyds bank plc v Independent Insurance Co Ltd [1998] EWCA Civ 1853</span> </li> <li id="cite_note-:3-114"><span class="mw-cite-backlink">^ <a href="#cite_ref-:3_114-0"><sup><i><b>a</b></i></sup></a> <a href="#cite_ref-:3_114-1"><sup><i><b>b</b></i></sup></a></span> <span class="reference-text">Barclays Bank v WJ Simms (1980)</span> </li> <li id="cite_note-115"><span class="mw-cite-backlink"><b><a href="#cite_ref-115">^</a></b></span> <span class="reference-text">Kitchen HSBC Bank plc (2000)</span> </li> <li id="cite_note-116"><span class="mw-cite-backlink"><b><a href="#cite_ref-116">^</a></b></span> <span class="reference-text">Rouse v Bradford Banking Co (1894)</span> </li> <li id="cite_note-117"><span class="mw-cite-backlink"><b><a href="#cite_ref-117">^</a></b></span> <span class="reference-text">CARLYLE v RBS [2015] UKSC 13.</span> </li> <li id="cite_note-118"><span class="mw-cite-backlink"><b><a href="#cite_ref-118">^</a></b></span> <span class="reference-text">Rawlings, Avoiding the Obligation to Lend, 2012 JBL 89</span> </li> </ol></div> <div class="mw-heading mw-heading2"><h2 id="Further_reading">Further reading</h2><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=Financial_law&action=edit&section=31" title="Edit section: Further reading"><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <ul><li>Benjamin, Financial Law (OUP, 2007)</li> <li>Chitty on Contracts (Sweet and Maxwell, 32nd ed 2015) Vols I (General Principles) and II (Specific Contracts)</li> <li>Goode on Commercial Law (Penguin, 5th ed 2016 by Ewan McKendrick)</li> <li>Goode & Gullifer on Legal Problems of Credit and Security (Sweet & Maxwell, 7th ed 2017)</li> <li>Gullifer and <a href="/wiki/Jennifer_Payne" title="Jennifer Payne">Payne</a>, Corporate Finance Law: Principles and Policy (Hart Publishing, 2nd ed 2015)</li> <li>Hudson, The Law of Finance (Sweet & Maxwell, 2nd ed 2013)</li> <li>Gullifer and Payne, Corporate Finance Law (Hart publishing, 2nd Ed, 2016)</li></ul> <div class="mw-heading mw-heading2"><h2 id="External_links">External links</h2><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=Financial_law&action=edit&section=32" title="Edit section: External links"><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <ul><li><span class="noviewer" typeof="mw:File"><a href="/wiki/File:Commons-logo.svg" class="mw-file-description"><img alt="" src="//upload.wikimedia.org/wikipedia/en/thumb/4/4a/Commons-logo.svg/12px-Commons-logo.svg.png" decoding="async" width="12" height="16" class="mw-file-element" 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law</a></li> <li><a href="/wiki/Consumer_protection" title="Consumer protection">Consumer protection</a></li> <li><a href="/wiki/Corporate_law" title="Corporate law">Corporate law</a></li> <li><a href="/wiki/IT_law" class="mw-redirect" title="IT law">Cyberlaw</a></li> <li><a href="/wiki/Drug_policy" title="Drug policy">Drugs law</a></li> <li><a href="/wiki/Election_law" title="Election law">Election law</a></li> <li><a href="/wiki/Energy_law" title="Energy law">Energy law</a></li> <li><a href="/wiki/Entertainment_law" title="Entertainment law">Entertainment law</a> (Media law)</li> <li><a href="/wiki/Environmental_law" title="Environmental law">Environmental law</a></li> <li><a href="/wiki/Family_law" title="Family law">Family law</a></li> <li><a class="mw-selflink selflink">Financial law</a></li> <li><a href="/wiki/Financial_regulation" title="Financial regulation">Financial regulation</a></li> <li><a href="/wiki/Health_law" title="Health law">Health law</a></li> <li><a href="/wiki/Immigration_law" title="Immigration law">Immigration law</a></li> <li><a href="/wiki/Intellectual_property" title="Intellectual property">Intellectual property</a></li> <li><a href="/wiki/International_criminal_law" title="International criminal law">International criminal law</a></li> <li><a href="/wiki/International_human_rights_law" title="International human rights law">International human rights</a></li> <li><a href="/wiki/Slavery_in_international_law" title="Slavery in international law">International slavery laws</a></li> <li><a href="/wiki/International_trade_law" title="International trade law">International trade law</a></li> <li><a href="/wiki/Jurimetrics" title="Jurimetrics">Jurimetrics</a></li> <li><a href="/wiki/Labour_law" title="Labour law">Labour</a></li> <li><a href="/wiki/Landlord%E2%80%93tenant_law" title="Landlord–tenant law">Landlord–tenant law</a></li> <li><a href="/wiki/Law_of_war" title="Law of war">Law of war</a></li> <li><a href="/wiki/Legal_archaeology" title="Legal archaeology">Legal archaeology</a></li> <li><a href="/wiki/Legal_fiction" title="Legal fiction">Legal fiction</a></li> <li><a href="/wiki/Admiralty_law" title="Admiralty law">Maritime law</a></li> <li><a href="/wiki/Marriage_law" title="Marriage law">Marriage law</a></li> <li><a href="/wiki/Military_justice" title="Military justice">Military law</a></li> <li><a href="/wiki/Nationality_law" title="Nationality law">Nationality law</a></li> <li><a href="/wiki/Probate" title="Probate">Probate</a> <ul><li><a href="/wiki/Estate_(law)" title="Estate (law)">Estate</a></li> <li><a href="/wiki/Will_and_testament" title="Will and testament">Will and testament</a></li></ul></li> <li><a href="/wiki/Product_liability" title="Product liability">Product liability</a></li> <li><a href="/wiki/International_law" title="International law">Public international law</a></li> <li><a href="/wiki/Refugee_law" title="Refugee law">Refugee law</a></li> <li><a href="/wiki/Reparation_(legal)" title="Reparation (legal)">Reparations</a></li> <li><a href="/wiki/Space_law" title="Space law">Space law</a></li> <li><a href="/wiki/Sports_law_in_the_United_States" title="Sports law in the United States">Sports law</a></li> <li><a href="/wiki/State_of_emergency" title="State of emergency">State of emergency</a></li> <li><a href="/wiki/Tax_law" title="Tax law">Tax law</a></li> <li><a href="/wiki/Transport_law" title="Transport law">Transport law</a></li> <li><a href="/wiki/Trust_(law)" title="Trust (law)">Trust law</a></li> <li><a href="/wiki/Unenforced_law" title="Unenforced law">Unenforced law</a></li></ul> </div></td></tr><tr><th scope="row" class="navbox-group" style="text-align:center;;width:1%"><a href="/wiki/Sources_of_law" title="Sources of law">Sources of law</a></th><td class="navbox-list-with-group navbox-list navbox-odd hlist" style="width:100%;padding:0"><div style="padding:0 0.25em"> <ul><li><a href="/wiki/Charter" title="Charter">Charter</a></li> <li><a href="/wiki/Code_of_law" title="Code of law">Legal code</a> / <a href="/wiki/Statutory_law" class="mw-redirect" title="Statutory law">Statutory law</a></li> <li><a href="/wiki/Constitution" title="Constitution">Constitution</a></li> <li><a href="/wiki/Customary_law" title="Customary law">Custom</a></li> <li><a href="/wiki/Divine_right_of_kings" title="Divine right of kings">Divine right</a> <ul><li><a href="/wiki/Divine_law" title="Divine law">Divine law</a></li></ul></li> <li><a href="/wiki/Human_rights" title="Human rights">Human rights</a></li> <li><a href="/wiki/Letters_patent" title="Letters patent">Letters patent</a></li> <li><a href="/wiki/Natural_law" title="Natural law">Natural law</a> <ul><li><a href="/wiki/Natural_rights_and_legal_rights" title="Natural rights and legal rights">Natural and legal rights</a></li></ul></li> <li><a href="/wiki/Case_law" title="Case law">Case law</a> <ul><li><a href="/wiki/Precedent" title="Precedent">Precedent</a></li> <li><a href="/wiki/Law_report" title="Law report">Law reports</a></li></ul></li> <li><a href="/wiki/Legal_treatise" title="Legal treatise">Legal treatise</a></li> <li><a href="/wiki/Regulation" title="Regulation">Regulations</a></li></ul> </div></td></tr><tr><th scope="row" class="navbox-group" style="text-align:center;;width:1%"><a href="/wiki/Lawmaking" title="Lawmaking">Law making</a></th><td class="navbox-list-with-group navbox-list navbox-even hlist" style="width:100%;padding:0"><div style="padding:0 0.25em"> <ul><li><a href="/wiki/Referendum" title="Referendum">Ballot measure</a></li> <li><a href="/wiki/Codification_(law)" title="Codification (law)">Codification</a></li> <li><a href="/wiki/Decree" title="Decree">Decree</a> <ul><li><a href="/wiki/Edict" title="Edict">Edict</a></li> <li><a href="/wiki/Executive_order_(disambiguation)" class="mw-disambig" title="Executive order (disambiguation)">Executive order</a></li> <li><a href="/wiki/Proclamation" title="Proclamation">Proclamation</a></li></ul></li> <li><a href="/wiki/Legislation" title="Legislation">Legislation</a> <ul><li><a href="/wiki/Primary_and_secondary_legislation" title="Primary and secondary legislation">Delegated legislation</a></li> <li><a href="/wiki/Regulation" title="Regulation">Regulation</a></li> <li><a href="/wiki/Rulemaking" title="Rulemaking">Rulemaking</a></li></ul></li> <li><a href="/wiki/Promulgation" title="Promulgation">Promulgation</a></li> <li><a href="/wiki/Ratification" title="Ratification">Ratification</a></li> <li><a href="/wiki/Repeal" title="Repeal">Repeal</a></li> <li><a href="/wiki/Treaty" title="Treaty">Treaty</a> <ul><li><a href="/wiki/Concordat" title="Concordat">Concordat</a></li></ul></li> <li><a href="/wiki/Statutory_law" class="mw-redirect" title="Statutory law">Statutory law</a> <ul><li><a href="/wiki/Statute" title="Statute">Statute</a></li> <li><a href="/wiki/Act_of_parliament" title="Act of parliament">Act of parliament</a></li> <li><a href="/wiki/Act_of_Congress" title="Act of Congress">Act of Congress</a></li></ul></li> <li><a href="/wiki/Basic_structure_doctrine" title="Basic structure doctrine">Basic structure doctrine</a></li></ul> </div></td></tr><tr><th scope="row" class="navbox-group" style="text-align:center;;width:1%"><a href="/wiki/List_of_national_legal_systems" title="List of national legal systems">Legal systems</a></th><td class="navbox-list-with-group navbox-list navbox-odd hlist" style="width:100%;padding:0"><div style="padding:0 0.25em"> <ul><li><a href="/wiki/Civil_law_(legal_system)" title="Civil law (legal system)">Civil law</a></li> <li><a href="/wiki/Common_law" title="Common law">Common law</a></li> <li><a href="/wiki/Chinese_law" title="Chinese law">Chinese law</a></li> <li><a href="/wiki/Legal_pluralism" title="Legal pluralism">Legal pluralism</a></li> <li><a href="/wiki/Religious_law" title="Religious law">Religious law</a> <ul><li><a href="/wiki/Canon_law" title="Canon law">Canon law</a> <ul><li><a href="/wiki/Canon_law_of_the_Catholic_Church" title="Canon law of the Catholic Church">Catholic canon law</a></li></ul></li> <li><a href="/wiki/Hindu_law" title="Hindu law">Hindu law</a></li> <li><a href="/wiki/Jain_law" title="Jain law">Jain law</a></li> <li><a href="/wiki/Halakha" title="Halakha">Jewish law</a></li> <li><a href="/wiki/Parsi_law" title="Parsi law">Parsi law</a></li> <li><a href="/wiki/Sharia" title="Sharia">Sharia</a></li></ul></li> <li><a href="/wiki/Roman_law" title="Roman law">Roman law</a> <ul><li><a href="/wiki/Byzantine_law" title="Byzantine law">Byzantine law</a></li></ul></li> <li><a href="/wiki/Socialist_law" title="Socialist law">Socialist law</a></li> <li><a href="/wiki/Statutory_law" class="mw-redirect" title="Statutory law">Statutory law</a></li> <li><a href="/wiki/Xeer" title="Xeer">Xeer</a></li> <li><a href="/wiki/Yassa" title="Yassa">Yassa</a></li></ul> </div></td></tr><tr><th scope="row" class="navbox-group" style="text-align:center;;width:1%">Legal theory</th><td class="navbox-list-with-group navbox-list navbox-even hlist" style="width:100%;padding:0"><div style="padding:0 0.25em"> <ul><li><a href="/wiki/Anarchist_law" title="Anarchist law">Anarchist</a></li> <li><a href="/wiki/Contract_theory" title="Contract theory">Contract theory</a></li> <li><a href="/wiki/Comparative_law" title="Comparative law">Comparative law</a></li> <li><a href="/wiki/Expressive_function_of_law" title="Expressive function of law">Expressive function</a></li> <li><a href="/wiki/Feminist_legal_theory" title="Feminist legal theory">Feminist</a></li> <li><a href="/wiki/Law_and_economics" title="Law and economics">Law and economics</a></li> <li><a href="/wiki/Legal_formalism" title="Legal formalism">Legal formalism</a></li> <li><a href="/wiki/Legal_history" title="Legal history">History</a></li> <li><a href="/wiki/Libertarian_theories_of_law" title="Libertarian theories of law">Libertarian</a></li> <li><a href="/wiki/International_legal_theories" title="International legal theories">International legal theory</a></li> <li><a href="/wiki/Legality" title="Legality">Principle of legality</a></li> <li><a href="/wiki/Principle_of_typicality" title="Principle of typicality">Principle of typicality</a></li> <li><a href="/wiki/Pseudolaw" title="Pseudolaw">Pseudolaw</a></li> <li><a href="/wiki/Rule_of_law" title="Rule of law">Rule of law</a></li> <li><a href="/wiki/Rule_of_man" title="Rule of man">Rule of man</a></li> <li><a href="/wiki/Sociology_of_law" title="Sociology of law">Sociology</a></li></ul> </div></td></tr><tr><th scope="row" class="navbox-group" style="text-align:center;;width:1%"><a href="/wiki/Jurisprudence" title="Jurisprudence">Jurisprudence</a></th><td class="navbox-list-with-group navbox-list navbox-odd hlist" style="width:100%;padding:0"><div style="padding:0 0.25em"> <ul><li><a href="/wiki/Adjudication" title="Adjudication">Adjudication</a></li> <li><a href="/wiki/Administration_of_justice" title="Administration of justice">Administration of justice</a></li> <li><a href="/wiki/Constitutionalism" title="Constitutionalism">Constitutionalism</a></li> <li><a href="/wiki/Criminal_justice" title="Criminal justice">Criminal justice</a></li> <li><a href="/wiki/Court-martial" title="Court-martial">Court-martial</a></li> <li><a href="/wiki/Dispute_resolution" title="Dispute resolution">Dispute resolution</a></li> <li><a href="/wiki/Fiqh" title="Fiqh">Fiqh</a></li> <li><a href="/wiki/Lawsuit" title="Lawsuit">Lawsuit/Litigation</a></li> <li><a href="/wiki/Legal_opinion" title="Legal opinion">Legal opinion</a></li> <li><a href="/wiki/Legal_remedy" title="Legal remedy">Legal remedy</a></li> <li><a href="/wiki/Judge" title="Judge">Judge</a> <ul><li><a href="/wiki/Justice_of_the_peace" title="Justice of the peace">Justice of the peace</a></li> <li><a href="/wiki/Magistrate" title="Magistrate">Magistrate</a></li></ul></li> <li><a href="/wiki/Judgment_(law)" title="Judgment (law)">Judgment</a></li> <li><a href="/wiki/Judicial_review" title="Judicial review">Judicial review</a></li> <li><a href="/wiki/Jurisdiction" title="Jurisdiction">Jurisdiction</a></li> <li><a href="/wiki/Jury" title="Jury">Jury</a></li> <li><a href="/wiki/Justice" title="Justice">Justice</a></li> <li><a href="/wiki/Practice_of_law" title="Practice of law">Practice of law</a> <ul><li><a href="/wiki/Attorney_at_law" title="Attorney at law">Attorney</a></li> <li><a href="/wiki/Barrister" title="Barrister">Barrister</a></li> <li><a href="/wiki/Counsel" title="Counsel">Counsel</a></li> <li><a href="/wiki/Lawyer" title="Lawyer">Lawyer</a></li> <li><a href="/wiki/Defense_(legal)" title="Defense (legal)">Legal representation</a></li> <li><a href="/wiki/Prosecutor" title="Prosecutor">Prosecutor</a></li> <li><a href="/wiki/Solicitor" title="Solicitor">Solicitor</a></li></ul></li> <li><a href="/wiki/Question_of_law#Question_of_fact" title="Question of law">Question of fact</a></li> <li><a href="/wiki/Question_of_law" title="Question of law">Question of law</a></li> <li><a href="/wiki/Trial" title="Trial">Trial</a></li> <li><a href="/wiki/Trial_advocacy" title="Trial advocacy">Trial advocacy</a></li> <li><a href="/wiki/Trier_of_fact" title="Trier of fact">Trier of fact</a></li> <li><a href="/wiki/Verdict" title="Verdict">Verdict</a></li></ul> </div></td></tr><tr><th scope="row" class="navbox-group" style="text-align:center;;width:1%">Legal institutions</th><td class="navbox-list-with-group navbox-list navbox-even hlist" style="width:100%;padding:0"><div style="padding:0 0.25em"> <ul><li><a href="/wiki/Barristers%27_chambers" title="Barristers' chambers">Barristers' chambers</a></li> <li><a href="/wiki/Bureaucracy" title="Bureaucracy">Bureaucracy</a></li> <li><a href="/wiki/Bar_(law)" title="Bar (law)">The bar</a></li> <li><a href="/wiki/Bench_(law)" title="Bench (law)">The bench</a></li> <li><a href="/wiki/Civil_society" title="Civil 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scope="row" class="navbox-group" style="width:1%">Categories</th><td class="navbox-list-with-group navbox-list navbox-odd" style="width:100%;padding:0"><div style="padding:0 0.25em"></div><table class="nowraplinks navbox-subgroup" style="border-spacing:0"><tbody><tr><th scope="row" class="navbox-group" style="width:1%"><a href="/wiki/Credit_risk" title="Credit risk">Credit risk</a></th><td class="navbox-list-with-group navbox-list navbox-odd" style="width:100%;padding:0"><div style="padding:0 0.25em"> <ul><li><a href="/wiki/Consumer_credit_risk" title="Consumer credit risk">Consumer credit risk</a></li> <li><a href="/wiki/Sovereign_credit_risk" title="Sovereign credit risk">Sovereign credit risk</a></li> <li><a href="/wiki/Settlement_risk" title="Settlement risk">Settlement risk</a></li> <li><a href="/wiki/Default_(finance)" title="Default (finance)">Default risk</a></li> <li><a href="/wiki/Concentration_risk" title="Concentration risk">Concentration risk</a></li> <li><a href="/wiki/Credit_derivative" title="Credit derivative">Credit derivative</a></li> <li><a href="/wiki/Securitization" title="Securitization">Securitization</a></li></ul> </div></td></tr><tr><th scope="row" class="navbox-group" style="width:1%"><a href="/wiki/Market_risk" title="Market risk">Market risk</a></th><td class="navbox-list-with-group navbox-list navbox-even" style="width:100%;padding:0"><div style="padding:0 0.25em"> <ul><li><a href="/wiki/Commodity_risk" title="Commodity risk">Commodity risk</a> (e.g. <a href="/wiki/Volume_risk" title="Volume risk">Volume risk</a>, <a href="/wiki/Basis_risk" title="Basis risk">Basis risk</a>, <a href="/wiki/Shape_risk" title="Shape risk">Shape risk</a>, <a href="/wiki/Holding_period_risk" title="Holding period risk">Holding period risk</a>, <a href="/wiki/Price_area_risk" class="mw-redirect" title="Price area risk">Price area risk</a>)</li> <li><a href="/wiki/Equity_risk" title="Equity risk">Equity risk</a></li> <li><a href="/wiki/Valuation_risk" title="Valuation risk">Valuation risk</a></li> <li><a href="/wiki/Foreign_exchange_risk" title="Foreign exchange risk">FX risk</a></li> <li><a href="/wiki/Margining_risk" title="Margining risk">Margining risk</a></li> <li><a href="/wiki/Interest_rate_risk" title="Interest rate risk">Interest rate risk</a></li> <li><a href="/wiki/Inflation_risk" class="mw-redirect" title="Inflation risk">Inflation risk</a></li> <li><a href="/wiki/Volatility_risk" title="Volatility risk">Volatility risk</a></li> <li><a href="/wiki/Liquidity_risk" title="Liquidity risk">Liquidity risk</a> (e.g. <a href="/wiki/Refinancing_risk" title="Refinancing risk">Refinancing risk</a>, <a href="/wiki/Deposit_risk" title="Deposit risk">Deposit risk</a>)</li></ul> </div></td></tr><tr><th scope="row" class="navbox-group" style="width:1%"><a href="/wiki/Operational_risk" title="Operational risk">Operational risk</a></th><td class="navbox-list-with-group navbox-list navbox-odd" style="width:100%;padding:0"><div style="padding:0 0.25em"> <ul><li><a href="/wiki/Operational_risk_management" title="Operational risk management">Operational risk management</a></li> <li><a href="/wiki/Business_risk" class="mw-redirect" title="Business risk">Business risk</a></li> <li><a href="/wiki/Model_risk" title="Model risk">Model risk</a></li> <li><a href="/wiki/Reputational_risk" class="mw-redirect" title="Reputational risk">Reputational risk</a></li> <li><a href="/wiki/Country_risk" title="Country risk">Country risk</a></li> <li><a href="/wiki/Political_risk" title="Political risk">Political risk</a></li> <li><a href="/wiki/Legal_risk" title="Legal risk">Legal risk</a></li></ul> </div></td></tr><tr><th scope="row" class="navbox-group" style="width:1%">Other</th><td class="navbox-list-with-group navbox-list navbox-even" style="width:100%;padding:0"><div style="padding:0 0.25em"> <ul><li><a href="/wiki/Execution_risk" class="mw-redirect" title="Execution risk">Execution risk</a></li> <li><a href="/wiki/Profit_risk" title="Profit risk">Profit risk</a></li> <li><a href="/wiki/Systemic_risk" title="Systemic risk">Systemic risk</a></li> <li><a href="/wiki/Non-financial_risk" title="Non-financial risk">Non-financial risk</a></li></ul> </div></td></tr></tbody></table><div></div></td></tr><tr><th scope="row" class="navbox-group" style="width:1%"><a href="/wiki/Financial_risk_modeling" title="Financial risk modeling">Modeling</a></th><td class="navbox-list-with-group navbox-list navbox-odd" style="width:100%;padding:0"><div style="padding:0 0.25em"> <ul><li><a href="/wiki/Arbitrage_pricing_theory" title="Arbitrage pricing theory">Arbitrage pricing theory</a></li> <li><a href="/wiki/Black%E2%80%93Scholes_model" title="Black–Scholes model">Black–Scholes model</a></li> <li><a href="/wiki/Replicating_portfolio" title="Replicating portfolio">Replicating portfolio</a></li> <li><a href="/wiki/Cashflow_matching" title="Cashflow matching">Cash flow matching</a></li> <li><a href="/wiki/Expected_shortfall" title="Expected shortfall">Conditional Value-at-Risk (CVaR)</a></li> <li><a href="/wiki/Copula_(probability_theory)" class="mw-redirect" title="Copula (probability theory)">Copula</a></li> <li><a href="/wiki/Drawdown_(economics)" title="Drawdown (economics)">Drawdown</a></li> <li><a href="/wiki/First-hitting-time_model" title="First-hitting-time model">First-hitting-time model</a></li> <li><a href="/wiki/Immunization_(finance)" title="Immunization (finance)">Interest rate immunization</a></li> <li><a href="/wiki/Market_portfolio" title="Market portfolio">Market portfolio</a></li> <li><a href="/wiki/Modern_portfolio_theory" title="Modern portfolio theory">Modern portfolio theory</a></li> <li><a href="/wiki/Omega_ratio" title="Omega ratio">Omega ratio</a></li> <li><a href="/wiki/Risk-adjusted_return_on_capital" title="Risk-adjusted return on capital">RAROC</a></li> <li><a href="/wiki/Risk-free_interest_rate" class="mw-redirect" title="Risk-free interest rate">Risk-free rate</a></li> <li><a href="/wiki/Risk_parity" title="Risk parity">Risk parity</a></li> <li><a href="/wiki/Sharpe_ratio" title="Sharpe ratio">Sharpe ratio</a></li> <li><a href="/wiki/Sortino_ratio" title="Sortino ratio">Sortino ratio</a></li> <li><a href="/wiki/Survival_analysis" title="Survival analysis">Survival analysis</a> (<a href="/wiki/Proportional_hazards_model" title="Proportional hazards model">Proportional hazards model</a>)</li> <li><a href="/wiki/Tracking_error" title="Tracking error">Tracking error</a></li> <li><a href="/wiki/Value_at_risk" title="Value at risk">Value-at-Risk (VaR)</a> and extensions (<a href="/wiki/Profit_at_risk" title="Profit at risk">Profit at risk</a>, <a href="/wiki/Margin_at_risk" title="Margin at risk">Margin at risk</a>, <a href="/wiki/Liquidity_at_risk" title="Liquidity at risk">Liquidity at risk</a>, <a href="/wiki/Cash_flow_at_risk" class="mw-redirect" title="Cash flow at risk">Cash flow at risk</a>, <a href="/wiki/Earnings_at_risk" title="Earnings at risk">Earnings at risk</a>)</li></ul> </div></td></tr><tr><th scope="row" class="navbox-group" style="width:1%">Basic concepts</th><td class="navbox-list-with-group navbox-list navbox-even" style="width:100%;padding:0"><div style="padding:0 0.25em"> <ul><li><a href="/wiki/Asset_allocation" title="Asset allocation">Asset allocation</a></li> <li><a href="/wiki/Asset_and_liability_management" title="Asset and liability management">Asset and liability management</a></li> <li><a href="/wiki/Asset_pricing" title="Asset pricing">Asset pricing</a></li> <li><a href="/wiki/Bad_debt" title="Bad debt">Bad debt</a></li> <li><a href="/wiki/Capital_asset" title="Capital asset">Capital asset</a></li> <li><a href="/wiki/Capital_structure" title="Capital structure">Capital structure</a></li> <li><a href="/wiki/Corporate_finance" title="Corporate finance">Corporate finance</a></li> <li><a href="/wiki/Cost_of_capital" title="Cost of capital">Cost of capital</a></li> <li><a href="/wiki/Diversification_(finance)" title="Diversification (finance)">Diversification</a></li> <li><a href="/wiki/Economic_bubble" title="Economic bubble">Economic bubble</a></li> <li><a href="/wiki/Enterprise_value" title="Enterprise value">Enterprise value</a></li> <li><a href="/wiki/Environmental,_social,_and_governance" title="Environmental, social, and governance">ESG</a></li> <li><a href="/wiki/Exchange_traded_fund" class="mw-redirect" title="Exchange traded fund">Exchange traded fund</a></li> <li><a href="/wiki/Expected_return" title="Expected return">Expected return</a></li> <li><a href="/wiki/Finance" title="Finance">Financial</a> <ul><li><a href="/wiki/Financial_adviser" title="Financial adviser">adviser</a></li> <li><a href="/wiki/Financial_analysis" title="Financial analysis">analysis</a></li> <li><a href="/wiki/Financial_analyst" title="Financial analyst">analyst</a></li> <li><a href="/wiki/Financial_asset" title="Financial asset">asset</a></li> <li><a href="/wiki/Financial_betting" title="Financial betting">betting</a></li> <li><a href="/wiki/Financial_crime" title="Financial crime">crime</a></li> <li><a href="/wiki/Financial_engineering" title="Financial engineering">engineering</a></li> <li><a class="mw-selflink selflink">law</a></li> <li><a href="/wiki/Financial_risk" title="Financial risk">risk</a></li> <li><a href="/wiki/Financial_social_work" title="Financial social work">social work</a></li></ul></li> <li><a href="/wiki/Fundamental_analysis" title="Fundamental analysis">Fundamental analysis</a></li> <li><a href="/wiki/Growth_investing" title="Growth investing">Growth investing</a></li> <li><a href="/wiki/Hazard" title="Hazard">Hazard</a></li> <li><a href="/wiki/Hedge_(finance)" title="Hedge (finance)">Hedge</a></li> <li><a href="/wiki/Investment_management" title="Investment management">Investment management</a></li> <li><a href="/wiki/Risk" title="Risk">Risk</a></li> <li><a href="/wiki/Risk_pool" title="Risk pool">Risk pool</a></li> <li><a href="/wiki/Risk_of_ruin" title="Risk of ruin">Risk of ruin</a></li> <li><a href="/wiki/Systematic_risk" title="Systematic risk">Systematic risk</a></li> <li><a href="/wiki/Mathematical_finance" title="Mathematical finance">Mathematical finance</a></li> <li><a href="/wiki/Moral_hazard" title="Moral hazard">Moral hazard</a></li> <li><a href="/wiki/Risk-return_spectrum" class="mw-redirect" title="Risk-return spectrum">Risk-return spectrum</a></li> <li><a href="/wiki/Speculation" title="Speculation">Speculation</a></li> <li><a href="/wiki/Speculative_attack" title="Speculative attack">Speculative attack</a></li> <li><a href="/wiki/Statistical_finance" title="Statistical finance">Statistical finance</a></li> <li><a href="/wiki/Strategic_financial_management" title="Strategic financial management">Strategic financial management</a></li> <li><a href="/wiki/Stress_test_(financial)" title="Stress test (financial)">Stress test (financial)</a></li> <li><a href="/wiki/Structured_finance" title="Structured finance">Structured finance</a></li> <li><a href="/wiki/Structured_product" title="Structured product">Structured product</a></li> <li><a href="/wiki/Systemic_risk" title="Systemic risk">Systemic risk</a></li> <li><a href="/wiki/Toxic_asset" title="Toxic asset">Toxic asset</a></li></ul> </div></td></tr><tr><td class="navbox-abovebelow" colspan="2"><div> <ul><li><a href="/wiki/Financial_economics" title="Financial economics">Financial economics</a></li> <li><a href="/wiki/Investment_management" title="Investment management">Investment management</a></li> <li><a href="/wiki/Mathematical_finance" title="Mathematical finance">Mathematical finance</a></li></ul> </div></td></tr></tbody></table></div>    </div><noscript><img src="https://login.wikimedia.org/wiki/Special:CentralAutoLogin/start?type=1x1" alt="" width="1" height="1" style="border: none; position: absolute;"></noscript> <div class="printfooter" data-nosnippet="">Retrieved from "<a 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