Derivatives Resolution

Market manipulation and mis-selling scandals have called into question the integrity of derivative markets and the basis of relationships between counterparties.

The impact of long dated interest rate hedging, the wide-spread purchase of LOBOs, coupled with termination rights has been catastrophic for many borrowers. Accommodating swap mark to market positions and managing breaks or extensions has become the single most important factor in many financings.

TradeRisks is a completely independent firm that is unique in its combination of derivative and legal expertise. We work with clients to unlock value or mitigate costs from existing financial  portfolios that include derivatives and derivative-related products such as LOBOs. Our capabilities include:

  • Negotiating enhanced restructuring and exits from hedging transactions. TradeRisks has negotiated restructuring or termination of >£5bn of interest rate and inflation swaps, including many long dated and exotic instruments. In doing so we have challenged valuation and execution methodology and negotiated discounts typically in £ms
  • Calculating appropriate and accurate breakage costs for pre-payment of LOBOs allowing for exits from LOBOs at a dramatically reduced cost.
  • Negotiating exits from LOBOs at a price attractive to our clients based on the above calculations and/or on legal arguments related to mis-representation and rescission.
  • Breaking down complex derivative and debt (eg LOBO) restructures into their component parts to reveal true cost vs opaque blended costs
  • Exploring legal redress relating to market abuse. With recent LIBOR, FX and ISDAfix scandals and the losses incurred by corporates as a result, the need for specialist legal as well as financial advice in relation to derivative re-structuring and resolution is essential. Through our in-house and affiliated lawyers TradeRisks provides dedicated and integrated legal expertise to ensure we can lead all possible angles to derivative negotiations
  • Reviewing historic trades. TradeRisks owns and analyses a vast database of historic swap market pricing information to allow instantaneous and precise review of historic trades on a minute-by-minute basis
  • We use our expertise in ISDA documentation and current market practice to argue for the application of new valuation methodology in a way that more fairly allocates costs and benefits between parties. This is typically highly beneficial to borrowers

Few companies are able to provide truly integrated expert advice across finance and legal in relation to complex derivatives. TradeRisks’ unique experience enables us to provide clients with a comprehensive and immediate service when exploring possible litigation or mediation solutions for losses incurred relating to derivative transactions.