Understanding Financial Law
Financial law governs investment management, insurance, the capital markets, commercial banking, and derivative instruments. Lawyers with specialist knowledge in this area offer expert advice on investment funds, financial products and services, securities, repos, and derivatives, and cash management, settlement, clearing, and custody.
Scope and Regulations
Financial law governs performance bonds, standby letters of credit, insurance, and guarantees. Other transactions that fall in the scope of finance law are credit derivatives, swaps, options, and futures. Equity issuing and debt financing are main focus areas, including revolving, term loan, and overdraft instruments and committed and on-demand lending.
In Canada, finance matters are governed by the Financial Administration Act which includes provisions on assignment of crown debts, public accounts and property, and asset management. There are also provisions that deal with public disbursements, restricted transactions, corporate budgets and plans, and auditor’s reports.
Other acts and regulations that govern financial matters are the Budget Implementation Acts, Bank for International Settlements Act, Currency Act, and Canadian Payments Act.
Cash Management and Settlement
The main focus here is on custody and cash pooling structures and the impact of supervisory rules. Lawyers conduct legal proceedings, resolve issues related to netting, offsetting, and securities, and issues relating to incorrect transactions and settlement failures. They also prepare and negotiate clearing documentation and custody agreements for central counterparties and international and national central securities depositories. Additionally, finance lawyers provide assistance to corporate treasury departments and cash management services to international and national financial institutions.
Financial Products and Services
Finance lawyers also have experience with a broad range of products and offer advice on newly introduced and existing legislation. They draft conditions for wholesale and retail services and products such as investment management, securities, and mortgages, and document and structure innovative instruments. Lawyers with expertise in this area assist in discussions with the regulatory agencies to protect the interests of market parties.
Securities Lending, Repos, and Derivatives
Financial law also governs securities lending, repurchase transactions, derivatives, and contracts documenting. Lawyers offer legal opinions and advice on counterparty capacity and documentation enforceability, including counterparties such as pension and investment funds, governments, and semi-public bodies. They are involved in the development of structured products and the drafting of clearing and collateral documentation and master agreements. Additionally, finance lawyers conduct legal proceedings and oversee close-outs.
Financial law governs asset management arrangements, listings, cross border structuring, fund formation, and asset pooling. Lawyers assist with asset and investment management arrangements, the extension and setup of mortgage investment platforms, and regulatory approval on acquisitions. Another area of expertise is the restructuring and setting up of cross-border and national fund formations and investment institutions. Financial lawyers also provide assistance with license applications, admittance of new stakeholders, and drafting of fund documentation.
In addition, lawyers are involved in integrity and sustainability screening, preparing safeguarding documentation, and drafting contractual documentation, internal policies, and procedural manuals. They offer legal opinion regarding prime brokerage arrangements, collateral documents, and securities transactions.
Finance lawyers assist clients with project, debt, and equity financing, including convertible debt, trust indentures, and cross-border financing. They offer advice on private placements, bought deals, prospectus and rights offerings, and corporate finance matters. Practice areas also include venture capital and startups, public company compliance, stock exchange listings, and going public. In the field of commercial and business law are also shareholder and escrow agreements, joint ventures, takeover bids, due diligence reviews, and share purchases.