There is a rather interesting paper the BIS have just published that explains the Federal Reserve’s thinking about central banks providing liquidity. It’s worth having a look at for a view of the big picture of what has been going on in the financial markets over the past year. It’s by Ben S Bernanke who is the Chairman of the Board of Governors of the US Federal Reserve System and he gave the talk on 13 May.
The FSA hope to encourage consumers to get more confidence in using the retail financial products market. As part of their project to achieve this, today the FSA have published the Retail Distribution Review Interim Report.
There is more commentary on my employer’s site. Note this frank declaration of interest; access is free but you might need to register. At its briefest, the FSA propose a “simpler landscape”:
The FSA will publish a feedback statement in October 2008. They will report industry responses, outline changes to rules and provide a timetable.
The judgment on the test case hearing of January 2008 has been published this morning. On a quick look through, the OFT will be able to review the fairness of the charges under the Unfair Terms in Consumer Contracts Regulations. Contrary to the implication of some national headlines appearing already that the banks have “lost the case”, no judgment on the fairness of the charges has been given (nor was sought) in this trial of preliminary issues. The terms do not amount to a penalty under common law. If the banks wish to appeal the judgment, they have until 22 May 2008 to do so.
24 April 2008
New and revised credit derivative documentation
Also available on ISDA’s site are:
1) iTraxx® LevX® standard terms supplement and confirmation for credit derivative transactions on leveraged loans. These documents are designed for credit default swap transactions where the reference entity is a European syndicated loan which is listed on the iTraxx® LevX® index and are primarily intended for use in the European market. 12 March 2008
2) A revised version of the “single name standard terms supplement and confirmation” for use with credit derivative transactions on leveraged loans. These documents, which are designed for credit default swap transactions referencing a syndicated secured loan, have been updated.
2008 Americas Master Designated/Exchange-Traded Contract Option Confirmation Agreement
ISDA have published the 2008 Americas Master Designated/Exchange-Traded Contract Option Confirmation Agreement on their website, at www.isda.org . 28 March 2008
BERR have published The Companies (Particulars of Company Charges) Revised Draft Regulations 2008. They, Err …, deal with the information to be provided to the Registrar of Companies on the registration of company charges under Part 25 of the Companies Act 2006. These are timetabled to come into force on 1 October 2009.
They are still in draft and capable of revision but I think this is unlikely. The prescribed particulars for English and Welsh companies are—
“(a) the date of the creation of the charge;
(b) a description of the instrument (if any) creating or evidencing the charge;
(c) the amount secured by the charge;
(d) the name and address of the person entitled to the charge; and
(e) short particulars of the property charged.”
For Scotland, the prescribed particulars are:
“(a) the particulars prescribed by regulation 2; and
(b) in the case of a floating charge, a statement as to any provisions of the charge and of any instrument relating to it which prohibit or restrict or regulate the power of the company to grant further securities ranking in priority to, or pari passu with, the floating charge, or which vary or otherwise regulate the order of ranking of the floating charge in relation to subsisting securities.”
The new Business Banking Code and the Banking Code were published at the start of April, together with guidance and a fact sheet giving the key new provisions.
The Codes have been given a bit of “press”. Radio 4’s Moneybox Live had Eric Leenders, head of the Retail team at the British Bankers’ Association on to explain the changes. The BBA’s view is the Codes have been received posititively by consumer organisations and the press. The committment by the banks to contact customers who are getting into financial difficulty is thought particularly helpful. Anyone want to disagree?
New provisions added to the Codes include:
Banking Code Standards Board: http://www.bankingcode.org.uk/home.htm
Eric Leenders: http://www.bba.org.uk/bba/jsp/polopoly.jsp?d=153&a=8077
In response to concerns about backlogs of unconfirmed trades in the over-the-counter (OTC) derivatives market, a group of dealer banks have written to the New York Federal Reserve committing to improving the trade processing of credit derivatives.
In recent years, the volume of trades has increased and many banks are struggling to process them. Many OTC trades are still confirmed by email or fax rather than on electronic trading platforms.
The Ministry of Justice has issued a consultation paper addressing the issue of whether the UK should opt in to the Rome I Regulation on choice of law in contract. BLB has been concerned about Rome 1 before.
The Rome I proposal will provide clarity over which law applies if a dispute arises over a contract made between people or businesses from different countries. The idea is to allow cross border trade to continue with confidence. Questions arise for the banking industry in relation to securitisation and assignments, among other things. There will be - or should be - a great deal of debate on this from bankers. For a couple of years now there has met at MinJ, and before that at the DTi, a stakeholder group of lawyers and eminent academics who have ironed out the worst problems of the drafting. There are still enough practical problems that need to be addressed that, eg, ISDA has formed a working group to work out what to do about the proposals.
The Government thinks the UK should opt in to the Rome I Regulation. In doing so, they think the UK should apply similar rules to contracts connected to two or more jurisdictions within the UK.
The Government wants to test this conclusion by seeking the views of stakeholders. The consultation paper seeks views on:
Responses must be submitted to the HM Courts Service by 25 June 2008.
Bank Law Blogger’s loyal reader must think BLB spends too much time watching credit crunch and her shares plummet to write posts for the Blog. It’s true. That, combined with an enjoyable secondment to a client has distracted her a trifle. But with the passing of a snowy Easter, BLB has pulled herself together and is back in action.
Grosvenor Casinos Ltd v National Bank of Abu Dhabi
This case last month shows that the Uniform Rules for Collection (URC) 522 did not create privity of contract between the principal and the collecting banks. The claim based on breach of contract and fraud was dismissed. It was brought by a London casino against a UAE bank and arose out of the bank failing to honour two cheques created by a customer of the casino.
Companies Act 2006 - 6 April 2008 implementation
Another stage of implementation of the Companies Act 2006 happened on 6 April 2008. Provisions now in force include:
Part 12: Company secretaries
Section 44: Execution of documents
Part 15: Accounts and reports, other than ss417 and 463.
Part 16: Audit, other than ss485-488
Part 19: Debentures
Parts 20: Private and public companies and 21: Certification and transfer of securities
Part 23: Distributions
Part 26: Arrangements and reconstructions
The biggie - changes to registration of charges - will come in on 1 October 2009.
Remaining commencement dates
The Civil Justice Council (”We promote the needs of civil justice in England and Wales and monitor the system to ensure that progress to modernise it continues.”) has issued a consultation paper on a Mortgage Arrears Protocol. This is going to be of interest to amongst others, lenders to residential developers.
The consultation proposes a new mortgage arrears pre-action protocol to ensure that before proceedings are commenced for proceedings in which a residential possession claim is made by a lender against a borrower in mortgage arrears, all reasonable steps have been taken to avoid the necessity for litigation.
Responses to the consultation are requested by 23 May 2008.
