Asia Risk awards 2010: Derivatives law firm of the year
Asia Risk awards 2010: Derivatives law firm of the year
Allen & Overy
All contenders for Asia Risk’s Derivatives Law Firm of the Year award were able to boast top-notch expertise, prestigious clients on multi-million dollar deals and surging business volumes across the region brought about by the financial crisis. Yet Allen & Overy (A&O) received the strongest seal of approval from clients for the period under review.
“A&O is the strongest derivatives law firm in the region. Certainly for highly structured transactions and technical matters I would go to them,” says the regional head of equities at a global bank in Hong Kong. “I would be using them if it was a very technical point in derivatives that needed a true expert.”
Another client, a senior legal counsel at a global bank in Hong Kong, adds: “A&O consistently provides outstanding service to us, which is why we tend to go back to them repeatedly… which is quite a lot because they have some very talented individuals there.”
A major scoop for A&O was the firm’s engagement by the Asian Development Bank to advise the People’s Bank of China on the enforceability of close-out netting and collateral arrangements for derivatives transactions under China’s insolvency law and reform proposals.
“Derivatives products have come under increasing scrutiny from regulators following the onset of the global financial crisis and we note that regulators are being cautious about what they are doing in this area,” says Hong Kong-based A&O partner Catherine Husted. “The enforceability of close-out netting and collateral arrangements is extremely important for all derivatives products, even very simple products.”
Led by the firm’s head of its PRC regulatory group, Jane Jiang, and special global counsel, Philip Wood, the work involved conducting comparative law analysis, producing a report, presentations and discussions with representatives from the People’s National Congress, the State Council, the China Banking Regulatory Commission and the Supreme People’s Court. “That is a good example of our ability to combine local expertise and local knowledge with experts from elsewhere,” Husted adds.
In Hong Kong, a major area of work was related to Lehman Brothers’ ‘minibonds’ – credit-linked notes that were issued to more than 40,000 retail investors with potential losses of more than $1.2 billion. A&O advised PricewaterhouseCoopers as the receivers of the collateral securing the Lehman Brothers minibonds. In July 2009, a settlement was offered to 95% of the minibond holders who will recover 60–70% of their initial investment with the payout coming from 16 distributor banks.
Another major area of work in Hong Kong related to the Securities and Futures Commission’s (SFC) structured products reform for which A&O was actively engaged in discussion with clients and the SFC. The SFC launched two consultation papers in September and October 2009 with the objective of enhancing the regulatory regime governing retail offerings of structured products in Hong Kong. The consultation conclusions were published in April and May 2010.
“There has been an increase in the number of disputes regarding derivatives and structured products, from claims of mis-selling to attempted repudiation on the grounds of lack of authority and disputes on valuation,” says Hong Kong-based A&O partner Matthew Hebburn. “In addition, there has been an increase in decided cases in the US, Europe and Asia on key aspects of International Swaps and Derivatives Association (Isda) documentation and various other derivatives and structured product issues.”
A&O also advised Morgan Stanley in a case that involved cross-currency swap transactions with Hong Kong-listed juice maker China Haisheng Juice Holdings Co. An out-of-court settlement was reached with China Haisheng paying Morgan Stanley $7 million (see: Morgan Stanley settles out of court with China Haisheng).
Regional expansion has also been high on the firm’s agenda. In February 2010, it opened its Australian office with the appointment of 17 new partners – 14 in Sydney and three in Perth. In July 2010, the firm announced the launch of an exclusive association agreement with Daniel Ginting Law Firm, a new Indonesian law firm in Jakarta.
“In Australia, a lot of the derivatives work is dependent on having strong tax advice,” Husted says. “Our entry into the Australian legal market is all about offering our clients pre-eminent local and global expertise. The growing inbound and outbound activity between Australia and Asia means it is important for us to give clients a one-stop shop.”
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