Shearman Logo

Shearman & Sterling’s Derivatives & Structured Products practice is widely recognized for representing the full spectrum of market participants across the complete range of derivatives products and asset classes. It is the breadth of our client base, the depth of our product experience and our true cross‐border capabilities that distinguish our practice from others in the market. With significant high-end capabilities in both the United States and the United Kingdom, we advise clients on the full range of structural, legal and documentation considerations that arise in derivatives and structured product transactions across all major asset classes, including credit, equity, fixed-income, currency and commodity-linked instruments.

Our clients include a broad range of U.S. and global financial institutions, hedge and private equity funds, private clients, asset managers, corporations, multinationals and investors. We are also one of only a few firms in the world with the experience required to represent market infrastructure providers and leading clearing organizations. Our representation of the full spectrum of market participants provides us with first-hand insight into the often competing requirements of such participants, thereby enabling us to provide a more meaningful, in-depth and efficient service to our clients.

We pride ourselves on our responsiveness to market dynamics and our ability to offer dynamic and innovative solutions to constantly evolving market conditions. Our practice is never static; we are continually evolving in line with the market. We are deeply committed to accommodating the needs of our clients in line with the advancing product and regulatory landscape. Clients appreciate our sophistication, experience and depth in legal matters involving highly structured and bespoke derivatives transactions, repurchase products and hybrid instruments. We provide a comprehensive service to our clients, structuring derivatives and providing derivatives regulatory advice, both on a stand-alone basis and as an integral component of capital markets, M&A, project and leveraged finance and asset repackaging transactions.

Leveraging our experience in both New York and London, our combined New York and English law strength is a unique offering in the market. This includes related regulatory and tax experience, which is particularly important given the current regulatory developments in the United States and Europe. Our clients benefit from our ability to provide multi‐product, cross‐departmental knowledge and an in‐depth understanding on a truly cross-border basis.

Bankruptcy & Creditors’ Rights 

Combining our experience in the fields of derivatives and financial restructuring has put us at the forefront of many of the most significant insolvency cases involving derivatives, thereby enhancing our ability to meet our clients’ needs. Due to our in-depth understanding of the insolvency, derivatives and regulatory aspects of counterparty risks of default, we have helped minimize the extent of counterparty exposure of some of the largest hedge funds and financial institutions in the world.

We assist the full range of market participants in managing their exposure to troubled institutions, offering strategies and solutions that are custom-tailored to the specific needs of our clients. This assistance includes an analysis of derivatives and other exposures as well as advice regarding termination, liquidation, netting and setoff rights with respect to positions and collateral.

The versatility in our skillset allows us to constantly keep ahead of the market. With the recent bankruptcies of oil E&P companies, our derivatives attorneys used their experience in the context of oil-hedging commodity derivatives, together with their longstanding proficiency in counterparty risk and default management, to enable large financial institutions to successfully manage their counterparty credit risk and meet their clients’ financing needs.

Notable representations include assisting various financial institutions and hedge funds in counterparty risk analysis and derivatives claims trading in connection with the Lehman Brothers and MF Global cases.

Enforcement & Litigation 

We help our clients navigate the complex and rapidly developing regulatory enforcement and litigation environment, utilizing our extensive experience in complex investigations and litigation matters involving derivatives and product expertise. Clients come to us for comprehensive regulatory, enforcement and litigation solutions in matters involving the SEC, the CFTC, the Department of Justice, FINRA, the Financial Conduct Authority and the European Commission, among others, as well as the courts and arbitration panels.

We work with our Litigation team to provide our clients with a deep cross-disciplinary and cross-border proficiency, assisting them through all aspects of these often highly complex matters. Our knowledge of how government agencies conduct investigations and prosecute enforcement actions, combined with our understanding of the regulatory landscape, ensures that our clients navigate these processes successfully.

In recent years, we have represented major financial institutions, asset management firms and individuals in some of the most sensitive and comprehensive investigations concerning securities, commodities and financial products, including CDOs, CLOs, CDS, ARS, FX and structured finance products that have been at the center of regulatory activity since the beginning of the financial crisis.

Exchanges, Clearinghouses & Other Market Infrastructure Providers 

We are one of only a few firms in the world with the knowledge required to represent market infrastructure providers and clearinghouses. This is a significant advantage to our clients, providing us with a holistic understanding of and insight into the intricate workings of the market, which in turn enables us to provide a more meaningful, in-depth and comprehensive service.

For years, we have advised market infrastructure providers such as clearing houses, multilateral trading platforms and payment systems providers around the world, including on the establishment of new derivatives clearing houses, product development, regulatory matters (including on recovery and resolution planning in light of regulatory requirements) and obtaining recognized status from U.S. and EU regulatory authorities.

Some notable representations include:

  • IntercontinentalExchange (ICE) and its subsidiaries, one of the world’s leading exchange groups, in connection with the establishment and ongoing development of their swaps and futures clearinghouses, trading facilities and related businesses. These projects played a significant role in reducing counterparty credit risk in the credit derivatives market by creating a central counterparty for cleared transactions and facilitating multilateral netting and offset of positions.
  • Depository Trust & Clearing Corporation in connection with the ongoing development of its derivatives processing services and infrastructure, including development of its Trade Information Warehouse, equity and rates derivatives trade repository, electronic derivative confirmation systems and swap data repository.
OTC Derivatives & Trading Documentations 

With significant high-end capabilities in both the U.S. and Europe, we advise clients on the full range of legal and documentation considerations that arise in derivatives and structured product transactions across all major asset classes, including credit, equity, fixed-income, currency and commodity-linked instruments. We pride ourselves on our responsiveness to market dynamics and our ability to offer cutting‐edge and innovative solutions to constantly evolving market challenges.

We are a market leader in the development of innovative and complex financial instruments and are widely recognized for our sophistication and experience in legal matters involving highly structured derivatives transactions.

We regularly represent financial institutions, investment banks, issuers, holders of large equity stakes as well as hedge and private equity funds in connection with highly complex equity derivatives transactions and margin loans, including convertible note hedges, total return swaps, equity collars and prepaid forward transactions. Together with our broader Capital Markets practice, we counsel clients on the securities law issues related to these transactions, including Securities Act registration, restricted stock, broker-dealer registration, disclosure considerations, stock repurchase, beneficial ownership reporting, insider reporting and short-swing profit liability.

We also have a dynamic credit derivatives practice, representing the full range of market participants in connection with credit risk transfers, structured finance arrangements, CDOs and other repackagings.

Financial institutions, hedge funds and other market participants regularly rely on us for assistance with all their trading documentation (including ISDA, repo and securities lending agreements) and financing commitments (including prime brokerage and related term commitments).

Regulatory & Compliance 

Clients rely on us to assist them in navigating the complex and constantly evolving regulatory environment on a multi-jurisdictional basis, at a time when current regulatory developments in the United States and Europe are critical to their businesses.

Leveraging our capabilities in both London and New York, our combined knowledge of regulatory reform issues under both English and New York law (including under the Dodd‐Frank Act and the European Market Infrastructure Regulation (EMIR)) enables us to advise clients on complex, multi-product and cross-jurisdictional transactions.

Being deeply committed to accommodating the needs of our clients in line with the advancing legal and regulatory landscape, we advise on the full range of U.S. and U.K. regulations, including SEC, CFTC and NFA regulations, FCPA and AML compliance, Volcker Rule, FATCA and AIFMD, as well as cross border/extraterritoriality implications and investigations and enforcement advice. We regularly represent clients before the SEC, CFTC, Financial Conduct Authority and other regulators in regulatory compliance matters with respect to the sale and trading of derivatives.

We actively advise on all phases of Dodd-Frank derivatives reform compliance, including major swap participant status, end-user exemptions, reporting and record-keeping obligations, proprietary trading, “swaps pushout,” systemically important institutions and securitization “skin in the game” requirements. We also have extensive experience advising corporations on their new obligations under the EMIR, including reporting, notifications to ESMA and local regulators, risk mitigation techniques and the clearing obligation. We also advise foreign banks worldwide on regulatory reform implementation and compliance with U.S. requirements.