Through many years and engagements, our derivatives practice has grown to cover the broadest spectrum of asset classes and transaction structures, including significant experience in relation to the use of derivatives in implementing investment, hedging, monetization, arbitrage, M&A and restructuring strategies.
We regularly act for sell-side and buy-side clients to negotiate and structure OTC derivatives across a wide variety of asset classes and provide critical advice in respect of Canadian legal requirements and regulatory considerations. This provides us with up-to-date knowledge of contracting and collateralization techniques, opinion requirements and standards, transaction types and their commercial objectives, “market standard” expectations in contracting, enforcement techniques and pitfalls, and the impact of ongoing derivatives regulatory developments in areas such as trade reporting, clearing, execution, margin, business conduct and dealer registration requirements.
Our engagements often involve cross-border transactions, which in turn require us to understand and respond to global practices and requirements in a practical and integrated manner. We also frequently assist banks and pension plans with template reviews of trading documentation and borrower clients to establish hedging programs.
Recent transactional mandates include:
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Representing several of Canada's largest banks to draft and negotiate amendments to ISDA CSAs to address regulatory margin rules, including managing the re-papering of a significant portion of their existing ISDA counterparty documentation.
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Advising international dealers to “Canadianize” their documentation for OTC derivatives transactions.
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Advising U.S.-based broker-dealers to implement structured share-buyback solutions in Canada, including ASRs, program share repurchases, VWAP minus trades and equity compensation plan hedging swaps.
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Structuring and documenting cross-border equity total return swap program.
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Structuring forward transactions for public prospectus-offered investment funds that use forwards for investment purposes.
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Providing derivatives advice to Canadian pension plans in connection with novel investment structures.
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Advising borrowers on complex hedging arrangements for secured lending and infrastructure transactions.
Opinion matters:
Blakes is regularly engaged in opinion work for numerous Canadian and international financial institutions, insurance companies, pension clients, investment funds and securitization entities, relating to a range of trading agreements and counterparty types. This work includes:
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Issuing netting and collateral opinions for ISDA, MSFTA, GMRA, GMSLA, MRA, MSLA, futures account agreements and prime brokerage agreements covering a broad range of specific counterparties.
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Issuing netting and collateral opinions for bank-specific (non-ISDA) derivatives master agreements.
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Issuing netting and collateral opinions for futures and clearing agreements and account control agreements.
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Issuing netting and collateral opinions for reinsurers and securitizers.
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Issuing custody and sub-custody opinions.
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Drafting pre-insolvency enforceability riders with qualifications for 1992 and 2002 ISDA enforceability opinions.
Derivatives regulatory matters:
Blakes has played and continues to play an active role in helping to shape regulatory developments impacting OTC derivatives in Canada. We have played a leading role in the following:
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Representing Canada’s six largest Schedule I banks to obtain OTC derivatives trade-reporting exemptive relief across Canada.
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Acting as counsel to ISDA, including in connection with commenting on OSFI Guideline E-22 – Margin Requirements for Non-Centrally Cleared Derivatives and drafting of the Canadian Cash Collateral Appendix that forms part of the Exhibit NY-New.
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Advising the Ontario Securities Commission in relation to the development of securities rules governing derivatives, including formulating rules that regulate OTC derivatives, advising on the commercial and insolvency aspects of collateral and clearing arrangements.
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Assisting ISDA in the preparation of its comment letter on the initial draft of the CSA’s National Instrument 93-101: Business Conduct.
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Advising Canadian banks, fund sponsors, investment advisers and exchanges on various aspects of the proposed “business conduct” and “dealer and adviser registration” requirements.
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Advising several banks regarding the conduct of derivatives business on a cross-border basis in compliance with Bank Act restrictions, including structuring commodities derivatives and physical business to meet Bank Act requirements.
Insolvencies and Restructurings
We have considerable experience with termination, close-out and enforcement scenarios involving insolvent counterparties, including significant roles in relation to failed financial institutions and structured credit products during the financial crisis. In particular, we played a leading role in the structuring and implementation of the C$35-billion restructuring of non-bank asset-backed commercial paper.
Tax
Many of the derivatives and derivatives-based transactions and strategies we see require critical tax planning. Our leading national Tax practice includes practitioners with market-leading experience in relation to the design and use of derivatives.