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REGULATIONS AND DOCUMENTATION
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I - Introduction

  • Documentation: present at each stage of the hedging process

  • The documentation package (Termsheet, FBF/ISDA, credit agreement, intercreditor agreement, confirmation of hedging derivatives, etc.)

  • Objectives to keep in mind when reviewing the documentation

II - Structuring: Hedging objectives and covenants

 

  • The hedging strategy: key points of attention

  •  Choice of hedging instruments

  • Hedging tunnel

  • Choice of hedging banks

      Market practice and possible deviations

      The case of orphan swaps

       Waterfall

III - Execution of the hedging strategy

  • Onboarding: a question of anticipation

       KYC

       LEI

  • MIFID

  • EMIR

  • Execution protocol

       Timing

       Procedures with rate/profile iteration

       Rate index

  • Confirmation of the transaction

       Under FBF or ISDA master agreement

       The case of the long form confirmation

IV - Management of the hedging derivatives

  • A long lasting relationship with the counterparty: ISDA, FBF, DRV

  • ISDA wording

       Additionnal termination event

       Affected party

      Termination balance

       Replacemene value

  • Examples of Additionnal termination events

  • Usual cases (change of control; illegality)

  • Specific cases (transfer, early repayment, over-hedging…)

  • Clauses in case of disappearance of the benchmark

  • Events of default

 

V - Prehedging documentation

  • Collateral for prehedging instruments

  • The specific case of contingent prehedging (By swap or option)

  • Anticipating transforming the pre-hedge into the final hedge

 

VI- The Termsheet

 

VII- Questions and discussion 

Note that each training session will include a MCQ to validate the knowledge acquired.

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