Dr Philipp Paech NAB7.05

This course is available on the Executive LLM. This course is not available as an outside option.

Available to Executive LLM students only. This course will be offered on the Executive LLM during the four year degree period. The Department of Law will not offer all Executive LLM courses every year, although some of the more popular courses may be offered in each year, or more than once each year. Please note that whilst it is the Department of Law's intention to offer all Executive LLM courses, its ability to do so will depend on the availability of the staff member in question. For more information please refer to the Department of Law website.

As the recent debate on shadow banking shows, the traditional financial market sectors of commercial banking, investment banking, derivatives, capital markets and asset management are nowadays converging. However, their academic analysis is still largely sector-based. This course offers a cross-sectoral, functional analysis, permitting students to grasp the big picture of the entire financial market law. To this end, the course largely concentrates on the different activities of risk taking and risk shifting regardless of the type of financial institution involved.

The course is also a novelty to the extent that it integrates both spheres of rulemaking for the financial markets, notably financial law and some fundamentals of financial regulation. Experience shows that approaching the framework for financial law without at least considering the interdependencies with risk management and capital requirements leaves us with only a fragmented picture.

For non-practitioners, the market context of financial law appears sometimes confusing. Therefore, this course will first approach each subject from in a market perspective before coming to the legal framework. This is essential with a view to understanding the permanent interaction between market behaviour and the legislators’ and regulators’ responses to it. The legal framework will be analysed taking into account international rules and developments as well as European legislation. Since the City of London is one of the globally most important financial markets, England will be used as anchor-jurisdiction in order to develop patterns of global significance that are addressed by legislators and regulators around the world, in particular also looking at the European Union and at international rulemaking.

The course also considers key trends. It is designed to be as topical as possible, and the content may change in the light of developments. While the precise topics covered will vary from year to year they typically will include the following:

• The logic and the players of the financial market. The creation and allocation of risk. The distinction between ‘Law’ and ‘Regulation’.

• The reasoning and sources of financial law and regulation. The role of European financial law and regulation. The role of international law.

• Understanding the financial crisis.

• Banks and their nature. Assets and Liabilities. Deposit-taking and bank loans. Money market instruments. Rank of creditors in bank insolvencies.

• Raising capital. Primary market and secondary market. Issuance of debt securities (bonds). Issuance of Eurobonds. Issuance of equity (shares).

• Security interests and financial collateral.

• Rehypothecation, repurchase agreements and securities lending. Relevant conflict-of-laws problems.

• Guarantee, indemnity, insurance.

• Derivatives. Types of derivatives. The rise of derivatives. Recharacterisation risk. Standard documentation (ISDA).

• Netting and set-off. Relation to insolvency law. Importance for derivatives, repos, securities lending. Conflict-of-laws analysis. Cross-jurisdictional problems.

• Trusts.

• Fund structures (public and alternative).

• Structured finance, securitisation and asset-backed securities. The rationale behind it. Risks.

• Transfer of financial instruments. Stock exchanges. Trading and settlement of securities. Intermediated securities. Conflict of laws and cross-jurisdictional problems. Derivatives clearing.

• Syndicated loans.

• Regulatory arbitrage in respect of financial transactions.

24-26 hours of contact time.

Students will have the option of producing a formative exam question of 2000 words to be delivered one month from the end of the module’s teaching session by email.

    -P. Wood. Law and Practice of International Finance, Sweet & Maxwell, 2008 (ca. £40, soft bound). This book is the first building block of the Basic Reading. Students might consider buying  it.

- J. Benjamin, Financial Law, Oxford University Press 2007. Ca. £200. This volume is available at a heavily discounted price (ca. £100 for hardcover) at the Waterstones bookshop on the LSE campus only.

- For an understanding of the underlying market aspects: S. Valdez, Ph. Molyneux, An Introduction to Global Financial Markets, 7th ed., Palgrave-McMillan 2013, ca. £29.-P. Wood. Law and Practice of International Finance, Sweet & Maxwell, 2008 (ca. £40, soft bound). This book is the first building block of the Basic Reading. Students might consider buying  it.

- J. Benjamin, Financial Law, Oxford University Press 2007. Ca. £200. This volume is available at a heavily discounted price (ca. £100 for hardcover) at the Waterstones bookshop on the LSE campus only.

- For an understanding of the underlying market aspects: S. Valdez, Ph. Molyneux, An Introduction to Global Financial Markets, 7th ed., Palgrave-McMillan 2013, ca. £29.- P. Wood. Law and Practice of International Finance, Sweet & Maxwell, 2008 (ca. £40, soft bound). This book is the first building block of the Basic Reading. Students might consider buying  it.

- J. Benjamin, Financial Law, Oxford University Press 2007. Ca. £200. This volume is available at a heavily discounted price (ca. £100 for hardcover) at the Waterstones bookshop on the LSE campus only.

- For an understanding of the underlying market aspects: S. Valdez, Ph. Molyneux, An Introduction to Global Financial Markets, 8th ed., Palgrave-McMillan 2013, ca. £29.

Assessment path 1
Essay (100%, 8000 words).

Assessment path 2
Take home exam (100%).