With our specific buy-side focus, Ropes & Gray’s derivatives and commodities practice offers investment professionals unrivaled counsel on a full range of regulatory and commercial matters involving these instruments. Our cross-border team of attorneys is known for their in-depth knowledge of the asset management industry, regulatory expertise, practical “real world” advice, and full-service capabilities in advising clients on the issues arising in transactions involving commodities, futures, forwards, options, swaps and other derivatives.
Many other law firms have built a derivatives and commodities practice based on representing dealers and brokers. In contrast, Ropes & Gray’s practice developed as part of our core asset management practice, which has more than 300 dedicated lawyers globally and is distinguished not only by the size of its bench, but equally by the scope of its offering, its market-leading clients, its ability to engage effectively with regulators, and market recognition by peers and clients.
Given the broad scope and depth of our asset management offering, our colleagues practicing in tax, ERISA, labor and employment, intellectual property, data privacy, fintech, and enforcement are deeply embedded and experienced in applying their expertise to transactions in commodities, futures, forwards, options, swaps and other derivatives. Our cross-practice, industry-focused approach positions us well to guide asset managers and other buy-side participants with not only their current business activities, but also as they evolve and expand. Also valuable to clients is our extensive experience working with regulators at the Commodity Futures Trading Commission, the National Futures Association, futures exchanges and swap execution facilities, as these relationships provide us with insights into issues and the ever-changing regulatory environment. In addition, we are active participants in industry associations and serve as outside counsel to SIFMA Asset Management Group’s Derivatives Europe Committee.
Our attorneys regularly advise our asset management clients on matters including:
- Over-the-counter transactions such as swaps, options, forward contracts, repurchase agreements/reverse repurchase agreements, market-access transactions, structured notes, and other structured products.
- Dodd-Frank, European Market Infrastructure Regulation (EMIR), resolution stay, and other ISDA protocols, as well as negotiating the terms of the key documents such as the ISDA Master Agreement, the IFEMA master agreement, the FEOMA master agreement, the Master Repurchase Agreement, the Global Master Repurchase Agreement, the Master Securities Loan Agreement, and the Global Master Securities Lending Agreement.
- Negotiation of derivatives clearing documentation with dealers and futures brokers; prime brokerage contracts (including term agreements); collateral and credit agreements, including tri-party agreements with custodians.
- Exchange-traded transactions, such as futures contracts (and related margin, custody and clearing arrangements, and insolvency issues), as well as transactions on swap execution facilities.
- Advice to commodity pool operators and commodity trading advisors on fund formation and launch, advisory agreements, marketing, negotiations and documentation (including preparing and filing disclosure documents with NFA and addressing NFA comments).
- Advice on trading issues, such as position limits (and related aggregation requirements), bunched trades, block trades, exchange for related positions, wash trading, automated trading, manipulation and disruptive trading.
- Advice on exemptions from registration, as well as on registration with the Commodity Futures Trading Commission and membership in the National Futures Association, and advice on CFTC and NFA regulations and ongoing compliance obligations, including periodic reports to regulators and investors.
- Preparation of compliance policies and procedures, and conducting compliance onsite training programs, including CFTC-specific ethics training.
- Negotiations with regulators and obtaining exemptive relief from regulatory requirements.
- Credit issues with respect to derivatives and lessons learned from the MF Global and Lehman Brothers insolvency proceedings.
- Advising on whether specific instruments are “swaps” which are under CFTC jurisdiction as commodity interests.
- Managing and responding to regulatory inquiries, onsite exams, and investigations conducted by the CFTC, NFA, exchanges and SEFs.
Experience, Clients & Awards
We are experienced and pro-active in advising on legal and regulatory developments, such as those governing information security, internal controls, and proficiency exams, the application of mandatory clearing requirements to financial entities, new margin requirements for uncleared derivatives, reporting requirements, and the impact on credit risk to funds and portfolio companies arising from “qualified financial contract” rules and other recent changes to insolvency regimes for large financial institutions. We also have particular expertise in navigating the interaction between the U.S. and E.U. derivatives regulatory regimes, and assisting clients in selecting hedging banks who are in a position to provide hedging without requiring margin.
Representative examples of work include:
- Representing an affiliate of a leading global, private, independent investment firm on a variety of trading and derivatives matters for its hedge fund, registered fund and separate account clients investing in fixed income and equity portfolios.
- Advising a global fixed-income investment firm on derivatives, CFTC registration and securities financing matters and the attendant regulation affecting the manager, its funds, and its segregated accounts.
- Advising a private equity fund-of-funds on a number of FX and interest rate hedging transactions for the funds, and on special purpose vehicles entering into “NAV” financings in respect of the fund’s portfolio investments.
- Advising a leading university endowment on negotiating a fund of one investment using a short-only strategy, including negotiating the related trading documentation.
- Representing a sovereign wealth fund and pension fund on their provision of a $500 million warehouse facility for an energy opportunities fund being launched by one of the largest global alternative asset managers. The representation included structuring the credit facility, negotiating the underlying credit documentation (including a related subscription finance facility), advising on derivatives regulatory issues stemming from the structure, and negotiating the terms of the fund structure that held the warehoused assets. In tandem, we also advised our clients with respect to coinvestments into several of the underlying oil and gas assets being warehoused for the new fund and a related PIPE transaction.
- Advising a U.S. mutual fund trade association in connection with proposed Securities and Exchange Commission Rule 18f-4, which would have a significant impact on the use of derivatives by mutual funds for hedging and investment purposes.
- Advising a preeminent asset management firm on U.S. and European regulatory matters related to its investments in derivatives, including advice on clearing, execution and margin requirements and advice on ISDA protocols.
- Advising a hedge fund firm with over U.S. $2.5 billion in assets under management on a variety of U.S. and non-U.S. regulatory issues, prime brokerage, custody, trading documentation, bankruptcy and credit analysis in connection with derivative investments, and on other derivative investment matters.
- Obtaining no-action relief from CFTC staff on an issue of first impression for a private equity fund sponsor.
- Advising private equity fund sponsors on whether SPVs are commodity pools and whether hedging instruments are commodity interests
- Guiding global fund sponsors with complex structures through the CPO/CTA registration process.
- Counseling global asset management firms and pension plans on position limits and related aggregation exemptions and filings.
We represent a diverse group of clients across the globe and across the spectrum of asset managers, from large institutional investors to start-ups, which use a wide range of strategies, markets and instruments. Our clients include:
- Hedge funds
- Private equity funds
- Mutual funds
- Real estate funds
- Managed futures funds
- Sovereign wealth funds
- Investment advisers
- University endowments
- Family offices
- Industry groups
- Insurance companies
- Operating companies (both public and private)
- Ranked nationally for derivatives and structured products practice in Chambers USA
- Ranked nationally for hedge funds, private equity fund formation & registered funds in Chambers USA
- Award for Client Service: winner in the investment funds category in Chambers USA
- Award for Excellence: honored twice in the investment funds category Chambers USA
- Ranked Band-1 for investment funds: regulatory & compliance and derivatives practice in Chambers USA
- Ranked Tier-1 law firm in private equity fund formation & registered funds in Legal 500