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Global Derivatives Awards 2019: Mayer Brown cuts through on margin

By GlobalCapital
26 Sep 2019

Mayer Brown is GlobalCapital’s Global Law Firm of the Year after an impressive 12 months that comprised working closely with ISDA on new regulations, having a seat on nearly every bank’s legal panel and making a number of key hires in the US.

Earlier this year, Mayer Brown produced a video series on Initial Margin, split into two seasons. In one of the episodes, Edmund Parker, head of the firm’s derivatives and structured practice, began by showing the single ISDA document that was needed for margining when he established Mayer Brown’s London derivatives practice 13 years ago. He then laid out over 20 collateral documents on a board room table, which the world’s largest derivatives institutions may have to sign with their market counterparties.

This outreach effort, not the first time Parker has created educational videos on the workings of derivatives markets to a wide audience, was a simple but elegant — and needed — solution to explaining a wide reaching and time consuming reform of the global derivatives markets.

“It has all become a lot more complicated,” he says. “You can be dealing with multiple underlying governing laws, custodians in different jurisdictions, and different strands of documentation, which superficially seem similar, but in fact are very distinct. It’s a real minefield.” The kicker to this is that the legal opinions supporting much of the market documentation have been authored by Mayer Brown itself.

The work that the firm has done this year with ISDA — including on phases four and five of uncleared margin requirements and New York law netting enforceability advice — means that, in effect, the entire global derivative market relies on their work.

“We have been at the forefront of efforts to educate the market, and also helping to shape the documentation itself,” says Parker. “We are delighted that the market looks to us for support.” As a result, Mayer Brown has worked with almost every single bank in their initial margin preparations.

Mayer Brown has a practice with equal depth in both New York and English derivatives law, the two regimes that govern 90% of the global derivatives market. This year it has significantly bolstered its practice, not least with the addition of Matthew Kluchenek from Baker Mackenzie to its Chicago office.

Together with its partners in continental Europe and Hong Kong, Mayer Brown is a truly global derivatives practice. As a result, it has a seat on most banks’ panels of law firms.

The company has been involved this year in a number of time sensitive issues, such as helping a large custodian set up operations in Belgium to allow it to continue serving European clients in the event of a no-deal Brexit.

Mayer Brown works closely with its bank clients as they help arrange financings and deals with their clients by advising on issues such as deal contingent swaps involving foreign exchange or commodities, issuer-based equity derivatives and structured share repurchase programmes, and the use of structured derivatives transactions to support or supplement financing for funds and other investors.

What differentiates the firm is how its derivative practice supports other practices within the firm as a whole. It sets store by the level of collaboration it achieves with its partners in corporate finance, project finance and litigation, so as to bring the whole firm to play in these complex situations.  

Many European banks also use the firm for more flow transactional work, especially in structured products. This goes against the trend of many banks bringing this legal work in-house. In the US, where regulations direct that this work is undertaken by law firms, Mayer Brown is an industry leader.

The firm is widely seen as a thought leader when it comes to explaining all the new issues facing global derivative regulations. But it is also innovative and a leader when it comes to drafting those changes.

By GlobalCapital
26 Sep 2019