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Derivatives Law and Regulation

Prior to 2008, derivatives were a specialized area of the financial world that was largely unfamiliar to the general population and most lawyers. Derivatives were lightly regulated, and the derivatives bar was a niche group comprised of a handful of outside law firms and in-house lawyers. The 2008 financial crisis changed that. Derivatives were portrayed as dangerous instruments of financial alchemy that nearly destroyed the economy. Regulators responded with the passage of the Dodd-Frank Act, which, among other things, implemented a complete overhaul of U.S. derivatives regulation. Derivatives are now highly regulated in the United States and abroad, and derivatives lawyers and compliance specialists are in growing demand. The goal of this course is to provide students with a basic understanding of the current state of derivatives law and regulation. This requires a basic understanding of derivatives products and markets and of the historical context in which regulation has been imposed. Accordingly, this course will first introduce students to the basic structures and cash flows of forwards, options, futures and swaps, as well as to the related legal documentation. The course will then consider the uses of derivatives in the financial markets and the market players. Finally, the course will explore the current regulatory framework in the context of the 2008 financial crisis and the regulatory environment leading up to 2008.

Grading and Method of Evaluation:
Letter grade only. An in-class exam will be administered. Students will be graded on the exam, an in-class presentation and classroom participation.