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Derivatives
Introduction
Today's challenges
The use of derivatives for investment purposes is becoming increasingly common. The European Commission has agreed that funds that may be sold to the public throughout Europe may use derivatives as an investment tool. The use of derivatives by pension fund trustees and insurance companies is also becoming increasingly common. The fact that the use is becoming common, however, does not mean that derivatives are becoming simpler. Far from it. They are becoming far more complex. The challenge for users of derivatives is to make sure that they know what they are getting into; they are not taken advantage of by the counterparties to their transactions; and that they are allowed to invest in derivatives by their constitution.
How we can help
The Eversheds financial services group has been trained on the IDSA Master Agreement, which is the bedrock of almost every derivatives transaction. Within the group there is a core team which has developed a more detailed knowledge and experience of derivatives. The group's wide experience of advising on financial matters generally means that the team is aware of the different requirements of different investors. What is suitable for an authorised unit trust may not be suitable for the trustee of a pension scheme.
Eversheds has recently advised the Investment Management Association on the updating of its standard ISDA supplements for use by the authorised fund industry.
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