Mr. Mathews, a partner in Orrick’s New York office, serves as Global Co-Head of
the Derivatives group. He is also a member of the Structured Finance, Banking
and Finance, and Energy and Infrastructure groups.
His practice focuses on representing financial institutions, governmental and
regulated entities, hedge funds and corporate end-users in structuring and
negotiating a broad range of fixed income, foreign exchange, commodity, energy
and credit derivative products. Among other things, he has successfully
negotiated numerous domestic and cross-border hedging transactions relating to
leveraged loans and infrastructure transactions. In addition, Mr. Mathews has
significant experience in foreign exchange and fixed income prime brokerage
issues, as well as various structured products. He also regularly advises
clients on derivatives regulation, including rules relating to the central
clearing, exchange trading, reporting, recordkeeping and other requirements of
the Dodd-Frank legislation, as well as the negotiation of related
Mr. Mathews is lead editor of Orrick’s publication, Derivatives in Review, which periodically
highlights important legal, regulatory and other newsworthy developments in the
area of derivatives. He has also published articles in several journals,
including on rating agency hedge criteria in connection with structured finance
Before joining Orrick, Mr. Mathews was vice president and assistant general
counsel at Goldman, Sachs & Co. and director and counsel at UBS AG. He also
served as a law clerk to the Honorable Nicholas Tsoucalas of the United States
Court of International Trade.
From 1999 to 2007, Mr. Mathews held a commission as a Captain in the United
States Army Reserve, where he was qualified to practice as a Judge Advocate. A
veteran of both Operations Iraqi Freedom and Enduring Freedom, he served as an
Operational and Administrative Law attorney in Kuwait, Iraq and Afghanistan.
On May 16, the International Swaps and Derivatives Association, Inc. (“ISDA”) published two consultations in connection with the potential discontinuation of certain interbank offered rates (“IBORs”), seeking input on (i) the replacement of USD LIBOR, CDOR and HIBOR (the “Second Benchmark Consultation”) and (ii) the preferred approach for addressing pre-cessation issues in derivatives that reference certain IBORs (the “Pre-Cessation Consultation”).  These Consultations follow an earlier consultation published by ISDA in July 2018 (the “First Benchmark Consultation” and, together with the Second Benchmark Consultation and the Pre-Cessation Consultation, the “Consultations”) relating to the potential discontinuation of numerous IBOR benchmark rates. READ MORE
On March 18, the extended comment period ended for the Standardized Approach for Calculating the Exposure Amount of Derivative Contracts (“SA-CCR”) rule (the “Proposed Rule”) proposed by the Federal Reserve Board (“Board”), the Federal Deposit Insurance Corporation (“FDIC”), and the Office of the Comptroller of the Currency (“OCC” and together with the Board and the FDIC, the “Agencies”). SA-CCR would, in some cases, supplant the calculations currently used by banking organizations for derivatives under the existing regulatory capital rule, and may have significant implications for commercial end-users. READ MORE
On April 18, the American College of Investment Counsel (the “ACIC”) released a final version of its Model Form Make-Whole and Swap Breakage Indemnity Language (the “Model Provision”), as well as a substantially similar Swap Indemnity Letter Form (the “Letter Form”). These final versions of the Model Provision and the Letter Form revise the initial drafts, released for comment on May 20, 2018, which were prepared to replace the existing 2007 versions. The purpose of both the Model Provision and the Letter Form is to place noteholders purchasing non-U.S. dollar denominated notes and entering into a cash-flow hedge with a swap counterparty in a similar economic position as if they had purchased a U.S. dollar denominated note. READ MORE
The Board of Governors of the Federal Reserve System (Board), the Office of the Comptroller of the Currency (OCC), and the Federal Deposit Insurance Corporation (FDIC) adopted rules (together, the QFC Stay Rules) in 2017 requiring amendments to certain qualified financial contracts (QFCs). The compliance dates for these rules depend on the type of QFC counterparty facing a “covered entity” (as defined below), and are being phased in beginning on January 1, 2019 and ending on January 1, 2020. Notwithstanding this compliance phase-in, dealers subject to the QFC Stay Rules have been requesting that all of their counterparties, including end users, take action to facilitate compliance as though the initial compliance date, January 1, 2019, applied to all types of QFC counterparties. This article is intended to help buy-side participants navigate the compliance process, with emphasis on describing (i) the various types of contracts that constitute “covered” QFCs subject to the rules and (ii) the various alternative methods for compliance.
In recent years, the U.S. Commodity Futures Trading Commission (CFTC) has devoted significant resources to addressing how the requirements of the Commodity Exchange Act (CEA) and the regulations thereunder apply to transactions involving Bitcoin and other virtual currencies. The CFTC has not adopted any rules specific to virtual currencies, but rather has made clear that derivatives contracts based on a virtual currency are subject generally to the same CFTC regulations that apply to other types of derivatives contracts that have traditionally been within the CFTC’s jurisdiction. Additionally, the CFTC has noted that derivatives contracts are susceptible to automation through smart contracts and distributed ledger technology (DLT) and “[e]xisting law and regulation apply equally regardless what form a contract takes . . . [even to] contracts [or parts of contracts] that are written in code[.]”
On July 12, the International Swaps and Derivatives Association, Inc. (“ISDA”) initiated a market-wide consultation (the “Consultation”) on technical issues related to new benchmark fallbacks for derivatives referencing certain interbank offered rates, or IBORs, in response to the expected discontinuance of the publication of those IBORs at the end of 2021. The purpose of the Consultation is to ease the transition of the derivatives market from referencing existing IBOR rates to alternative risk-free-rates (“RFRs”) that have been identified as part of the global benchmark reforms. These RFRs are intended to be based on robust and highly liquid underlying markets that, unlike the relevant IBORs, do not require and are not based on submissions from panel banks or others.
On July 25, Commodity Futures Trading Commission (“CFTC”) Chairman Giancarlo testified before the House Committee on Agriculture to address the priorities and recent work of the agency. The testimony touched on a number of areas, but focused in significant part on the CFTC’s oversight of virtual currencies and financial technology (“FinTech”). Those portions of the testimony are summarized below.
On April 26, Commodity Futures Trading Commission (“CFTC”) Chairman Giancarlo and the CFTC Chief Economist published a white paper titled “Swaps Regulation Version 2.0: An Assessment of the Current Implementation of Reform and Proposals for Next Steps” (the “White Paper”). At the International Swaps and Derivatives Association, Inc. (“ISDA”) annual meeting where the White Paper was initially presented, Chairman Giancarlo described the White Paper as “economy-focused” and stated that regulatory role of the CFTC is focused on “what’s in the best interest of markets.”
On January 19 the Commodity Futures Trading Commission (“CFTC”) and the Securities and Exchange Commission (“SEC”) issued a joint statement warning about potential enforcement actions involving the offering of digital instruments: “When market participants engage in fraud under the guise of offering digital instruments – whether characterized as virtual currencies, coins, tokens, or the like – the SEC and CFTC will look beyond form, examine the substance of the activity and prosecute violations of the federal securities and commodities laws.” In conjunction with this warning, the CFTC brought a number of virtual currency enforcement actions in January, three of which are discussed below. READ MORE
On January 18 the English Supreme Court refused to grant Comune di Prato (“Prato”), an Italian local authority with responsibility for the municipality of Prato in Tuscany, permission to appeal a 2017 decision of the Court of Appeals in favor of Dexia Creditop SpA (“Dexia”), Prato’s swap counterparty. This decision brings to an end a long-standing dispute that was one of many involving swaps entered into by Italian municipalities between 2001 and 2008, when the onset of the financial crisis triggered defaults and brought increased scrutiny to the derivatives market.
The decision of the Court of Appeals, together with the determination by the Supreme Court not to allow further appeal, may provide greater certainty as to the narrow scope of Article 3(3) of the Rome Convention, particularly in respect of derivatives agreements documented under standard documentation that are governed by English law. READ MORE