Global law firm Reed Smith’s derivatives team has advised ETF Securities on its ground-breaking new 3x Short and Leveraged Equity Securities ETP Platform. This is one of the first new structured derivatives products to go through the revised UKLA retail prospectus approval process.
ETPs are passive tracker investment products, which enable investors to gain exposure to underlying assets, in this case equity indices, without entering the derivatives markets.
Reed Smith’s team was led by partner Chris Borg and included partner Brett Hillis, associate James Fisher, with support from London tax partner Caspar Fox, US exchange-traded fund partner Tom Conner and French tax partner Sophie Borenstein.
Chris Borg said: “Structured derivatives always throw up their own challenges. But as retail investors can buy and sell ETPs, the regulatory considerations give you another major angle to cover. This is particularly so, when dealing with the UKLA’s retail comprehensibility standards. The concept at the heart of these products is simple, but bringing that simplicity out in a retail prospectus is not always straightforward, because there’s a lot of moving parts under the bonnet. You have to strike the right balance.”
Brett Hillis added: “A few years ago credit risk was the main issue on people’s minds, now they’re also focusing on uncertainty around future regulatory and tax regimes. Reed Smith fielded an experienced team of derivatives, regulatory and tax specialists which was ideally equipped to address these issues. Our team has a long history in the development of the ETP market.”
Reed Smith has expanded its London structured finance and derivatives practice, over the past two years and has appointed a number of high-profile partners, including: Tamara Box, Helena Nathanson, Chris Borg, Nick Stainthorpe, Ranajoy Basu (promoted to partner in 2014), Peter Zaman, Brett Hillis, Claude Brown and Rashpaul Bahia. Moreover, the firm recently opened new offices in Houston and Singapore, renowned as key centres for energy and commodities trading.
Before joining Reed Smith, Chris Borg and Brett Hillis also advised ETF Securities on its Collateralised Currency Securities ETP launched in 2009 (and which now has over $500m invested). They also advised Shell on its role in ETF Securities’ Oil Securities ETP platform originally launched in 2005.
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Note to Editors
About ETF Securities
ETF Securities is one of the world’s leading providers of exchange-traded investment products and a pioneer in exchange-traded commodities. It is dedicated to developing liquid, transparent investment solutions that can be traded on world stock exchanges. The company has a strong history of product innovation and this remains a key tenet of its guiding philosophy. Today ETF Securities offers what it believes to be the world’s most comprehensive range of exchange-traded commodities and it is responsible for approximately US$19 billion in global investor assets (as at 31st March 2014).
About the Product
ETPs are passive tracker investment products, which enable investors to gain exposure to underlying assets, in this case equity indices, without entering the derivatives markets. Investors buy and sell debt securities in the secondary markets at prices which reflect the movements in the relevant indices.
This ETP platform is structured as a collateralised MTN programme for “Short and Leveraged Equity Securities”, which is primarily listed in the UK with secondary listings in Germany and Italy. The securities issued under the programme are debt securities which provide 3 x exposure (long or short) on a range of equity indices. The issuer, a special purpose vehicle, covers its exposure with back-to-back collateralised “equity contracts” from Societe Generale.
The first securities to be issued will be based on the FTSE 100, but the programme enables the launch of up to 116 different classes of security each referencing a different underlying equity index.
About Reed Smith
Reed Smith is a global law firm, with 25 offices and more than 1,800 lawyers in offices across Europe, the Middle East, Asia and the United States.
For further information please visit www.reedsmith.com or contact Jeyda Star (Senior PR & Communications Manager EME) on +44 (0)20 3116 2571.