Course details

Credit Derivatives: Regulatory, Legal, and Taxation Issues

Credit Derivatives: Regulatory, Legal, and Taxation Issues


Overview/Description
Target Audience
Expected Duration
Lesson Objectives
Course Number


Overview/Description
Credit derivatives are highly complex financial instruments used to transfer credit risk from one entity to another. These instruments are defined as contracts that are traded over-the-counter between private parties. Due to their private nature, the inherent risks posed by such agreements have forced regulators to address legal, accounting, and tax issues related to these agreements. Standardized documentation and definitions have been created to allow for mutual understanding between the two parties and try to remove any vagueness in the contract details that may prove detrimental to either party. Standardization will never be complete for such agreements due to the specific requirements of different users from one contract to another; however, they hope to build on a mutual solid foundation while still allowing flexibility to meet end user requirements. Because proper accounting and taxation treatment of these products is constantly evolving, professional judgment plays a great role in these areas. This course introduces regulatory documentation set out by the International Swaps and Derivatives Association (ISDA) and the legal issues that may arise due to a lack of proper documentation and understanding between two parties. It also examines the issue surrounding the definition of restructuring as a credit event. The course briefly covers regulatory issues, including centralized clearing mechanisms and collateral margins, and the accounting treatment and tax issues regarding credit derivatives.

Target Audience
Financial services professionals, consultants, and sales professionals interested in providing or selling products and services to banks, investment companies, and other financial corporations, and everyone interested in creation and use of credit derivative instruments

Expected Duration (hours)
1.0

Lesson Objectives

Credit Derivatives: Regulatory, Legal, and Taxation Issues

  • describe the standardization of CDS documentation
  • describe ISDA restructuring as a credit event
  • describe Basel and Dodd-Frank regulations
  • identify regulatory issues
  • describe legal regulations and issues
  • describe FASB's accounting treatment of derivatives
  • identify taxation issues for credit derivatives
  • describe accounting treatment and taxation issues
  • Course Number:
    fini_11_a08_bs_enus