Postgraduate Course: Principles of Financial Transactions (LAWS11516)
Course Outline
| School | School of Law |
College | College of Arts, Humanities and Social Sciences |
| Credit level (Normal year taken) | SCQF Level 11 (Postgraduate) |
Availability | Not available to visiting students |
| SCQF Credits | 20 |
ECTS Credits | 10 |
| Summary | This course will look at the rules and practical aspects, as well as other relevant matters, relating to financial transactions, undertaken by banks/financial institutions. These transactions form a core part of a bank's/financial institution's activities, and are a major source of their profits. |
| Course description |
This course will take a broad view of important financial transactions for banks/financial institutions, and matters that are relevant to them. These transactions or operations are important for students who wish to be involved in banking and finance as a lawyer, banker/financier or regulator, amongst other things, to have a knowledge and understanding of. The emphasis wll be on the rules and practical aspects of these transactions, as well as looking at matters related or connected to them. Whilst the base jurisdiction will be the United Kingdom (English law), given London is one of the two leading financial centres in the world, after New York, reference will be made to various pieces of important European Union legislation, and their effect, (eg, securitization, derivatives, and sustainable finance) as well as, to a lesser extent, the United States of America.
The course will look at repurchase agreements ("repos"), and the role they play in terms of the private sector and providing short term secured finance, as well as their use by governments to control money supply. The course will also look at asset finance (finance leases (leasing of equipment), acquisition finance and project finance). In addition, the course will also examine (i) derivatives (which are a hedging mechanism, amongst other things), and (ii) international bonds (both corporate and international bonds, as well as Eurobonds - the latter are often issued out of London, where a bond is issued in a currency other than that of the issuer, eg, a European company issuing a bond in US dollars). We will also look at key provisions of such bonds, such as, collective action clauses (including the EU legislation on this), and pari passu clauses (including the Argentinian bond default and the litigation relation to it) .Related to this, in the context of international or sovereign bonds, there will be a seminar on sovereign debt recovery, as there is no formal process for putting countries into insolvency. Further, the financing mechanism, known as securitization, where debt is bundled up and sold to investors at a discount, will be considered - this form of financing was heavily linked with the global financial crisis in 2007/2008. The benefit of securitisation was it got assets "off the books" of banks and financial institutions, and gave them a large lump sum upfront. Hence, given the problems associated with securitization, the European Union and the USA have passed legislation requiring the seller of the bundled up debt (eg, housing mortgages) to retain a 5% stake in the asset that is sold to investors via a new company - this is called "skin in the game". The basic structure of a securitization, as well as the obligations imposed by the EU legislation will be looked at in some detail, and aspects of the USA position will also be considered. The role and function of credit rating agencies ("CRAs"), who were criticised for their role in the global financial crisis, will be examined in a separate seminar. There is EU legislation on CRAs (which has been transposed into the UK) imposing obligations on them; there is also Australian authority imposing liability on a CRA for negligence. Lastly, we will look at sustainable finance - a growing and increasingly important area of the law, which is very much customer driven.
Environmental, Social and Governance ("ESG") matters are shaping banking and finance. It is an area in which the EU has made, and continues to make, a huge contribution. In this seminar, it is proposed we will look at Green Bonds, which are bonds used for "green" matters or "purposes"; these bonds were first issued by the World Bank, but the UK Government has also recently had a green bond issue. Corporations can also issue them. Up until recently, there was no legislation dealing with them - guidance was provided by the International Capital Markets Association with their "Green Bond Principles", which were a form of "soft law", and which were periodically updated. Very recently, the EU has passed legislation dealing with green bonds , we will look at this legislation, as well as the Green Bond Principles, and the underlying fundamentals regarding such bonds. The course, whilst focused primarily on private sector financial transactions, also looks at the public sector and international dimension involved with them.
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Entry Requirements (not applicable to Visiting Students)
| Pre-requisites |
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Co-requisites | |
| Prohibited Combinations | |
Other requirements | None |
Course Delivery Information
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| Academic year 2024/25, Not available to visiting students (SS1)
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Quota: 25 |
| Course Start |
Semester 2 |
Timetable |
Timetable |
| Learning and Teaching activities (Further Info) |
Total Hours:
200
(
Seminar/Tutorial Hours 20,
Programme Level Learning and Teaching Hours 4,
Directed Learning and Independent Learning Hours
176 )
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| Assessment (Further Info) |
Written Exam
0 %,
Coursework
100 %,
Practical Exam
0 %
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| Additional Information (Assessment) |
A 100% essay of 5,000 words in length. Students will have a choice of topics taken from the subjects studied during the course. |
| Feedback |
Formative Assessment
This will take the form of either (i) a case note, or a note on a relevant topic. These will be 4 pages in length. Guidance is provided as to the layout of the case note, eg, Facts, Court's Reasoning. The purpose is to get students from non-United Kingdom jurisdictions reading and understanding and digesting cases (a primary source), as these are important for this course and the assessment process.
The note on a relevant topic will also get students analysing and digesting sources in preparation for the Summative assessment
Further, both exercises will students the opportunity to practice and utilise their legal writing skills and their referencing skills, ie, footnoting sources, such as, the case citation and the relevant page or paragraph. Referencing skills are important.
The students will be given written feedback on their formative assessment, so that errors can be corrected in advance of the Summative assessment. Students will be given a draft grade to provide them with an idea as to how they went.
Students will be given 3-4 weeks to complete the task, which will be issued early in the semester; they will receive written feedback on their formative assessment before the end of the course.
Summative Assessment
This will be by means of a 5,000 word essay from a choice of topics on the semester's work. This tests a student's knowledge, research skills, analytical skills and communication skills
Students will be provided with written feedback via LEARN. This will, normally, be within 3 weeks from the date of submission, as per University requirements.
Essay Writing Assistance
Students will be provided with a written Essay Writing Guide, setting out good practice and key points regarding essays, ie, the approach to writing essays, what should and should not be included, and resources and referencing.
In addition, essay writing will be discussed in class.
And students will be provided with an Essay Checklist before handing in their essay. This is a summary of key matters they should do and include in their essay. |
| No Exam Information |
Learning Outcomes
On completion of this course, the student will be able to:
- Have a good grounding in, and understanding of, the key legal principles involved in financial transactions.
- Have a good grounding in, and understanding of, the key legal principles involved in financial transactions.
- Demonstrate familiarity with the importance of key legal principles in financial transactions, and their application to banking transactions and operations.
- Have a general appreciation of the law and practice of financial transactions and the transactions involved in a wider context.
- Be able to undertake independent research in financial transactions, and critically analyse, and apply, what has been learnt.
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Reading List
There will be no set textbook for this course, as articles, cases and legislation will be important. However, the following books can be used as a basis for the course:
(i) R Cranston and E Avgouleas, Principles of Banking Law (2019, 3rd edn, OUP);
(ii) L Gullifer, Goode and Gullifer on Legal Problems of Credit and Security (2022, 7th edn, Sweet &. Maxwell)
(iii) PR Wood, Practice of International Banking and the Law (2008, University Edition, Sweet & Maxwell |
Additional Information
| Graduate Attributes and Skills |
1. "Skills and Abilities in Research and Enquiries"
To be able to effectively research and improve knowledge in areas relevant to financial transactions, and apply and contextualise the knowledge obtained.
2. "Skills and Abilities in Personal and Intellectual Autonomy"
To be able to think and work independently, including critical self-evaluation and resilience.
3. "Skills and Abilities in Communication"
To be able to communicate their ideas and views, both orally and in written form, in a cogent and coherent manner. In framing these ideas and view, they would be aware of the relevant context (both domestic and international)
4. "Skills and Abilities in Personal Effectiveness"
Being able to adapt to new and changing circumstances, and deal with new situations; and to be able to interact effectively with others, ie, be able to use these skills and abilities to deal with novel situations or transactions.
5. "Technical/practical skills"
Use and apply the knowledge and skills learnt to good effect in the work force (e.g., as a legal practitioner, or in banking or finance) and real world situations, i.e., be able to apply knowledge and critical thinking to solve problems |
| Keywords | Repos,asset finance,derivatives,international bonds,securitization,sovereign debt recovery |
Contacts
| Course organiser | Mr Parker Hood
Tel: (0131 6)50 2048
Email: Parker.Hood@ed.ac.uk |
Course secretary | Miss Hannah Ackroyd
Tel: (0131 6)50 2008
Email: hackroyd@ed.ac.uk |
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