Assia Damianova
Assia’s practice focuses on complex financing transactions involving a wide variety of asset classes. She has extensive experience of derivative products (including credit default swaps, credit-linked notes, total return swaps, currency and interest rate swaps, equity derivatives, repos and other derivative instruments) and also advises on EMIR compliance and related regulatory issues.
Practice Area
Panel
- Contributing Author
Qualified Year
- 1998
Qualification
- Solicitor admitted in England and Wales
4 Contributions by Assia Damianova
PRACTICE NOTES
Digital Bond Issuance in the UK and EU: Legal Frameworks, Smart Contracts, Documentation and Risk Across the Transaction Lifecycle
This Practice Note sets out a clear overview of how UK and EU legal frameworks are developing to accommodate digital bonds. It explains key terminology and the digital bond transaction lifecycle, covering the principal documents needed for issuance, with emphasis on smart contracts. It also signposts what practitioners should consider when engaging in digital bond transactions.
Summary
Digital bonds are now legally recognised in the UK and EU, provided the issuance structure complies with the relevant securities regime, the Prospectus Regulation and/or Regulation (EU) 2023/1114 on markets in crypto-assets (MiCA), and the underpinning distributed ledger technology (DLT) infrastructure falls within the scope of the competent regulator or sandbox. Practitioners should determine early whether an instrument is a native digital bond or a tokenised form of a traditional bond, as that choice shapes property law status, custody and settlement exposure, and undertake regulatory mapping at the structuring stage. In most digital bond models, smart contract code functions as the tool that executes agreed outcomes rather than the source of the parties’ legal rights and obligations, so tight alignment between the code and the written contractual suite is essential. Cross-border enforceability, insolvency outcomes and settlement finality continue to present elevated legal risk...
Banking & Finance
PRACTICE NOTES
Documenting EU and UK derivatives client clearing under the principal model: ISDA/FIA templates, collateral and segregation, porting, EMIR 3 active account requirement and UK EMIR reforms
What does this Practice Note cover?
This Practice Note explains the documentation needed to set up and run a derivatives clearing arrangement operating under the principal model (see: ‘Two main models of clearing’ below), as typically and widely applied in the EU and UK. It sets out the legal and operational architecture for recording both the Client Transaction (defined below) and the linked CCP Transaction (defined below), covering the deployment of standard industry templates, collateral mechanisms, and various account segregation approaches.
How is clearing achieved?
Clearing is the mechanism by which a central counterparty (CCP) serves as an intermediary for financial market trades, seeking to assure and reduce the risk on the transaction between ‘buyer’ and ‘seller’. In practice, clearing occurs via a structured workflow encompassing trade submission, validation, and novation by a CCP. After execution, a trade is routed to the CCP through a clearing member (CM), and the CCP, performing its intermediation role, becomes the buyer to each seller and the seller to each buyer, thereby centralising counterparty exposure. Margin obligations are computed and exchanged daily, and where a default arises, the CCP activates its default management processes, which include porting or closing out positions. Operational infrastructure includes...
Banking & Finance
PRACTICE NOTES
EU and UK Central Counterparties: EMIR Authorisation and Rules on Clearing, Client Segregation and Portability, Prudential Standards, Default Management, and Resolution
What is a clearing house?
The clearing obligation set by the European Markets Infrastructure Regulation (EU) No 648/2012 (EU EMIR) and, from IP completion day (31 December 2020) in the UK, by assimilated Regulation (EU) 648/2012 (UK EMIR), requires that all eligible derivatives are sent for clearing via a central counterparty (a clearing house, or CCP). For more on the obligation, see Practice Note: Clearing obligation.
EU EMIR was reviewed in 2019; the revised framework, EU EMIR REFIT (Regulation (EU) 2019/834), has applied since 17 June 2019.
In the UK, UK EMIR substantially carries across the EU EMIR Refit changes that were operative immediately before IP completion day.
EU EMIR is further amended by Regulation (EU) 2019/2099 (EU EMIR 2.2) concerning procedures and authorities for CCP authorisation and the requirements for recognising third-country CCPs, effective from 1 January 2020. These amendments form part of EU assimilated law and are mirrored in UK EMIR.
A CCP is a market infrastructure intended to reduce and manage counterparty risk through clearing and settlement...
Banking & Finance
PRACTICE NOTES
ISDA/FIA Cleared Derivatives: English law Execution Agreement and Client Cleared OTC Derivatives Addendum: key terms, procedures, termination and default mechanics, transfers, and FIA Indirect Clearing Terms (UK/EU)
Clearing requirements have brought about significant changes to derivatives documentation.
Uncleared derivatives remain subject to an International Swaps and Derivatives Association (ISDA) Master Agreement together with a Credit Support Annex, whereas cleared derivatives call for additional paperwork, including:
clearing agreements
give-up agreements
collateral transformation agreements
To reduce the documentation burden of putting clearing arrangements in place, and to help with compliance with the new derivatives rules, the industry has produced standard forms. These encompass classification letters and delegated reporting agreements (both available from the ISDA website), plus client clearing documentation for both US and non-US platforms, as well as a range of protocols and standard amendment agreements.
For more information on documenting clearing relationships, see Practice Note: Documenting a derivatives clearing relationship—EU and UK platforms. This Practice Note sets out the key terms of the 2017 ISDA/Futures Industry Association (FIA) Cleared Derivatives Execution Agreement (the 'Agreement') and the ISDA/FIA Client Cleared over-the-counter (OTC) Derivatives Addendum (the 'Addendum'). Both the Agreement and the Addendum are available on ISDA’s website...
Banking & Finance
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