Synthetic transaction meaning

Banking & Finance 2024 case round up Force majeure—shipping contract—reasonable endeavours RTI Ltd (Respondent) v MUR Shipping BV (Appellant) [2024] UKSC 18 This Supreme Court decision examines how a force majeure clause in a shipping contract between MUR Shipping BV (MUR) and RTI Ltd (RTI) should be interpreted. Such clauses excuse a party from performing when specified events outside the parties’ reasonable control (acts of God) occur. They frequently contain a ‘reasonable endeavours’ proviso, which prevents a party from invoking force majeure if the consequences could be averted by taking reasonable steps. The appeal turned on whether those reasonable endeavours required the party seeking to rely on force majeure to accept an offer of performance that did not match the contract terms. In this instance, the suggested alternative was payment in euros rather than US dollars. The Supreme Court unanimously allowed the appeal, ruling that MUR’s refusal to accept RTI’s non-contractual proposal did not amount to a failure to exercise reasonable endeavours...

For further details on the FCA Monzo fine, see: FCA fines Monzo £21m for financial crime control failings, LNB News 08/07/2025 10. Background Between 2020 and 2022, Monzo brought on more than 34,000 high-risk customers without adequate due diligence. As a result, blatantly fictitious addresses, including ‘10 Downing Street’ and ‘Buckingham Palace’, were not challenged. The FCA noted the bank did not evolve its controls as its customer numbers grew, exposing it to contemporary fraud typologies such as synthetic identity fraud, where criminals mix genuine and fabricated data to build convincing profiles. The Monzo episode prompts the question of whether banks and other firms lean too heavily on manual AML review—a method vulnerable to inconsistency and human error. Could automated technology, particularly AI-driven tools, have helped avoid such failures? AI's helping hand Rapid progress and broad adoption of AI in recent years has shifted its role in combating financial crime from concept to practice. Financial institutions now utilise AI across AML and counter-terrorism financing to handle...

This Practice Note examines the application of term risk‑free rates (RFRs) in loan agreements. It addresses: what term RFRs exist and when they are appropriate Term Secured Overnight Financing Rate (Term SOFR) and the Loan Market Association (LMA) Facilities Agreements EURIBOR and Term €STR key considerations when deploying Term Sterling Overnight Index Average (Term SONIA) For: guidance on using compounded RFRs in loan agreements, see Practice Note: Interest provisions in risk‑free rate based loan agreements background on interest in a facilities agreement and the types of rates available, see Practice Note: Introductory guide to interest in loan agreements our material in an easy‑to‑navigate interactive toolkit, see: toolkit an overview of the key issues in the LIBOR transition, see Practice Note: Introductory guide to LIBOR transition a list of developments for each LIBOR currency during the transition, see the: LIBOR developments tracker What term RFRs are available and when can they be...

This Practice Note outlines collateralised debt obligations (CDOs) and the relevant UK regulatory regime. It addresses: fundamentals such as special purpose vehicles (SPVs), securitisation, tranches, and creating security over a portfolio of financial assets, which may include asset-backed securities (ABS), mortgage-backed securities (MBS) and other issues of CDO securities the key participants in a CDO transaction (arranger, portfolio manager, rating agencies, issuer and investors) the principal CDO structures (cash flow CDO, market value CDO and synthetic CDO) the main portfolio management approaches (dynamic and static) the capital structure of SPVs used for CDO transactions the role of hedging in CDO structures key considerations and legal issues for CDOs (bankruptcy remoteness, methods of transferring the underlying assets to the SPV, jurisdiction and tax issues, credit enhancement and overcollateralisation) What is a CDO? Core concepts Collateralised debt obligations (CDOs) are intricate, high-value arrangements involving many parties, extensive documentation and, commonly, multiple jurisdictions. A CDO transaction involves an orphan shell...

ARCHIVED : This Practice Note has been archived and is not maintained . This Practice Note offers: context on moving away from the London Interbank Offered Rate (LIBOR) and other Interbank Offered Rates (IBORs) towards risk-free rates (RFRs) (so called as they indicate minimal credit risk—see glossary definition below) clarification of key terminology relating to the shift to RFRs a table identifying the RFR chosen for each LIBOR currency and the priorities of the relevant Working Group an outline of LIBOR contractual fallbacks details of issues particular to the loan market arising from the transition to RFRs details of issues particular to the derivatives market arising from the transition to RFRs details of issues particular to the debt capital markets arising from the transition to RFRs an update on the current position of EURO benchmarks, including EONIA, €STR and EURIBOR For a quick reference guide, an FAQs list on LIBOR transition, and the key unresolved discussion...