Our Commodities & Derivatives Group provides comprehensive counsel to commodity markets participants on transactional and regulatory matters involving physical commodities and derivatives. Our clients include commodity trading houses, swap dealers, producers and end-user, operators of commodity- related infrastructure assets, commercial and investment banks, hedge funds, derivative exchanges, clearing organizations futures commission merchants, introducing brokers, commodity pool operators and commodity trading advisors. We assist clients on commodity-linked financings, intermediations, supply and offtake transactions, hedging, and a variety of commercial arrangements involving the purchase, sale, transportation and storage of commodities. Our work spans multiple asset classes, including financial rates, foreign exchange, energy and natural resources, environmental credits and others. The group also regularly advises hedge funds, investment banks, institutional investors and corporate clients on regulatory compliance programs, exchange-traded futures and options, and enforcement matters. Our firm has been active in assisting clients in developing domestic and offshore commodity/derivatives funds, including private placements and public offerings.
In the course of representing clients, the Commodities & Derivatives Group often calls upon the capabilities of our firm's other practice groups including: Project Finance & Investment, Restructuring, Asset Management, Digital Works, Tax, Corporate & Financial Services, Finance and Executive Compensation & Employee Benefits.
Structured Commodity Transactions
We advise producers, consumers and traders of commodities on a wide range of structured transactions, including many designed to mitigate commodity price risk and/or counterparty credit risk. Our team structures arrangements that can be used to reduce the exposure of project owners to commodity prices, including long-term purchase agreements, offtake agreements, tolling agreements, and physical hedge transactions. We also have experience with energy and supply management agreements as well as with asset and transportation optimization agreements, all of which implicate important regulatory and credit issues.
Commodity Trading Agreements
Our Commodities and Derivatives team brings significant experience to the negotiation of master commodity and derivatives trading agreements and related documentation for over-the-counter physically and financially settled transactions, including International Swaps and Derivatives Association (ISDA) master agreements, ISDA Dodd Frank Protocols, EEIs, and NAESBs as well as trading agreements for crude and products, coal, and environmental commodity products, as well as long-form confirmations across all types of commodities.
Climate Change-Related Structures and Hedging Instruments
We help clients navigate new transaction structures and hedging instruments designed to facilitate capital flows needed to finance the transition to a low carbon economy. Our attorneys counsel clients on U.S. and international climate change law and policy, development and implementation of greenhouse gas (GHG) reduction programs and offsetting initiatives, as well as voluntary and mandatory disclosures and management strategy. We frequently advise clients regarding the trading of environmental commodities, including renewable energy credits (RECs), renewable identification numbers (RINs) and carbon offsets.
Regulatory Matters and Enforcement
As part of our Commodities & Derivatives practice, we provide advice regarding the regulatory characterization of new structures under the Commodity Exchange Act (CEA) and Commodity Futures Trading Commission (CFTC) regulations. Willkie has extensive experience representing clients in regulatory and enforcement matters before the CFTC, Federal Energy Regulatory Commission (FERC), the National Futures Association (NFA), and derivatives exchanges. In addition, our European regulatory practice advises on EU regulations such as MiFID II, EMIR, and REMIT. Our team includes several partners who previously worked for the CFTC, FERC, the DOJ and the SEC as well as leading practitioners who are knowledgeable in all legal aspects of swaps, futures, and commodities markets.
Commodity Trading and Derivatives Regulation
We regularly provide advice to entities registered with the CFTC and other derivatives market participants on an array of issues, including:
- The requirement to register with the CFTC (or rely up an exemption from registration), and assisting with the registration process
- Permitted trade practices, such as block trades, EFRPs and crosstrades on designated contract markets, swap execution facilities and other electronic trading facilities
- Prohibited trading practices (manipulation, fraud, disruptive trading, spoofing, wash trades and fictitious sales)
- Trading strategies that comply with the CEA), CFTC regulations and exchange rules
- Obtaining no-action and other relief from the CFTC
- The characterization and regulatory treatment of transactions as spot, forward, option, swap and futures contracts
- Compliance with speculative position limits and aggregation requirements
- Hedge and other exemptions from CFTC and exchange rules
- Dodd Frank regulations applicable to over-the-counter swaps, including reporting and recordkeeping requirements
- CFTC requirements as well as exemptions applicable to SDs, FCMs, IBs, CPOs, CTAs and foreign brokers
- Swap dealer-specific regulation including with respect to business conduct standards, corporate governance, NFA audits and the annual Chief Compliance Officer (CCO) report
- Compliance policies, procedures, training and audits
- Formation of domestic and offshore commodity pools and other investment funds, including private placements and public offerings
- Cross border issues
- Proposed legislation and regulations