Hedging and the documentation of over the counter derivatives

Andrea Geat, Head of Documentation, Noble Group, Hong Kong

Looking back some years, joining a specialized group of young legal professionals at ABN AMRO Bank N.V. turned out to be a life time opportunity that allowed me to learn and develop specialized knowledge in a “niche” legal practice area being concerned with derivatives trading, or “hedging”, in regulated and unregulated markets. Quietly the derivatives market has been growing over the past three decades and, arguably, speculative hedging combined with gaps in regulatory supervision and lacking risk management has contributed to the recent near melt-down of the international financial system, colloquially referred to as the “financial tsunami”. Whatever the cause of the recent troubles in the financial markets, even with respect to derivatives, the contractual agreement documenting such financial instruments is what parties take out of dusty cabinets whenever disputes arise. Herewith we are going to see what hedging and derivatives are all about and how they are documented from a practitioner hands-on perspective.

Andrea Geat is dually qualified as a Solicitor (England & Wales) and Attorney (New York). Worked in-house for most of his career and specialized as a finance and capital markets transactional legal counsel. During the past six years he has worked at ABN AMRO Bank N.V., as capital markets documentation negotiator (Amsterdam, Hong Kong) and he is now head of documentation at Noble Resources Limited (Hong Kong), part of Noble Group.

Noble Group (SGX: NOBL) is a market leader in managing the global supply chain of agricultural, essential raw materials, industrial and energy products operating from over 100 offices in more than 40 countries. With 2008 annual revenues exceeding USD 36 billion, Noble Group is now listed on the Fortune Global 500 in position #218 (www.thisisnoble.com).