Global law firm Reed Smith’s derivatives team has advised ETF Securities on its ground-breaking new 3x Short and Leveraged Equity Securities ETP Platform. This is one of the first new structured derivatives products to go through the revised UKLA retail prospectus approval process.
ETPs are passive tracker investment products, which enable investors to gain exposure to underlying assets, in this case equity indices, without entering the derivatives markets.
Reed Smith’s team was led by partner Chris Borg and included partner Brett Hillis, associate James Fisher, with support from London tax partner Caspar Fox, US exchange-traded fund partner Tom Conner and French tax partner Sophie Borenstein.
Chris Borg said: “Structured derivatives always throw up their own challenges. But as retail investors can buy and sell ETPs, the regulatory considerations give you another major angle to cover. This is particularly so, when dealing with the UKLA’s retail comprehensibility standards. The concept at the heart of these products is simple, but bringing that simplicity out in a retail prospectus is not always straightforward, because there’s a lot of moving parts under the bonnet. You have to strike the right balance.”
Brett Hillis added: “A few years ago credit risk was the main issue on people’s minds, now they’re also focusing on uncertainty around future regulatory and tax regimes. Reed Smith fielded an experienced team of derivatives, regulatory and tax specialists which was ideally equipped to address these issues. Our team has a long history in the development of the ETP market.”
Reed Smith has expanded its London structured finance and derivatives practice, over the past two years and has appointed a number of high-profile partners, including: Tamara Box, Helena Nathanson, Chris Borg, Nick Stainthorpe, Ranajoy Basu (promoted to partner in 2014), Peter Zaman, Brett Hillis, Claude Brown and Rashpaul Bahia. Moreover, the firm recently opened new offices in Houston and Singapore, renowned as key centres for energy and commodities trading.
Before joining Reed Smith, Chris Borg and Brett Hillis also advised ETF Securities’s on its Collateralised Currency Securities ETP launched in 2009 (and which now has over $500m invested). They also advised Shell on its role in ETF Securities’ Oil Securities ETP platform originally launched in 2005.