Aspiring Solicitors Commercial Awareness Competition

[Bugsy Malone]

Hey, is anyone else taking part in this?

2019/20 thread is here: https://www.thecorporatelawacademy....reness-competition-2019-2020.1628/#post-13815

 

[gricole]

Yes, I am!

 

[Bugsy Malone]

Yes, I am!

Great! How are you feeling about Round 4? Trying to decide how best to prepare for it

 

[Salma]

Well done guys for getting this far! I think this thread will be beneficial for all members who are taking part in the AS CAC this year to discuss questions or general advice.

Please post here ☺️

 

[gricole]

Great! How are you feeling about Round 4? Trying to decide how best to prepare for it

Slightly nervous! I guess we'll just have to wait and see what the reading list includes. I have noticed three key topics that questions centred around and that I need to polish- financial institutions, financial instruments, and financial markets. So, I am just making mind maps of these!

 

[Jaysen]

Let us know if there's anything TCLA can do to help you with the competition!-

 

[George]

Congratulations on everyone making it to round 4! I found that listening to BBC 4's wake up to money has really helped me in getting this far into the competition, as well as reading some sections of the economist when i have time. But the lion share of the credit for me getting this far definitely goes to Jaysen and his classes in the commercial awareness group. Definitely been very helpful and worth it so far (even though i now have to do even more reading every week)!

 

[Jaysen]

Congratulations on everyone making it to round 4! I found that listening to BBC 4's wake up to money has really helped me in getting this far into the competition, as well as reading some sections of the economist when i have time. But the lion share of the credit for me getting this far definitely goes to Jaysen and his classes in the commercial awareness group. Definitely been very helpful and worth it so far (even though i now have to do even more reading every week)!

Thank you, I'm not sure I can take much credit though -- the existing commercial knowledge you show in our classes is outstanding. Far more than I had in my second year!

Is there anything else you do to develop your knowledge of business/finance?

 

[gricole]

Jaysen, can you explain briefly what derivatives are and how are lawyers involved in transactions with these financial instruments? They are the ones I struggle with the most and I find your simple but precise explanations very useful! Thank you!

 

[Jaysen]

Jaysen, can you explain briefly what derivatives are and how are lawyers involved in transactions with these financial instruments? They are the ones I struggle with the most and I find your simple but precise explanations very useful! Thank you!

Sure.

Derivatives are contracts. Their value is based on (derived from) an underlying asset. More specifically, they're based on the value of an underlying asset in the future. In that sense, you can think of derivatives as bets.

Derivatives are used to hedge against risk (by entering into a transaction which offsets your exposure) or to speculate (to bet on the change in value of an underlying asset). There are a few different types: great video on that here.

To give you a more concrete example, suppose you're an airline. You're worried about oil prices going up because it raises your fuel costs. That's where derivatives come in -- you can use a derivative to lock in the price of fuel today. If the price does end up increasing you've saved yourself money. Here, derivatives were used to offset the risk of rising fuel prices in the future.

You could also use derivatives to speculate on the future value of an underlying asset. For example, during the financial crisis some investors used derivatives to 'bet' on the housing boom (by betting on the price movement of mortgage backed securities). It's pretty effective because you don't have to actually own the underlying asset to bet on it.

Lawyers will help clients to use derivatives to hedge against their risks. For example, a company might want to enter into an interest rate swap to fix the rate of interest it pays (so it is not vulnerable to changes in the interest rate). They'll draft the documentation, negotiate the terms and assess the risks.

There are many types of derivatives and they can be complex (as we saw with synthetic CDOs during the financial crisis), so lawyers will also be involved in structuring the transactions. There's also a lot more regulation since the financial crisis (EMIR in the UK and Dodd Frank in the US) so lawyers will help clients understand and comply with the law.

I sat in structured finance & derivatives at my firm although I only worked on one derivatives transaction. That was a transaction which came from the corporate team: we had to start drafting (and then later help negotiate) a hedging agreement (which set out the terms of the particular derivative).

Let me know if anything is unclear!

 

[Salma]

Sure.

Derivatives are contracts. Their value is based on (derived from) an underlying asset. More specifically, they're based on the value of an underlying asset in the future. In that sense, you can think of derivatives as bets.

Derivatives are used to hedge against risk (by entering into a transaction which offsets your exposure) or to speculate (to bet on the change in value of an underlying asset). There are a few different types: great video on that here.

To give you a more concrete example, suppose you're an airline. You're worried about oil prices going up because it raises your fuel costs. That's where derivatives come in -- you can use a derivative to lock in the price of fuel today. If the price does end up increasing you've saved yourself money. Here, derivatives were used to offset the risk of rising fuel prices in the future.

You could also use derivatives to speculate on the future value of an underlying asset. For example, during the financial crisis some investors used derivatives to 'bet' on the housing boom (by betting on the price movement of mortgage backed securities). It's pretty effective because you don't have to actually own the underlying asset to bet on it.

Lawyers will help clients to use derivatives to hedge against their risks. For example, a company might want to enter into an interest rate swap to fix the rate of interest it pays (so it is not vulnerable to changes in the interest rate). They'll draft the documentation, negotiate the terms and assess the risks.

There are many types of derivatives and they can be complex (as we saw with synthetic CDOs during the financial crisis), so lawyers will also be involved in structuring the transactions. There's also a lot more regulation since the financial crisis (EMIR in the UK and Dodd Frank in the US) so lawyers will help clients understand and comply with the law.

I sat in structured finance & derivatives at my firm although I only worked on one derivatives transaction. That was a transaction which came from the corporate team: we had to draft (and then later help negotiate) a hedging agreement (which set out the terms of the particular derivative).

Let me know if anything is unclear!

Thanks for this concise explanation Jaysen!

 

[George]

Thank you, I'm not sure I can take much credit though -- the existing commercial knowledge you show in our classes is outstanding. Far more than I had in my second year!

Is there anything else you do to develop your knowledge of business/finance?

Its mostly podcasts and the economist from time to time. There are a few movies and TV shows that also helped in hindsight, like The Big Short and Billions (first time I heard the term austerity explained was in this show). I also have a house mate this year who does econ and finance and wants to go into investment banking, so from time to time I pick his brain about these topics and their effects on the markets. I find that talking about this stuff to anyone really helps, whether your explaining it or getting it explained to you!

 

[Jai C.]

did everyone get the email for the QF topics...Please if you guys find any source useful relating to these topics do share it here.

The Topics are
The Budget
UK High Street Retail
Tech Companies
UK Legal Industry
UK Food and Drink Sector
Data Protection.

 

[Jaysen]

did everyone get the email for the QF topics...Please if you guys find any source useful relating to these topics do share it here.

The Topics are
The Budget
UK High Street Retail
Tech Companies
UK Legal Industry
UK Food and Drink Sector
Data Protection.

FYI - we've just brought on our commercial writers who will be writing about current news topics each week. I'm not sure when the next round of your competition is but their weekly posts may be useful.

 

[Hazal]

Its mostly podcasts and the economist from time to time. There are a few movies and TV shows that also helped in hindsight, like The Big Short and Billions (first time I heard the term austerity explained was in this show). I also have a house mate this year who does econ and finance and wants to go into investment banking, so from time to time I pick his brain about these topics and their effects on the markets. I find that talking about this stuff to anyone really helps, whether your explaining it or getting it explained to you!

Loved The Big Short! Whenever I hear about investors shorting a stock, I actually understand. Also makes the financial crash better to visualise (i.e. how complacent banks got with sub-prime mortgages)

 

[AJ]

did everyone get the email for the QF topics...Please if you guys find any source useful relating to these topics do share it here.

The Topics are
The Budget
UK High Street Retail
Tech Companies
UK Legal Industry
UK Food and Drink Sector
Data Protection.

Not taking part, so not sure in what context these topics are coming up, but re Data Protection I would suggest:

1. Law society guidance: https://www.lawsociety.org.uk/suppo...ement/advice-and-guidance-on-gdpr-compliance/
From memory they have a really good 40 page guide on DP/GDPR which should be on the link

2. The Information Commissioner's Office website, the UK DP regulator: https://ico.org.uk/

 

[Lawgirlxo]

Sure.

Derivatives are contracts. Their value is based on (derived from) an underlying asset. More specifically, they're based on the value of an underlying asset in the future. In that sense, you can think of derivatives as bets.

Derivatives are used to hedge against risk (by entering into a transaction which offsets your exposure) or to speculate (to bet on the change in value of an underlying asset). There are a few different types: great video on that here.

To give you a more concrete example, suppose you're an airline. You're worried about oil prices going up because it raises your fuel costs. That's where derivatives come in -- you can use a derivative to lock in the price of fuel today. If the price does end up increasing you've saved yourself money. Here, derivatives were used to offset the risk of rising fuel prices in the future.

You could also use derivatives to speculate on the future value of an underlying asset. For example, during the financial crisis some investors used derivatives to 'bet' on the housing boom (by betting on the price movement of mortgage backed securities). It's pretty effective because you don't have to actually own the underlying asset to bet on it.

Lawyers will help clients to use derivatives to hedge against their risks. For example, a company might want to enter into an interest rate swap to fix the rate of interest it pays (so it is not vulnerable to changes in the interest rate). They'll draft the documentation, negotiate the terms and assess the risks.

There are many types of derivatives and they can be complex (as we saw with synthetic CDOs during the financial crisis), so lawyers will also be involved in structuring the transactions. There's also a lot more regulation since the financial crisis (EMIR in the UK and Dodd Frank in the US) so lawyers will help clients understand and comply with the law.

I sat in structured finance & derivatives at my firm although I only worked on one derivatives transaction. That was a transaction which came from the corporate team: we had to draft (and then later help negotiate) a hedging agreement (which set out the terms of the particular derivative).

Let me know if anything is unclear!

There’s a movie about this on Netflix, ‘The Big Short’. It’s largely about the financial crisis but it’s got lots of scenes on CDOs.

It’s a comedy/drama so it’s not that serious. I didn’t even realise it was based on the real financial crisis.

It helped me understand some terms and I’ll probably watch it again soon

 

[Jaysen]

There’s a movie about this on Netflix, ‘The Big Short’. It’s largely about the financial crisis but it’s got lots of scenes on CDOs.

It’s a comedy/drama so it’s not that serious. I didn’t even realise it was based on the real financial crisis.

It helped me understand some terms and I’ll probably watch it again soon

Love The Big Short!

If you're interested in financial crisis films I'd highly recommend: Margin Call (excellent drama with Kevin Spacey), Inside Job (very good documentary on the causes) and Too Big to Fail (documentary on the responses to the crisis).

 

[George]

LawCareers.net recently published an article that touches on some of the bigger commercial topics that have happened this year...
https://www.lawcareers.net/Informat...wareness-issues-you-should-know-about-in-2018
Jaysen also published a great summary on the budget in the forums
https://www.thecorporatelawacademy....the-budget-2018-for-a-law-firm-interview.728/

 

[George]

Also wanted to ask if anyone is interested in h joining in on a Skype session to discuss the topics before the QF next week?