Commodities, Trading & Derivatives

Our experience encompasses a wide range of trading issues, including the following.

Energy Transactions

Offering deep industry knowledge, Akin’s powerhouse energy lawyers handle the full value chain, from traditional through renewable resources. The multidisciplinary climate change team addresses the intricate legal, regulatory and policy issues commodities traders face today. Our elite dealmakers round out the practice, with traders regularly seeking them out for advice on complex mergers & acquisitions.

Physical Trading. Our team guides clients through the complexities of financially settled and derivative transactions, credit derivative transactions, physically settled power swaps and hydrocarbon price swaps, including New York Mercantile Exchange (NYMEX) swaps, index swaps, basis FOM swaps, BOM swing swaps and exotic swaps in the exempt and cleared OTC markets.

Cash-Settled Hedging. We assist with financially settled derivative transactions, whether cleared or uncleared, from plain vanilla interest rate and commodity price swaps, to portfolio credit derivative, accelerated stock repurchase, heat rate call options (HRCO) and other more complicated hedging transactions.

Speculative Trading. We advise major energy companies, proprietary trading firms, commodities traders and hedge funds with respect to speculative trading of futures, options, swaps and other derivatives. We support clients in establishing trading and compliance programs and documenting risk management and marketing policies for their hedging groups, including assisting in the hedge committee approval process applicable to the addition of new trading instruments and advising on compliance with hedging exemptions from speculative position limits. Our team also effectively negotiates counterparty trading relationships and transactions with major investment banks, and advises on financially settled energy hedges for sponsors, developers and offtakers.

Commodity Finance. Our lawyers also regularly advise on financing models for commodity purchases and trades.

Securities Trading & Repurchase Agreements. Further, we assist clients with securities lending & repurchase transactions on both U.S.- and U.K.-governed industry standard documentation.

Commodities Funds

Akin routinely represents prominent investment funds and other sponsors of diverse commodity trading firms, including commodities funds and hedge funds, on regulatory and commercial matters involving instruments for commodity trading advisors (CTAs) and commodity pool operators (CPOs).

Our experience extends to CFTC, National Futures Association (NFA) and Securities and Exchange Commission (SEC) rulemaking, spot, futures trading and over-the-counter (OTC) derivatives trading, swaps market requirements, speculative position limits and aggregation, the regulation of exchanges and products, and other exchange rules and reporting, clearing and registration requirements.    

We also advise on the tax treatment of various futures and other derivatives products and our prime brokerage group in negotiating futures clearing, International Swaps and Derivatives Association (IDSA) master and prime brokerage agreements and related confirmations, protocols and addendums.

Our advice covers a broad array of matters, including:

• Registration and exemption procedures and regulatory hosting arrangements
• Fund formation and managed account agreements
• AIFMD and MiFID II compliance
• Counterparty and trading relationships
• Comprehensive compliance guidance for CTAs and CPOs
• Tax and ERISA
• Intellectual property and trademark protection
• Cybersecurity, privacy & data protection.

Notably, Akin is a leader in the representation of cutting-edge asset managers and other market participants dealing in digital assets. Our lawyers assist in the formation of crypto-focused funds, provide regulatory compliance counseling, advise on digital asset transactions and litigate on behalf of crypto clients. Learn more about Akin’s work in digital assets, cryptocurrency & blockchain.

Investigations & Enforcement

Akin’s white collar defense & government investigations team has decades of experience working on CFTC investigations and enforcement proceedings, including parallel and stand-alone regulatory matters. Our team includes a former Senior Trial Attorney at the CFTC who also served as head of the agency’s Digital Asset Task Force, a former chief and members of the Securities & Commodities Fraud Task Force in the U.S. Attorney’s Office for the Southern District of New York, a former deputy chief of the Business and Securities Fraud Unit in the U.S. Attorney’s Office for the Eastern District of New York, and former SEC enforcement attorneys, as well as other former prosecutors with significant experience in complex regulatory investigations and enforcement proceedings.

We routinely advise on examinations, investigations and actions brought by designated contract markets, the CFTC, NFA, Financial Conduct Authority (FCA), SEC, U.S. futures exchanges, U.S. Department of Justice (DOJ) and other U.S., European and U.K. regulators. Our team has broad and deep experience in matters arising from a wide range of futures and derivatives issues, including trading issues such as market manipulation, spoofing, wash trading and fictitious trading, as well as regulatory requirements such as position and financial reporting by futures commission merchants and swap dealers, position limits, and registration and anti-money laundering (AML) issues. We have represented clients engaged in traditional futures and swaps trading, as well as complex algorithmic trading and different parts of the digital asset ecosystem.

International Trade

In today’s rapidly evolving sanctions environment, Akin’s international trade and economic sanctions lawyers assist commodity traders in vetting counterparties and ensuring compliance.

Akin’s international trade practice is among the largest, most distinguished and most geographically diverse in the world. We have extensive experience helping trading companies navigate the complex regulatory landscape, in full compliance with applicable laws and regulations. Our lawyers provide regulatory compliance advice and trainings for trade clients across a wide variety of matters, including in proceedings involving the alleged manipulation of securities, derivatives and commodities markets.

In addition, our lawyers have experience advising international trade clients on physical commodities, futures and derivatives, as well as soft commodities and agricultural commodities, including grain, wheat, sugar, cotton, cocoa, coffee, rice, nuts, soya, oil and seed.

With a global practice, our team advises companies on regulations governing the export and re-export of goods, technologies and services from the MENA region, U.S., U.K., Switzerland and EU. We frequently represent Europe- and MENA-based commodity trading firms on commercial and compliance matters. Our lawyers have longstanding relationships with sanctions policy officials worldwide and provide advice on fast-moving sanctions developments.

Representative Work

Energy Transactions

• Represented Vitol in several transactions, including its:
  • $100 million Series C investment in FlexGen Power Systems Inc., a leading integration services and software technology provider for energy storage solutions.
  • Sale to Amp Americas of renewable natural gas projects involved in the conversion of dairy waste into carbon-negative renewable transportation fuel and power.
  • Sale of its Permian Basin crude oil gathering and terminalling system and related assets to Sunoco Logistics Partners LP.
• Advised a subsidiary of Vitol on the $2.3 billion takeover of African downstream oil business Vivo Energy.
• Counseled Olin on its global joint venture with Mitsui & Co., known as the Blue Water Alliance, an independent global trader of electrochemical units-based derivatives, initially focused on globally traded caustic soda and ethylene dichloride.
• Represented a global commodities trader in several transactions, including its:
  • Joint venture with a midstream company and the acquisition of another midstream company that owns a crude oil pipeline system in Oklahoma and Texas.
  • Bespoke long-term natural gasoline (C5+) purchase agreement and related terminalling, blending and storage arrangements to supply feedstock for various projects.
  • Acquisition of a bunker fuel supply business in the Caribbean, including long-term storage rights and other related project agreements, as part of a strategy to expand its bunker fuel trading business in the region.
  • Strategic crude oil processing transaction with Calcasieu Refining Company.
• Advised a project sponsor in executing a physically settled energy swap with a swap dealer from an approximately 150-megawatt (MW) wind energy project.
• Represented a project company in executing a physically settled contract for differences (CFD) with a corporate offtaker for a solar project in the Pennsylvania-New Jersey-Maryland (PJM) Interconnection region.
• Advised a renewable energy company in executing an ISDA hedge agreement for an approximately 160-MW wind energy project in Texas.
• Represented a project company in executing a financially settled virtual power purchase agreement (VPPA) with a corporate offtaker of a wind project in the Midcontinent Independent System Operator (MISO) region.

Commodities Funds

• Represented a commodities-focused trading firm, in establishing an open-ended capital call structured fund to allow OTC trading for underlying separate managed clients and funds through a single vehicle.
• Represented a U.K. investment manager in the establishment and structuring of a fund of one for a significant investment by a sovereign wealth fund.
• Represented an Asia-based manager in the launch of its global commodities trading business.
• Represented a proprietary trading firm in the establishment of a structure for trading Chinese internationalized commodity futures.

Investigations & Enforcement

• Representing Christophe Rivoire, a former senior rates trader at HSBC, in a litigated CFTC enforcement case arising from alleged market manipulation in connection with a $2 billion issuer swap with a Japanese government instrumentality. 
• Representing a leading global Futures Commission Merchant in a CFTC investigation arising from alleged recordkeeping and reporting violations regarding futures positions as well as net capital and residual interest.
• Represented Chris Jordan, a former JPMorgan precious metals trader, in a litigated criminal prosecution arising out of alleged spoofing in the precious metals futures market.
• Represented Morgan Stanley in a CFTC investigation of precious metals trading activity. In 2019, the CFTC issued an order settling spoofing charges against the bank. Pursuant to the settlement, Morgan Stanley was required to pay a civil monetary penalty of $1.5 million. The CFTC order recognized Morgan Stanley’s significant cooperation with the CFTC’s investigation and noted that Morgan Stanley’s corporation and remediation resulted in a reduced civil monetary penalty.
• Represented Tower Research Capital LLC, a leading proprietary high-frequency trading firm, in parallel CFTC, DOJ, and CME investigations arising out of spoofing by a former trading team. The matter resulted in a CFTC settlement and a DOJ deferred prosecution.
• Represented former traders at multiple institutions in futures exchange enforcement cases arising out of alleged spoofing in futures markets.
• Represented Moore Capital Management, a multibillion-dollar hedge fund, in connection with a CFTC investigation and enforcement arising from an alleged “banging the close” market manipulation scheme involving platinum and palladium futures markets. The matter resulted in a CFTC settlement with no DOJ enforcement.
• Represented Arthur Hayes, co-founder of BitMEX, a leading cryptocurrency derivatives trading platform, in government investigations, including by the CFTC, arising out of failures to register as a futures commission merchant and designated contract market. The matter resulted in a CFTC settlement and a guilty plea to a criminal violation of the Bank Secrecy Act resulting from BitMEX’s failure to implement a BSA-compliant anti-money laundering program.
• Represented a global financial institution with respect to two separate mismarking incidents that gave rise to investigations by various regulators and SROs, including the CFTC. Following its investigation of the second incident, the CFTC issued its first public declination letter to the institution based, in part, on its full and proactive cooperation.
• Represented a global financial institution in internal and government investigations, including by the CFTC, regarding the valuation of emerging market FX options.
• Represented a global financial institution in government investigations, including by the CFTC, regarding potential collusion and manipulation in the spot FX market.
• Represented a former trader at Glencore in connection with DOJ and CFTC investigations into alleged manipulation of physical oil benchmarks and related futures and swaps.
• Represented Treasury employees, Libor submitters, and swaps traders at three different global financial institutions in cross-border criminal and regulatory investigations of alleged manipulation of Libor.
• Represented a leading global proprietary trading firm in exchange enforcement proceedings for violation of wash trading rules.

International Trade

• Represented a global energy company in a complex internal sanctions compliance review of its trading and shipping operations.
• Represented a global oil producer and trader on EU, U.S. and other international trade regulations relating to sanctions, import and export, customs, and export controls, the sanction status of the company in the U.K., and Russian countermeasures.
• Advised a public company on EU, U.K., U.S. and other trade, sanctions, export controls, AML, anti-corruption and other international trade regulations.
• Represented global supplier of feed products on sanctions advice related to an arbitration regarding the company’s status under EU and U.K. sanctions.
• Advised a global agricultural business on regulatory and trade issues in relation to compliance with EU and U.S. export controls, sanctions and other trade regulations
• Advised a trading company on the sanctions issues arising from a potential trade with an energy corporation.