Find Lawyers in Spain for Derivatives

Derivatives are financial instruments whose value derives from the price movements of another asset, called "underlying asset."

Basically, a derivative is a contract term in which all the details are set out at the time of the agreement, while the effective exchange occurs at a future time.

In more formal terms, we can say that a derivative is a financial instrument whose value depends on the price of an asset (a bond, an action, or a product), of an interest rate, an exchange rate a index (stock, prices, or other), or any other variable quantifiable (which will be called underlying variable).

There are basically four types of financial derivatives: Forwards, Futures, Swaps, and Options. However, among them they can be combined, which means they can form more complex instruments that serve to better the financial needs of users.

In our practice area, more problems arise from swap contracts.

A swap is a financial contract between two parties agrees to exchange future cash flows according to a preset formula. Contracts are made in order to meet specific needs of those who sign the contract.

The most common type of swap is the interest rate by which interest flows are exchanged in the same currency in certain previously agreed dates. This type of swap is used to transform cash flows to fixed-rate cash flows to floating rate or vice versa.

When you go to hire a swap you must take special care in how it is contracted and the information received, and ensure the details and risks of the operation are known, since it is a high-risk product.

Therefore, a problem you have with a swap must take into account both the operation of the product and the requirements established by the “Ley de Mercado de Valores” entities providing advisory services, as knowledge of civil law when attempting to request the annulment of the swap agreement or resolution thereof.

Therefore, being a global assessment, the defense arguments combine procedural, legal, and substantive issues, as well as forensic tests to determine the nature and legal compliance of financial products in dispute.