Spotlight

Artificial intelligence in financial markets: systemic risk and market abuse concerns

The prospect of widespread adoption of advanced artificial intelligence (AI) models in financial markets, particularly reinforcement learning and deep learning techniques, has raised significant concerns among regulators. Although there is no clear evidence that these AI techniques are currently prevalent in trading systems, regulators warn that their future integration could heighten systemic risks and introduce novel forms of market manipulation. This Spotlight article examines whether the characteristics of advanced AI systems create new forms of market instability and explores the challenges they present to existing market abuse detection and prevention frameworks.

Navigating conflicts of interest in European restructurings

Drawing a comparison with recent US Chapter 11 cases, this Spotlight article explores potential lawyer conflicts of interest in European restructurings of private equity-backed companies. Whilst, in contrast to the US, UK insolvency law does not seek to directly arbitrate these conflicts, solicitors practising in England and Wales should in any event be cognisant of their professional duties to act with independence and in the best interests of each client. In view of these duties, a solicitor or firm with a close connection to the sponsor should carefully consider whether it is able to act for the debtor company.

After Byers v Saudi National Bank: confronting the unresolved issues in knowing receipt

The question in Byers v Saudi National Bank  [2023] UKSC 51 (Byers)  was disarmingly simple: does a beneficiary have a claim in knowing receipt against someone who receives absolute title to the trust property, but knows at the time that the transfer was in breach of trust? Answer: No, since it is logically impossible for the defendant to misdeal with the beneficiary's proprietary interests when the defendant never held any property subject to those interests (paras 6, 44, 158-159, 172, 201).  

The majority reached that conclusion in nine short paragraphs, setting out what was agreed by all five judges as determining the outcome of the appeal. Lord Briggs and Lord Burrows delivered separate judgments ranging widely across a number of unresolved issues surrounding knowing receipt. Given the importance of these issues, this commentary ignores the unsurprising ratio of the case and focuses instead on the matters raised in these extensive dicta.  

Private credit: exploring systemic risk concerns and regulatory architecture

The regulation of private credit (PC) is firmly in the regulatory spotlight, as part of a broader focus on non-bank financial intermediation (NBFI). This Spotlight article explores whether PC features the risks typically associated with NBFI, and whether the regulatory architecture in the UK and EU is appropriate to address any such risks.

A current legal problem when private equity is distressed

This Spotlight article is an executive summary of an article published in the Current Legal Problems (CLP) series, which is itself based on a CLP lecture that the author gave in November 2023.¹ The current legal problem identified is that both modern private equity (PE) firms and senior lenders to PE portfolio companies have incentives to avoid a formal restructuring of PE portfolio companies in financial distress. The full article investigates what we can do to address this issue.

“Sailing into the rules of smart contracts...”

In this Spotlight article, the authors consider the significance of Lord Justice Lopes’ judgment in The Satanita [1897] AC 59 to shaping development and innovation in contracting through smart contracts.

Will COVID change legal systems permanently?

This Spotlight article discusses the long-term impact of COVID on world legal systems, in particular whether COVID will crystallise legal upheavals around the world and whether it will cast a grim shadow over the law or a redeeming glow. I am mainly concerned with financial, corporate and commercial law. My enquiry relates to the post-COVID world, not emergency legislation during COVID. I deal with actual changes to the law, not how it is practised. Thus, I do not aim to cover the documentation of deals, or shifts in market practice, or the future of remote working, or the availability and cost of credit. My focus is on large-scale permanent changes to legal systems themselves, which in turn excludes emergency legislation.

The tide has gone out: the structure of UK financial services legislation post-Brexit: Part 5

This Part 5 covers the legislative endgame leading up to the UK’s final withdrawal from the European Union’s Single Market and Customs Union after the transition period.

Smart contracts: navigating a course between a consensus arrangement and a legal contract

In this Spotlight article, the authors propose a rebuttal to one of the conclusions in ‘Sailing into the rules of smart contracts’, an article co-authored by Akber Datoo and Jeffrey Golden and published in the June edition of this journal ((2021) 6 JIBFL 387).

What sort of property is a cryptoasset?

There is now an emerging consensus that cryptoassets are property – judges have so held in cases in England and other jurisdictions and it is the unanimous conclusion of independent reports on the topic.¹ But what sort of property? The category of property into which cryptoassets are placed has wide implications in areas such as insolvency, security and tax. Two rival schools of thought have developed and the ongoing confusion has led to legal uncertainty. In this article, we argue for the correct categorisation based on a principled explanation of why different categories of property exist and how they apply to cryptoassets.