710 Derivatives: Financial Markets, Law and Policy

Modern capital and financial markets rely on a wide variety of complex instruments, including Treasury securities, structured debt and equity instruments, and derivatives of various kinds.  Public awareness regarding these instruments has grown since the Financial Crisis of 2008 because they are thought to have played an important role in both the rapid growth of financial markets (“financialization”) and their destabilization.  Yet these instruments and the role they play in modern markets remain little understood.  A basic understanding of these instruments has now become important in modern financial law practice and any discussions on financial policy and regulation.

This course will review the workings of derivative instruments in the capital markets and how such instruments themselves are used.  The relationship between banking and capital markets, and between government and the private markets, will be explored, as will the most important legal and fiduciary responsibilities involved.  While not highly technical, the various principal types of government securities and derivatives will be examined. 

Warren Buffet once called derivatives “weapons of mass financial destruction.”  We will consider the numerous public policy issues relating to derivatives, their role in the Crisis of 2008 (and more recent financial distress such as the Eurozone crisis and the US debt ceiling controversy), the history of attempts to regulate these instruments, and the current regulatory structure.

Final grades are based on a final exam and in class participation.

Enrollment Pre-/Co- Requisite Information

Students must have taken or be currently taking Big Bank Regulation and/or Securities Regulation and/or Corporate Finance.

Course Areas of Practice
Evaluation Methods
  • Final Exam
  • Class participation
Degree Requirements
Course Type
  • Lecture
Learning Outcomes
  • Legal analysis and reasoning, legal research, problem-solving, and written and oral communication in the legal context

Sample Syllabi

Fall 2021

2021
Course Number Course Credits Evaluation Method Instructor

710.02 3
  • Final Exam
  • Class participation
Gina-Gail S. Fletcher

Modern capital and financial markets rely on a wide variety of complex instruments, including Treasury securities, structured debt and equity instruments, and derivatives of various kinds.  Public awareness regarding these instruments has grown since the Financial Crisis of 2008 because they are thought to have played an important role in both the rapid growth of financial markets (“financialization”) and their destabilization.  Yet these instruments and the role they play in modern markets remain little understood.  A basic understanding of these instruments has now become important in modern financial law practice and any discussions on financial policy and regulation.

This course will review the workings of derivative instruments in the capital markets and how such instruments themselves are used.  The relationship between banking and capital markets, and between government and the private markets, will be explored, as will the most important legal and fiduciary responsibilities involved.  While not highly technical, the various principal types of government securities and derivatives will be examined. 

Warren Buffet once called derivatives “weapons of mass financial destruction.”  We will consider the numerous public policy issues relating to derivatives, their role in the Crisis of 2008 (and more recent financial distress such as the Eurozone crisis and the US debt ceiling controversy), the history of attempts to regulate these instruments, and the current regulatory structure.

Final grades are based on a final exam and in class participation.

Pre/Co-requisites

Students must have taken or be currently taking Big Bank Regulation and/or Securities Regulation and/or Corporate Finance.

Spring 2021

2021
Course Number Course Credits Evaluation Method Instructor

710.01 3
  • Research paper, 25+ pages
  • Oral presentation
  • Class participation
Lawrence G. Baxter

Modern capital and financial markets rely on a wide variety of complex instruments, including Treasury securities, structured debt and equity instruments, and derivatives of various kinds.  Public awareness regarding these instruments has grown since the Financial Crisis of 2008 because they are thought to have played an important role in both the rapid growth of financial markets (“financialization”) and their destabilization.  Yet these instruments and the role they play in modern markets remain little understood.  A basic understanding of these instruments has now become important in modern financial law practice and any discussions on financial policy and regulation.

This course will review the workings of derivative instruments in the capital markets and how such instruments themselves are used.  The relationship between banking and capital markets, and between government and the private markets, will be explored, as will the most important legal and fiduciary responsibilities involved.  While not highly technical, the various principal types of government securities and derivatives will be examined. 

Warren Buffet once called derivatives “weapons of mass financial destruction.”  We will consider the numerous public policy issues relating to derivatives, their role in the Crisis of 2008 (and more recent financial distress such as the Eurozone crisis and the US debt ceiling controversy), the history of attempts to regulate these instruments, and the current regulatory structure.

Required Coursework

The 3-credit graded requirements for the course will be:

  1. A final paper, about 25-30 pages in length, to be submitted by the Thursday, April 16, 2020 (last day of all classes) (75%); JD writing credit will be given to any JD students who present research proposals (see “Paper” above), approved by me, commit to completing their drafts for class presentation and subsequent comments by me (draft for comments by Friday March 20), and submit their final drafts in response to my comments by Thursday April 16, when all papers will be due.
  2. An individual class presentation, of 20 minutes in length (10%), on the early draft of the 3-credit paper; and
  3. Overall class participation (15%).The course will be highly interactive and graded on this basis. Class participants, probably in groups of two or three, will take turns in leading the class through the topic for the day (that will be found I the detailed syllabus as soon as it is completed).  Class leaders can use slides or videos or both, and they will be expected to base their material on the assigned readings and subsequent updates.

The course will be highly interactive and graded on this basis.

Syllabus: 710.01.Spring2021-syllabus.pdf68.65 KB

Spring 2020

2020
Course Number Course Credits Evaluation Method Instructor

710.01 3
  • Research paper, 25+ pages
  • Oral presentation
  • Class participation
Lawrence G. Baxter

Modern capital and financial markets rely on a wide variety of complex instruments, including Treasury securities, structured debt and equity instruments, and derivatives of various kinds.  Public awareness regarding these instruments has grown since the Financial Crisis of 2008 because they are thought to have played an important role in both the rapid growth of financial markets (“financialization”) and their destabilization.  Yet these instruments and the role they play in modern markets remain little understood.  A basic understanding of these instruments has now become important in modern financial law practice and any discussions on financial policy and regulation.

This course will review the workings of derivative instruments in the capital markets and how such instruments themselves are used.  The relationship between banking and capital markets, and between government and the private markets, will be explored, as will the most important legal and fiduciary responsibilities involved.  While not highly technical, the various principal types of government securities and derivatives will be examined. 

Warren Buffet once called derivatives “weapons of mass financial destruction.”  We will consider the numerous public policy issues relating to derivatives, their role in the Crisis of 2008 (and more recent financial distress such as the Eurozone crisis and the US debt ceiling controversy), the history of attempts to regulate these instruments, and the current regulatory structure.

Required Coursework

The 3-credit graded requirements for the course will be:

  1. A final paper, about 25-30 pages in length, to be submitted by the Thursday, April 16, 2020 (last day of all classes) (75%); JD writing credit will be given to any JD students who present research proposals (see “Paper” above), approved by me, commit to completing their drafts for class presentation and subsequent comments by me (draft for comments by Friday March 20), and submit their final drafts in response to my comments by Thursday April 16, when all papers will be due.
  2. An individual class presentation, of 20 minutes in length (10%), on the early draft of the 3-credit paper; and
  3. Overall class participation (15%).The course will be highly interactive and graded on this basis.

The course will be highly interactive and graded on this basis.

Spring 2019

2019
Course Number Course Credits Evaluation Method Instructor

710.01 3
  • Research paper, 25+ pages
  • Oral presentation
  • Class participation
Lawrence G. Baxter

Modern capital and financial markets rely on a wide variety of complex instruments, including Treasury securities, structured debt and equity instruments, and derivatives of various kinds.  Public awareness regarding these instruments has grown since the Financial Crisis of 2008 because they are thought to have played an important role in both the rapid growth of financial markets (“financialization”) and their destabilization.  Yet these instruments and the role they play in modern markets remain little understood.  A basic understanding of these instruments has now become important in modern financial law practice and any discussions on financial policy and regulation.

This course will review the workings of derivative instruments in the capital markets and how such instruments themselves are used.  The relationship between banking and capital markets, and between government and the private markets, will be explored, as will the most important legal and fiduciary responsibilities involved.  While not highly technical, the various principal types of government securities and derivatives will be examined. 

Warren Buffet once called derivatives “weapons of mass financial destruction.”  We will consider the numerous public policy issues relating to derivatives, their role in the Crisis of 2008 (and more recent financial distress such as the Eurozone crisis and the US debt ceiling controversy), the history of attempts to regulate these instruments, and the current regulatory structure.

Required Coursework

The 3-credit graded requirements for the course will be:

  1. A thirty-page paper, to be submitted by Friday, April 14 2017 (80%); the opportunity for JD writing credit will be given to the first five students who present research proposals, approved by me, commit to completing their drafts by Friday March 10 for grading and comments by me, and submit their final drafts in response to comments by the last day of class for the semester (when all papers will be due).
  2. An individual class presentation, of 20 minutes in length (10%), on the early draft of the 3-credit paper; and
  3. Overall class participation (10%).The course will be highly interactive and graded on this basis.

The course will be highly interactive and graded on this basis.

Spring 2018

2018
Course Number Course Credits Evaluation Method Instructor

710.01 3
  • Research paper, 25+ pages
  • Oral presentation
  • Class participation
Lawrence G. Baxter

Modern capital and financial markets rely on a wide variety of complex instruments, including Treasury securities, structured debt and equity instruments, and derivatives of various kinds.  Public awareness regarding these instruments has grown since the Financial Crisis of 2008 because they are thought to have played an important role in both the rapid growth of financial markets (“financialization”) and their destabilization.  Yet these instruments and the role they play in modern markets remain little understood.  A basic understanding of these instruments has now become important in modern financial law practice and any discussions on financial policy and regulation.

This course will review the workings of derivative instruments in the capital markets and how such instruments themselves are used.  The relationship between banking and capital markets, and between government and the private markets, will be explored, as will the most important legal and fiduciary responsibilities involved.  While not highly technical, the various principal types of government securities and derivatives will be examined. 

Warren Buffet once called derivatives “weapons of mass financial destruction.”  We will consider the numerous public policy issues relating to derivatives, their role in the Crisis of 2008 (and more recent financial distress such as the Eurozone crisis and the US debt ceiling controversy), the history of attempts to regulate these instruments, and the current regulatory structure.

Required Coursework

The 3-credit graded requirements for the course will be:

  1. A thirty-page paper, to be submitted by Friday, April 14 2017 (80%); the opportunity for JD writing credit will be given to the first five students who present research proposals, approved by me, commit to completing their drafts by Friday March 10 for grading and comments by me, and submit their final drafts in response to comments by the last day of class for the semester (when all papers will be due).
  2. An individual class presentation, of 20 minutes in length (10%), on the early draft of the 3-credit paper; and
  3. Overall class participation (10%).The course will be highly interactive and graded on this basis.

The course will be highly interactive and graded on this basis.

Spring 2017

2017
Course Number Course Credits Evaluation Method Instructor

710.01 3
  • Research paper, 25+ pages
  • Oral presentation
  • Class participation
Lawrence G. Baxter

Modern capital and financial markets rely on a wide variety of complex instruments, including Treasury securities, structured debt and equity instruments, and derivatives of various kinds.  Public awareness regarding these instruments has grown since the Financial Crisis of 2008 because they are thought to have played an important role in both the rapid growth of financial markets (“financialization”) and their destabilization.  Yet these instruments and the role they play in modern markets remain little understood.  A basic understanding of these instruments has now become important in modern financial law practice and any discussions on financial policy and regulation.

This course will review the workings of derivative instruments in the capital markets and how such instruments themselves are used.  The relationship between banking and capital markets, and between government and the private markets, will be explored, as will the most important legal and fiduciary responsibilities involved.  While not highly technical, the various principal types of government securities and derivatives will be examined. 

Warren Buffet once called derivatives “weapons of mass financial destruction.”  We will consider the numerous public policy issues relating to derivatives, their role in the Crisis of 2008 (and more recent financial distress such as the Eurozone crisis and the US debt ceiling controversy), the history of attempts to regulate these instruments, and the current regulatory structure.

Required Coursework

The 3-credit graded requirements for the course will be:

  1. A thirty-page paper, to be submitted by Friday, April 14 2017 (80%); the opportunity for JD writing credit will be given to the first five students who present research proposals, approved by me, commit to completing their drafts by Friday March 10 for grading and comments by me, and submit their final drafts in response to comments by the last day of class for the semester (when all papers will be due).
  2. An individual class presentation, of 20 minutes in length (10%), on the early draft of the 3-credit paper; and
  3. Overall class participation (10%).The course will be highly interactive and graded on this basis.

The course will be highly interactive and graded on this basis.

Spring 2016

2016
Course Number Course Credits Evaluation Method Instructor

710.01 3 Lawrence G. Baxter

Modern capital and financial markets rely on a wide variety of complex instruments, including Treasury securities, structured debt and equity instruments, and derivatives of various kinds.  Public awareness regarding these instruments has grown since the Financial Crisis of 2008 because they are thought to have played an important role in both the rapid growth of financial markets (“financialization”) and their destabilization.  Yet these instruments and the role they play in modern markets remain little understood.  A basic understanding of these instruments has now become important in modern financial law practice and any discussions on financial policy and regulation.

This course will review the workings of derivative instruments in the capital markets and how such instruments themselves are used.  The relationship between banking and capital markets, and between government and the private markets, will be explored, as will the most important legal and fiduciary responsibilities involved.  While not highly technical, the various principal types of government securities and derivatives will be examined. 

Warren Buffet once called derivatives “weapons of mass financial destruction.”  We will consider the numerous public policy issues relating to derivatives, their role in the Crisis of 2008 (and more recent financial distress such as the Eurozone crisis and the US debt ceiling controversy), the history of attempts to regulate these instruments, and the current regulatory structure.

Required Coursework

The 3-credit graded requirements for the course will be:

  1. A thirty-page paper, to be submitted by Friday, April 14 2016 (80%); the opportunity for JD writing credit will be given to the first five students who present research proposals, approved by me, commit to completing their drafts by Wednesday March 9 for grading and comments by me, and submit their final drafts in response to comments by last day of classes (when all papers will be due).
  2. An individual class presentation, of 15 minutes in length (10%), on the early draft of the 3-credit paper; and
  3. Overall class participation (10%).The course will be highly interactive and graded on this basis.

The course will be highly interactive and graded on this basis.

Pre/Co-requisites

To enroll in the course, a student must have completed or be concurrently registered in either Big Bank Regulation or Securities Regulation.

*Please note that this information is for planning purposes only, and should not be relied upon for the schedule for a given semester. Faculty leaves and sabbaticals, as well as other curriculum considerations, will sometimes affect when a course may be offered.