LL4D5      Half Unit
Legal Risk in the Financial Markets

This information is for the 2013/14 session.

Teacher responsible

Visiting Professor Roger McCormick.


This course is available on the MSc in Law and Accounting, Master of Laws and Master of Laws (extended part-time study). This course is available with permission as an outside option to students on other programmes where regulations permit.

This course is capped at 30 students. Students must apply through Graduate Course Choice on LSEforYou.

Course content

This half unit course will examine the relationship between legal risk and legal and regulatory reform in the financial markets; the key elements of legal risk; relationship with political, reputational and other kinds of risk; how legal risk issues have been, and continue to be addressed, in the financial markets; the impact of the global financial crisis and the responses to it, including the Banking Act 2009 and various regulatory changes; set-off and netting questions; the impact of consumerism and the compensation culture; the impact of legal risk on the ability of transition economies to attract inward investment; sources of legal risk; how legal risk can be managed; key aspects of identification, assessment, monitoring and mitigation of legal risk; legal risk as part of operational risk and other regulatory aspects. The course will address substantive legal issues regarding, amongst other things, netting and set-off, the special resolution regime under the Banking Act 2009, dematerialised securities and financial crime laws; risk management issues will be explored in depth as will the relationship of the legal function to general corporate governance; the EU dimension regarding financial law reform (and associated risks) will be critically examined; the relationship between perceptions of risk, the markets' desire for legal certainty and the need for law reform and modernisation will also be considered.


20 hours of seminars in the MT. 2 hours of seminars in the LT.

Formative coursework

Students will take a mock examination: feedback session in LT

Indicative reading

Legal Risks in Financial Markets, Roger McCormick 2nd edition (OUP 2010). (For example of case law and legislation for the reading list, see the Tables set out at the beginning of this book); Legal Problems of Credit and Security, Roy Goode (4th edn. edited by Gullifer, Thomson 2008); Reforming Collateral Laws to Expand Access to Finance, Heywood Fleisig, Mehnaz Safavian and Nuria de la Pen (World Bank 2006); EBRD Model Law for Secured Transactions; 'Publicity of Security Rights' (EBRD Paper of 2004); plus various extracts from EBRD's annual 'Law in Transition' publications and the EBRD paper 'The Impact of the Legal Framework on the Secured Credit Market in Poland' (July 2005); the Banking Act 2009; FMLC papers on the Landsbanki Freezing Order and on dematerialised securities (FMLC.org.uk) and UNIDROIT draft Convention on dematerialised securities; FMLC papers on Proceeds of Crime Act and related articles.


Exam (100%, duration: 2 hours) in the main exam period.

Key facts

Department: Law

Total students 2012/13: 13

Average class size 2012/13: 16

Value: Half Unit

Guidelines for interpreting course guide information

Personal development skills

  • Communication
  • Specialist skills