April 2013 Blog Posts (17)

Innovation goes East – dawn of the Technology Spring

I’m writing this from Singapore, identified last year by Insead as the 3rd most innovative country in the world and in March 2013 named “Top Innovation City” in a Wall Street journal report.

Financial institutions and corporates operating in this region need modern technology solutions that can be rapidly implemented and easily scaled to respond to massively increasing volumes. Even the simplest of problems need automation when faced with internet scale.

Asian market innovation…

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Added by NeilVernon on April 30, 2013 at 12:27pm — No Comments

ERM vs GRC: Which adds more value?

Businesses began with Enterprise Risk Management (ERM) from the dawn of civilization. The first businesses were small and therefore one person knew all their customers, suppliers and processes. They knew all the risks within their business how they were connected to affect their business goals, which made it easy to manage both the upside and downside “impact of uncertainty on objectives”.

However, as the size of organizations grew in the industrial age, everyone became a specialist…

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Added by Steven Minsky on April 29, 2013 at 1:30pm — No Comments

Good vs Bad control

Do you agree with the following statement "A poorly designed control that is followed is still better than a well-designed control that's ignored."

How do u approach this question

Added by Lesego on April 23, 2013 at 5:41pm — 38 Comments

OTC Derivatives and Commodities in the spotlight, part two

In our previous blog we saw how MiFID II intends to ensure transparency across all asset classes, including those that are not in scope today, and the impact it will have on market participants. In this second installment we look at the regulation of commodities through position limits.

To recap, most commodities trading firms are exempted from MIFID when trading on their own accounts. The result, as postulated by the regulators, was increasing food prices due to unencumbered…

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Added by Ramandeep Lakhan on April 23, 2013 at 10:22am — No Comments

Trade, Commodity and Supply Chain Finance: Liquidity, Funding and Risk Conference Dates Announced!

The GFMI Trade, Commodity and Supply Chain Finance: Liquidity, Funding and Risk Conference, June 10-12, 2013 in New York, NY will help banks and trade finance firms gain a profitable funding structure under Basel III.

Join speakers from Citi, IFC, HSBC, Deutsche Bank, BAFT IFSA, Bank of America Merrill Lynch, Santander, Wells Fargo, Standard Chartered Bank and many more.

This high-level, intimate event will allow attendees to understand the impact of Basel III across all…

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Added by Michele Westergaard on April 18, 2013 at 6:54pm — No Comments

Interview with Christian Pichlmeier, CFA, Senior Vice President, Corporate Treasury, Institutional Clients Group at Citi

Funds transfer pricing is under increasingly sharp focus. Financial institutions need to respond to Basel III, as well the Dodd-Frank Act in order to change the way their liquidity is managed and regulated. The efficiency, with which banks adapt their business strategy and their FTP model, will be a deciding factor in the future profitability of core product lines.

Christian Pichlmeier, CFA, Senior Vice President, Corporate Treasury, Institutional Clients Group at Citi answered a…

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Added by Michele Westergaard on April 18, 2013 at 4:30pm — No Comments

OTC Derivatives and Commodities in the spotlight, part one

Since MiFID I was introduced it became increasingly clear that certain products, particularly commodities and corresponding derivatives also needed to be regulated. There are no current rules for ‘on-market-trading’ of OTC derivatives and most commodities trading firms are exempt from MiFID when trading on their own accounts. The result, as postulated by the regulators, was rising food prices due to unencumbered speculation[1].

The main concerns…

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Added by Ramandeep Lakhan on April 17, 2013 at 12:34pm — No Comments

‘xVA’s’ have found their way in to pricing and valuation

A common theme emerged on the first day at the Global Derivatives Trading and Risk Management Conference. CVA, DVA and FVA (but also a number of other components) have found their way into pricing and valuation models of financial institutions after the financial crisis of 2008.

After a macro-economic assessment by David Nowakowski of Roubini Global Econmics, which drew a somewhat grim picture with especially China being in slow-down, famed John Hull took up the stage to speak about…

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Added by Tom Riesack on April 17, 2013 at 11:30am — No Comments

Is traditional portfolio management dead?

When listening to the presenters on the “Portfolio Optimisation & Quantitative Investment Summit” at the Global Derivatives Trading and Risk Management event in Amsterdam one could draw such a conclusion.

Another is: “Do not worry!”, because, not least due to the 2008 crisis, risk management models and portfolio construction models have evolved and still allow for a decent return when managed thoroughly and correctly.

Some of the themes that emerged were around the…

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Added by Tom Riesack on April 15, 2013 at 7:08pm — No Comments

The world is entering the abyss of a pandemic

If Dr Timothy Uyeki and Dr Nancy Cox from the Center for Disease Control have it right, the human world is sitting on the edge of biological catastrophe.

H5N1 (your "common" bird flu) is comparatively harmless when compared against H7N9, the new strain of avian flu and numerically speaking; the number of cases of H5N1 over…

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Added by Martin Davies on April 15, 2013 at 3:59am — No Comments

Give Basel a Chance Before Implementing New Reforms

Questions and feedback are welcome.
Very best,…
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Added by MRV Associates on April 12, 2013 at 9:07pm — No Comments

Our Community in the news

Added by GlobalRiskCommunity on April 11, 2013 at 8:27pm — 1 Comment

Testing Times

Coming out of the financial crisis the banking industry has found itself under scrutiny with regards to its resilience and questions have been raised about financial institutions’ abilities to weather another storm. How good are your preparations in reality?

If you want to know what shape your crisis readiness is really in, you need to start by re-appraising your stress testing framework. The objective is to prepare for potentially disastrous conditions in advance – instead of picking…

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Added by Steven Kliffen on April 11, 2013 at 9:48am — No Comments

Managing Model Risks Associated with VAR Models

Errors in financial models that banks use on a daily basis could lead to tremendous financial and non-financial losses. It is crucial for banks to understand how they could minimize and manage model risk effectively. In addition, the OCC and the Federal Reserve have recently released new guidelines on model risk management, which will significantly modify their existing model risk management practices.

 

Vilen Abramov, Vice President, Model Risk Control at KeyBank answered a…

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Added by Michele Westergaard on April 10, 2013 at 8:22pm — No Comments

Risk Leadership: Young Leadership

Risk Leadership: Young Leadership

One of the great advantages of family holidays is the opportunity to learn from the younger generation. So often there is no end of surprises and you are walking away with your tail between your legs or nodding approvingly.

Why should we look for risk leadership from the uninitiated or those younger than us?:-

"Devil may care" Their carefree attitude can remind us of why we are doing all this in the…

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Added by Bryan Whitefield on April 4, 2013 at 7:10am — No Comments

3 Steps to a Compliance Risk Management Approach

Federal and state regulatory compliance requirements have grown exponentially and touch all operational areas. Compliance has become very complex and expensive with extensive new regulations, multiple overlapping information sources, and operational impacts that are difficult to identify and track. Financial Institutions typically manage compliance workflows…

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Added by Steven Minsky on April 2, 2013 at 2:00pm — No Comments

MiFID II – Trade Automation, Part 2

by Kiki Pentheroudaki 

We have discussed the historic development of automated trading and how regulators are pushing high-frequency traders to become market makers. We now want to look at further ways to regulate automated trading under MiFID II.

The impact of high frequency trading (HFT) flow on markets will also see continued attention from market participants…

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Added by Kiki Pentheroudaki on April 2, 2013 at 10:30am — No Comments

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