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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 speculation[1]. The

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 financing business lines,

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 series of questi

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 are:

• Insufficient intervention powers for regulators

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 the implicati

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 construction of alpha-generating

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 half a decade in China, is less than the number of reported and current infections of H7N9 in China over the last sixty days.

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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 up the piec

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 series of questions wr

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 first place and help shift our risk appetite to a more appropriate

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 manually, which is difficult in multiple branch or interstate operations, and across multiple lines of business. As a result, compliance an

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 and regulators alike. In 2012, significant regulatory attention focused on HFT, such as provisions in the European Parliament's version

by Kiki Pentheroudaki

MiFID II is intended to regulate the use of automated trading to ensure a level-playing field for all market participants. In a two-part overview we will provide you with insight into how regulators are thinking. Part one focuses on the history of automated trading and MiFID’s proposals around market-making for high-frequency traders.

Automated or algorithmic trading is used by a wide range of market participants. Profits from high-speed trading in American stocks were ca. $1

Self-Deception – Modeling “Unknown Unknowns”

Introduction

Fundamental uncertainties derive from our fragmentary understanding of risk and complex system dynamics and interdependencies.  Abundant stochastic variation in risk parameters further exacerbates the ability to clearly assess uncertainties.

Uncertainty is not just a single dimension, but also surrounds the potential impacts of forces such as globalization and decentralization, effects of movements of global markets and trade regimes, and

For all Risk Managers there is a must see Horizon  TV  program (http://www.bbc.co.uk/programmes/b01rhfmg -   March 21 2013 – A Medical “Fix”)

Most Risk professionals tend to regard “checklists” as the minimum acceptable response suitable for primary school teachers on field trips (– I exaggerate!) Now this program highlights the fact that the mere Introduction of “Flight Checklists” as in the Aviation sector has revolutionized NHS (UK National Health Service) statistics on death rates from surger

Lately, the "too big to fail" debate has intensified as if only now has an urgent need to find a scapegoat to slaughter emerged. Certainly, the numerous scandals and examples of gross mismanagement at financial institutions invite criticism and derision.

It is critical to have an intelligent and in-depth discussion about whether the top 12 U.S. banks, which make up 70% of all banking assets benefit from government subsidies and bailouts. If we really want to solve the TBTF problem, however, we ne