Feature
Dividend growth
Dealers and hedge funds were hammered by sharp falls in dividends during late 2008 and early 2009. Since then, liquidity has recovered as a wider range of market participants take advantage of the dislocation. Mark Pengelly reports
Reconsidering the fixed-floating mix
Yield curves for sterling, the euro and the dollar are the steepest they have been for well over a decade, leaving companies with outstanding fixed-rate debt and large amounts of cash on balance sheets facing significant negative carry. Many corporates…
Contingency plans
Following recent issues of contingent capital by Lloyds Banking Group and Rabobank, other firms are eyeing similar issuance as a means of meeting higher capital requirements in a cost-effective way. But the Basel Committee, which is due to discuss the…
A sting in the tail
After recent financial turmoil, market participants are thinking much more rigorously about ways to protect themselves against the possibility of rare but extreme events. However, effectively hedging tail risk is not straightforward. By Mark Pengelly
Where's your motivation?
Discussion about incentives to promote good risk management is increasingly gaining relevance for Basel II advanced measurement approach applicants, as well as for banks adopting the standardised approach
Passage to India
It’s a long way from Basel to Mumbai, and it will be a while before India’s banks have fully implemented the Basel II capital requirements framework. OR&R looks at how far they have come, and the obstacles they must overcome on the path ahead
MAD world
Hedge fund managers might unwittingly be exposing themselves and their firms to compliance risks by failing to fully address the Market Abuse Directive. Should they act now and review internal policies and systems as a key part in abuse detection?
Making Solvency II stick
Dubbed 'Basel for insurers', operational risk management under the Solvency II regime is still mystifying most in the insurance world. This case study highlights the basic issues to consider.
A capital suggestion
To prevent another financial crisis, should regulators introduce more of the same – that is, greater capital requirements – or should they take a completely different approach and address corporate culture and behaviour instead?
Road to transition
For a moment it looked as if the post-crisis drive for reform was losing momentum. But the Basel Committee on Banking Supervision has established working groups to keep the industry focused, and to propose ways to keep moving forward
A common language
Goldman Sachs’ operational risk management department has two global co-heads, Spyro Karetsos and Mark D’Arcy, who together are using a ‘Rosetta Stone’ approach to break down operational risk language barriers between business lines.
Ticked off with the uptick rule
The US Securities and Exchange Commission revealed a revised uptick rule in February, eliminating a key exemption for options market-makers. But some participants say these new rules will impede liquidity and price efficiency in US options markets. Peter…
Mastering sharia
The International Swaps and Derivatives Association and the International Islamic Financial Market published the long-awaited Islamic master agreement in March after more than three years of negotiations. Market participants welcome the document, but say…
Progress by the dashboard light
Increasing numbers of banks and vendors have built dashboards into risk management systems, designed to provide easy-to-comprehend, real-time indicators of risk. How do they work, what information do they provide and how effective are they? By Clive…
Obstacles to reform
Grand statements have been made about the need for a new financial supervision framework in Europe, but can the European Union work out the practicalities of reform? Patrick Blum reports
The sum of its parts?
The latest Basel committee proposals to force insurance subsidiaries’ equity to be financed with the parent’s Tier I capital poses a threat to the bancassurance business model, already wounded from high-profile failures. The increased cost of capital…
Loss leaders
Operational risk is potentially the biggest risk faced by insurers – and also one of the most difficult to model. However, as a number of loss data aggregation initiatives globally either emerge or mature, insurers are much better placed to quantify…
Surviving the fallout
As regulators rush to reassess international banking regulations, insurers are also at threat of seeing more stringent regulations imposed on them on the basis that they are systemically risky. But the industry is fighting back. John Ferry reports
Keeping it consistent
While consensus appears to have been reached over the liquidity premium and hybrid debt issues, whether the current state of the Solvency II directive can truly be called market consistent was debated as leading figures in the directive’s passage met in…
Crumbling relations
The so-called ‘Piigs’ countries – Portugal, Ireland, Italy, Greece and Spain – have been an ongoing source of worry for the financial markets in 2010. While the prospect of a Eurozone country being allowed to default appears low, insurers are under…
Building up bonds
Tax and structural changes in the South Korean government bond market last year will likely result in a significant rise in liquidity in this market this year, so facilitating the use of more sophisticated trading strategies.
Facing the challenge
The Chinese insurance sector has experienced an unprecedented level of growth in recent years, but as the premium inflows pile up, is its risk management approach adequate?
Out of their hands
Some regulators have suggested profits based on uncertain valuations of complex products should not be allowed to flow into earnings and be distributed in the form of dividends and bonuses – a move that potentially has massive implications for the…
A shift in focus
Hong Kong’s Securities and Futures Commission chief, Martin Wheatley, has devoted a lot of his staff’s time to revising Hong Kong’s investment products sales practices following large losses by retail investors. But that has not diverted attention from…