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CDS spreads tighten as bailout is revised

The cost of protection on some of the world’s largest financial institutions fell yesterday as the US Senate agreed to vote on a revised version of the $700 billion financial rescue plan.

Smile dynamics III

In two articles published in 2004 and 2005 in Risk, Lorenzo Bergomi assessed the structural limitations of existing models for equity derivatives and introduced a new model based on the direct modelling of the joint dynamics of the spot and the implied…

Fully flexible views: theory and practice

Attilio Meucci proposes a unified methodology to input non-linear views from any number of users in fully general non-normal markets and perform, among others, stress testing, scenario analysis and ranking allocation. He walks the reader through the…

Taking risk to the top office

Hit by billions of dollars in subprime writedowns, banks are looking at how best to organise their risk management functions. Steve White makes a far-reaching proposal

O Brothers, where art thou?

The bankruptcy of Lehman Brothers, coming on the back of the conservatorship of Fannie Mae and Freddie Mac, sent market participants rushing to compute their exposures and replace affected hedges. How did the market bear up? By Peter Madigan and Nick…

Time for action

Back-office processing has long been the neglected stepchild of the derivatives business. But improved technology and growing systemic risk mean the time is ripe for supervisors to demand T+0 reconciliation, argues David Rowe

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