iTreasurer: Kludgy Swap Market Still Safer than Pre-Crisis
By John Hintze, iTreasurer
May 15, 2015
"The consensus among Advisory Committee participants was that several factors have led to fewer FCMs, with new regulations playing a significant role. Luke Zubrod, director of risk and regulatory advisory at Chatham Financial, noted during the session that new regulations stemming from the Dodd-Frank Act as well as the Basel Committee have escalated costs for intermediaries and their clients, resulting in a less dynamic market.”
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“Luke Zubrod, director of risk and regulatory advisory at Chatham Financial, said that among the several aims of the new swap regulations was the intent to create incentives to clear swaps in order to reduce systemic risk in the derivatives market. He prefaced his comments about the drop in cleared swap volume by noting he would expect regulators to be more concerned if uncleared swap volume had increased more sharply. Nevertheless, he said, the decline in cleared swaps does likely raise questions for regulators."
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Introduction to Interest Rate Hedging for Financial Institutions
October 22, 2014 | Recording Available
Interest rate derivatives can be highly effective solutions for financial institutions seeking to manage interest rate risk from a balance sheet perspective, on a loan-by-loan basis, or both.
The first part of this webinar will cover the many benefits interest rate derivatives offer financial institutions and how best to incorporate derivatives and hedge accounting into an ALM strategy. Next, we will discuss the two most popular methods for hedging interest rate risk at the loan level: borrower back-to-back swaps and the hedging... Read More...
“To get to the bottom of the proposed regulation and the ambiguity that continues to cause anxiety, Treasury & Risk sat down with Luke Zubrod, director of risk and regulatory advisory with Chatham Financial and a technical advisor to the Coalition for Derivatives End-Users. Luke regularly confers with U.S. Congressional staff and federal regulatory agencies including the Commodity Futures Trading Commission (CFTC) and Federal Reserve regarding derivatives regulatory matters." Read the Complete Article
A large private equity firm executing an acquisition in a developed economy.
A private equity consortium had agreed to acquire a North American company. Due to the state of debt capital markets, a substantial portion of the debt capital structure was denominated in USD with floating rates.
The consortium and company needed to determine the best way to address the currency mismatch between cash flow and interest expense, as well as the optimal way to create a higher percentage of fixed rate debt. Chatham Financial educated the team on the use of cross-currency swaps, created transparency in the execution process of the hedging transactions, and assisted in the negotiation of the key documentation for the derivatives to ensure no hedge counterparty... Read More...
While regulators and participants have made great strides in increasing transparency of derivatives markets, new pricing and execution complexities have emerged in response to the changing market dynamics. This same regulatory environment has brought interest rate risk management into focus for management teams, as hedging policy has become a requirement to claim exemption from certain elements of Dodd-Frank regulation. As such, we’ve prepared an educational series on the current state of interest rate hedging, how companies are thinking about effective policies, and current... Read More...
CFO Journal: From Taxes to Executive Pay, New Rules for the New Year
By Emily Chasan
December 31, 2013
...“Guidance expected from the Commodity Futures Trading Commission could change the way companies conduct cross-border swaps trading, a common means of offsetting contract risks. The guidance will apply only to international swaps transactions, so companies may choose to make more trades within their own borders "to eliminate the hassle," said Luke Zubrod, a director at risk advisory firm Chatham Financial.”...Read More