EuroFrance San Fran 2018

March 14-15, 2018

San Francisco, CA, USA: Join Chatham in San Francisco for EuroFinance’s Managing Rapid International Growth conference. Chatham will be exhibiting.

Windy City Summit

May 22-24, 2018

Chicago, IL, USA: Chatham’s John Kane will be co-speaking with McCormick on “Foreign Exchange Exposure Management Requires the Right Analytics” on Wednesday, May 23 at 8:30am. Chatham’s Aaron Jacob will be co-speaking with Royal Caribbean Cruise Lines on “Seize the Opportunity: New Hedge Accounting Rules” on Thursday, May 24 at 11:20am. Chatham will also be exhibiting.

 

Semi-Annual Market Update – February 1, 2018

February 1, 2018 | 2PM EDT / 11AM PDT | 1 hour | Online | by Chatham Financial | Recording available

In this installment of Chatham’s semi-annual market update webinar series, we will examine current market conditions, drivers, and indicators, as well as communications from the Fed, and world economic events and their impacts.



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In this webinar, Chatham will cover the following learning objectives:
– Gain a practical understanding of economic drivers currently impacting today’s markets
– Understand principles behind some standard market components and indicators
– Gather insights on some possible strategies for financial risk management

 

Speakers:
Amol DhargalkarAmol Dhargalkar is a Managing Director and member of Chatham’s Operating Committee. He leads the Global Corporate Sector serving public and private corporations focusing on interest rate, foreign currency and commodity risk management. He joined Chatham in 2001 and launched its Corporate Sector offerings in 2007. Amol has advised a broad spectrum of public and privately held companies as well as corporate private equity sponsors on the structuring, implementation, and accounting of their risk management programs totaling more than US $500 billion in hedged notional. Amol graduated from Pennsylvania State University with a BS in Chemical Engineering and a BS in Economics. He also received his MBA from The Wharton School at the University of Pennsylvania where he was a Palmer Scholar.

 

Bryan MasonBryan Mason is a director in hedging advisory for Chatham’s Global Real Estate sector. At Chatham, Bryan advises some of the world’s largest real estate and private equity investors in their interest rate and foreign currency risk management programs. Prior to Chatham, Bryan was a global equity trader at Marvin & Palmer, where he advised large, institutional investors in multi-billion dollar long only strategies. He also traded live market hours for an ASEAN focused hedge fund employing long/short strategies. Bryan earned his BS in Economics from Washington College, and holds an MBA from the Alfred Lerner College of Business and Economics at the University of Delaware.

 

 

 

Cost of Funds Pressure

 

December 2017

 

Financial institutions have had success in keeping their cost of funds in check even after the Federal Reserve has raised short-term interest rates over the past few years. However, many financial institutions continue to use the same deposit betas in their interest rate risk modelling and financial forecasts that they utilized prior to the Federal Reserve rate hikes. The fact that these deposit betas have not been realized has been a large benefit to the financial institutions’ bottom lines.

 
 
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Impact Analysis of IFRS 9, November Update

Chatham Financial White Papers – November 2017



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Companies adopting IFRSs have historically been applying the hedge accounting provisions under IAS 39 – Financial Instruments: Recognition and Measurement which was issued back in 2001. However, many companies felt that IAS 39 was difficult to apply due to some of its onerous provisions. Some of these include restrictions on the types of hedging relationships that can qualify for hedge accounting and the need to perform periodic quantitative effectiveness assessments that evaluate how well the hedge has performed at hedging the designated risk. The IASB heard the criticisms of IAS 39 and drafted a new standard, IFRS 9 published in November 2013, which includes provisions that are aimed at simplifying the application of hedge accounting and bringing it more in line with a company’s risk management activities. Companies applying IFRSs issued by the IASB or IFRSs endorsed by the EU have a mandatory effective date for IFRS 9 for periods beginning on or after 1 January 2018 though they have the choice of deferring the application of the hedge accounting provisions contained in Chapter 6 of IFRS 9 until the IASB finalises its macro hedging project. This bulletin provides practical insight to help companies evaluate the impact of adopting Chapter 6 of IFRS 9. The transition provisions for those companies adopting Chapter 6 of IFRS 9 will be discussed in the last bulletin of this series.

 
 
 
 
 
 
 
 

Hedge Accounting Transition Provisions upon Adoption of IFRS 9

 

October 2017



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Entities are required to adopt IFRS 9 for annual periods beginning on or after 1 January 2018 although early application is permitted. However, in relation to hedge accounting, entities have an accounting policy choice to ignore the hedge accounting provisions contained in Chapter 6 of IFRS 9 and continue applying the hedge accounting requirements of IAS 39 to all hedges. It is expected that this accounting policy choice will be removed once the IASB has completed its macro hedging project. Entities will have the ability to subsequently adopt the hedge accounting provisions of IFRS 9 after their initial adoption of IFRS 9 but would not be able to switch back to the IAS 39 hedge accounting provisions once IFRS 9 hedge accounting provisions have been adopted. The paragraphs below summarise the transition provisions for entities adopting Chapter 6 of IFRS 9.

 
 
 
 
 
 
 

The Impact of Adopting IFRS 9 on Effectiveness Testing, Ineffectiveness Measurement, and Rebalancing

 

October 2017



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Some of the most challenging elements of maintaining a hedging relationship under IAS 39 include complying with the periodic effectiveness testing requirements and properly measuring hedge ineffectiveness. Performing effectiveness testing often requires the use of complex quantitative analysis like statistical regression. Calculating the fair values of the derivatives and hedged items to be used in both the effectiveness testing and the measurement of hedge ineffectiveness often requires the use of sophisticated valuation models. Determining the appropriate methodology to value derivatives and the related hedged items represents another complex area for companies to navigate. The IASB attempted to simplify much of this with changes made to effectiveness testing in IFRS 9, which we will explore in this section.

 
 
 
 
 
 
 

Improved accounting for time value of options and other costs of hedging

 

October 2017



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IFRS 9 introduces several new concepts to the area of hedge accounting. One of these new concepts is “costs of hedging.” This new idea is intended to bring relief to companies that use options and forwards to hedge certain financial exposures. The costs of hedging will likely introduce some added benefit for companies seeking to use options, but may also create additional complexity around using cross-currency swap products.

 
 
 
 
 
 
 

New hedge accounting strategies and opportunities under IFRS 9

 

October 2017



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Potentially one of the greatest benefits from the new hedging standard is the added flexibility related to identifying the hedged item and corresponding hedged risk in a hedging relationship. The new guidance essentially broadens the universe of risks that are permissible to be hedged, making it more likely that corporate treasury groups will be able to economically hedge their risk exposures and obtain hedge accounting treatment for derivatives used to hedge such exposures.

 
 
 
 
 
 
 

Initial considerations before applying Hedge Accounting under IFRS 9

 

September 2017

 


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Companies adopting IFRSs have historically been applying the hedge accounting provisions under IAS 39 – Financial Instruments: Recognition and Measurement which was issued back in 2001. However, many companies felt that IAS 39 was difficult to apply due to some of its onerous provisions. Some of these include restrictions on the types of hedging relationships that can qualify for hedge accounting and the need to perform periodic quantitative effectiveness assessments that evaluate how well the hedge has performed at hedging the designated risk. The IASB heard the criticisms of IAS 39 and drafted a new standard, IFRS 9 published in November 2013, which includes provisions that are aimed at simplifying the application of hedge accounting and bringing it more in line with a company’s risk management activities.