New Hedge Accounting Standard Flashes Green Light
July 13, 2017
Aaron Cowan, executive Commodities Hedging director and global leader of corporate accounting advisory services at Chatham Financial, a global risk management advisory firm, said that while the new standard will provide “a lot of opportunities” for companies, its biggest effect is likely to be on the way that companies deal with commodities risk. “We’ve seen historically that the punitive guidance in the past was a stumbling block to corporate hedging in the commodities arena,” he said. “We believe a lot more companies will start hedging commodities or increase the amount they were hedging because of the new rules.”
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FASB Facilitates Fair Value Hedge Accounting
July 7, 2017

The first two parts of this series (Part 1 and Part 2) addressed hedges of corporates’ cash flows, commonly referred to as cash-flow hedges. In fact, fair-value hedges are really just a type of cash-flow hedge, but in the case of interest rates they are converting fixed-rate cash flows to floating-rate, while the cash flow version does the opposite. Dan Gentzel, head of Chatham Financial’s global accounting advisory team, noted that ultimately the difference lies in how the results of each type of hedging relationship modify cash flows and are ultimately reported in the financial statements.

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New Accounting Guidance Won’t Always Be Easy
July 5, 2017

“Almost every piece of corporate debt that gets negotiated today has a floor in it, and a lot of them are at 0%,” Mr. Gentzel said. “However, companies often enter into swaps with no floor to hedge debt that does have a floor, and that creates a mismatch. That’s ineffectiveness.” However, most companies don’t want to buy 0% floors in their swaps because it won’t provide them with any real protection in today’s rising rate environment.

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Early Bird Special for Hedge Accounting
June 29, 2017

iTreasurer spoke at length with Dan Gentzel, head of Chatham Financial’s global accounting advisory team, about the benefits and challenges that lie ahead for corporates that use derivatives to hedge interest rate, foreign exchange (FX) and commodity risk, and apply hedge accounting to reduce volatility in their earnings. “Being required to include the additional charges can significantly impact the effectiveness of the hedging relationships and whether the hedge qualifies for hedge accounting, and it sometimes can create a lot of hedge ineffectiveness that causes unwanted volatility in financial statements,” Mr. Gentzel said.

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Visions of a Simpler Global Derivatives Market
June 29, 2017
Corporations’ struggle over the past half decade to keep pace with changes to the over-the-counter (OTC) derivatives market has nursed a growing desire for simplicity amongst participants in the market. These changes—largely the result of a global patchwork of derivatives rules, but also due in part to changes in accounting and valuation methods—have spurred a vexing new reality: Financial risk management has never been more complex. As market participants prevail upon policymakers for much-needed regulatory simplification, we’re seeing the birth of a new era in which simplification in the derivatives market will be driven principally by private-sector efforts.
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EC lays out plan to control euro clearing
June 15, 2017
Eric Juzenas, director of regulatory advisory at Chatham Financial, raised concerns about potential retaliation from US regulators such as the Commodity Futures Trading Commission (CFTC). “The proposal could possibly trigger further consideration by the US Financial Stability Oversight Council, designating EU and UK clearing houses as systemically important financial market utilities — something the FSOC has held off on so far.”
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Accounting Expert Outlines Impact of FASB Hedge Accounting Proposals on REITs
May 11, 2017

Robert Barton, vice president of accounting advisory at Chatham Financial, joined REIT.com for a video interview at NAREIT’s headquarters in Washington, D.C. “This has been a significant burden on a lot of REITs, so this simplification of this standard will really benefit most REITs,” Barton said, as they will not have to separately record and state ineffectiveness in their earnings. View Video


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Securitisation faces EMIR clearing threat
By Helen Bartholomew
May 12, 2017

“While the proposal takes some steps towards cross-border harmonisation, there are other ways in which that is not exactly the case,” said Matt Hoffman, director of global regulatory solutions at Chatham Financial.
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Sucden looks to reduce FX pricing complexity, increasing volumes
May 11, 2017
Chatham Financial managing director Amol Dhargalkar suggests limited liquidity tends to be related to restricted data availability and says liquidity drives more of the limits in options trading than data for corporate treasury. Read More


DERIVATIVES-EMIR review plans end to dual-sided swaps reporting
By Helen Bartholomew
May 4, 2016

...“What conceptually sounds like a straightforward exercise in transparency and reconciliation in reality has proven not to be so,” said Matt Hoffman, director of global regulatory solutions at Chatham Financial. “No two systems appear to capture and convey trade details in exactly the same way, such that trade matching rates have been lower than might have been expected. In our experience, most of the discrepancies that arise in the attempted matching process are really more about form and less about substance.”...
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CFTC counsel warns of threat to clearing portability
April 25, 2017

“FCMs have had greater latitude to raise prices and many of our clients are now subject to higher fees than they were at the beginning of their relationships,” says Luke Zubrod, director of risk and regulatory advisory services at Chatham Financial.

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Dealers crack down on clients with dual netting sets
April 18, 2017

“A certain number of our clients were told by banks that they can’t accommodate dual netting sets, and that the client must have its entire pre-existing portfolio under a margin-compliant netting set in order to continue trading,” says Chris Bender, director of regulatory advisory in the global regulatory solutions team at Chatham Financial in Pennsylvania. “Other banks say they can only do it in exceptional circumstances, because it essentially doubles the operational burden for them – two margin calls and exchanging margin under two netting sets.”

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Hazy guidance causes chaos on first day of VM regime
March 2, 2017

“We didn’t trade until we got everything straightened out on the regulatory classification, which slowed the trading process down by a couple of hours,” says Chris Bender, a director in the global regulatory solutions team at Chatham Financial, an advisory firm.

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Japan holds firm on VM deadline as Fed tracks progress
February 15, 2017

Some smaller firms have accepted they will not get the documentation completed in time and have developed contingency plans instead. Chris Bender, a director in the global regulatory solutions team at hedging advisory firm Chatham Financial, says clients are falling into two buckets in how they are preparing for March 1. “Our clients who are using a rolling forward strategy are planning to roll those trades in February because they anticipate there will be a bottleneck in March. So we expect to see a lot of trading activity towards the end of the month. For those clients that don’t have trades coming up in the near future, they are sitting tight for now and waiting for a lot of the bottleneck to clear before amending their documentation. Or, if they have to trade, they are planning to execute products out of scope of the margin rules, like deliverable forwards or spot for currency trades,” he says.

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Forex swap margin treatment uncertain ahead of VM deadline
February 6, 2017

Chris Bender, director of regulatory advisory on Chatham Financial’s global regulatory solutions team in Pennsylvania, agrees: “We have a number of clients that have decided they will be prioritising US dealers when transacting deliverable forex forwards,” he says. But US banks don’t have it so easy themselves. While forex swaps are exempt from variation margining, some market participants fear the Commodity Futures Trading Commission (CFTC) could treat forwards as non-deliverable forwards (NDFs), which are caught by the incoming regime.

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Corporates to Get More Time for Swaps Docs
January 23, 2017

“To the extent that the non-financial end user is party to a CSA that [it] has negotiated apart from regulatory requirements, that CSA will not need to be modified,” said Kate Helmberger, director, derivative and regulatory contract advisory at Kennett Square, PA-headquartered Chatham Financial. Ms. Helmberger added that the letter can be completed using the ISDA regulatory margin self-disclosure letter, which can be accessed on the analytics site IHS Markit website or in paper form; in addition some banks have created their own representation documents.

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FX options a tempting solution – but problems persist
December 16, 2016

Amol Dhargalkar, managing director of Chatham Financial, a risk-management company, observes that new entrants to the market might find it difficult to grab share without having some differentiating capability, especially since corporate treasury departments tend to reward business to their partner banks that provide them with capital markets, cash management and/or M&A support.
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Preparing for Continued FX Volatility
December 12, 2016
“For example, Dhargalkar said, a company that is hedging all of its currency exposures by 70% might be able to get a similar outcome at a lower cost by hedging just its top five exposures by 80%. “Instead of hedging everything a little bit, hedge a few things a lot more,” he said, but he noted that this approach might require additional tools and expertise.”
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OTC Trading Will Require Being More Forthcoming
By John Hintze, iTreasurer
December 2, 2016

Corporate end users dodged the swap clearing and margin requirements levied on financial firms that followed the 2008 financial crisis. However, they soon must abide by what may prove to be a tedious requirement for some companies if they want to continue trading over-the-counter (OTC) derivatives. That’s according to a Chatham Financial executive at The NeuGroup’s November Treasurers’ Group of Thirty (T30) meeting hosted by the Kennett Square, PA-based derivative advisory firm. “Given the complexity of trading relationships and regime-specific regulations, these determinations could be quite difficult to make if left to the counterparties without a foundational framework to work with,” said Ankur Patel, director of corporate regulatory advisory at Chatham Financial.

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M&A mania: deal-contingents re-emerge but risks remain
November 30, 2016
Mergers and acquisitions (M&A) have long been a money-spinning business for investment banks, generating millions of dollars in fee revenue per deal. Now, banks' trading businesses want a slice of the action. "In recent years, some banks have announced to us that they have made a deliberate decision to hire people to start or reinvigorate the deal-contingent business," says Mark Battistoni, a managing director at hedge advisory Chatham Financial in London. Read More


 
It’s Time for a New Chapter in Derivatives Reform 
November 28, 2016
Far from weakening reforms, a data-driven approach to right-sizing regulations for smaller players would be a logical extension of one of derivatives reforms’ great achievements: bringing the once-opaque derivatives market into the light, explains Luke Zubrod, director of risk and regulatory advisory services at Chatham Financial.
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Forex volatility leaves companies more exposed than ever, says Chatham Financial
November 8, 2016

Amol Dhargalkar, managing director of Chatham Financial’s global corporate sector, comments on the levels of volatility in currency markets over the past several years and notes unexpectedly that fewer companies are electing to hedge against exposures in this asset class.

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Companies Cut Financial Hedge Use
November 3, 2016

Amol Dhargalkar, managing director of Chatham Financial’s Global Corporate Sector, noted that slow growth in Europe, Canada, China and Japan, as well as recessions in Brazil, South Africa and Russia have impacted companies’ ability to forecast swings in FX rates. Consequently, newer entrants to the global markets have delayed implementing hedging strategies. Mr. Dhargalkar said such delays are likely to continue until these companies can more comfortably predict business patterns and make forecasts.

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OpenBracket brings high-tech talent to Delaware
By Scott Gross
November 1, 2016

Nearly 200 programmers from around the country are expected to put their skills to the test during this weekend’s finals of the inaugural OpenBracket Delaware coding competition at the Grand. Sponsors such as Chatham Financial, JPMorgan Chase Co. and Capital One are planning to host events at restaurants along Market Street.
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Non-US Person Swap Trading Gets Pass
By John Hintze, iTreasurer
October 18, 2016
Christopher Bender, a director of regulatory advisory on Chatham Financial’s Global Regulatory Solutions team, said “A benefit to the proposal is that if you are a non-US person corporate and you’re trading with a non-US swap dealer, then the proposed rule confirms that the corporate is exempted from having to comply with the external business conduct standards unless the transaction is negotiated or executed in the United States, but if the transaction is arranged, negotiated or executed (ANE) in the US, then certain external business conduct requirements would still apply.”

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Unfinished business; OTC derivative market reform
October 3, 2016
Luke Zubrod shares his insights and experiences with the OTC derivatives reform process. Zubrod recalls that in the immediate aftermath of the financial crisis there was an overwhelming public perception that derivatives were weapons of mass destruction, financial instruments capable of bringing economies to their knees. "In our discussions with policymakers and regulators in Washington DC and elsewhere, we thought it was important early on to tell the other side of the story – about commercial end-users that use derivatives as simple risk-reducing business transactions and that do so in quantities that are not systemically risky."

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The OTC derivatives harmonisation headache
September 29, 2016
Because of the global nature of many derivatives transactions, regulators recognised the need to develop a coordinated, harmonious regulatory framework. While the G20 nations demonstrated a remarkable level of coordination in developing this framework, the actual implementation of OTC derivatives regulation has not achieved the same level of harmonisation. Chris Bender, director of regulatory advisory at Chatham Financial, looks at the progress and remaining obstacles towards achieving a cohesive harmonious cross-border OTC derivatives regulatory framework.

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US Corporates Exploiting Global Low Rates
By John Hintze, iTreasurer
September 23, 2016

Amol Dhargalkar, managing director of Chatham Financial’s Global Corporate Sector, noted significant advantages in terms of hedging cash flows, since issuing in Swiss francs, for example, enables a company to “soak up earnings” of Swiss assets from a cash flow standpoint. “You don’t have to worry about the cash just sitting there, or repatriation issues,” he said, noting, however, that shifts in the franc’s value will still be reflected on financial statements through translation impacts.

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Flush Corporates Look to Harness Future Low Rates
By John Hintze, iTreasurer
September 8, 2016
Amol Dhargalkar, managing director of Chatham Financial’s Global Corporate Sector, said rate swap hedges out as far as five years have happened, but they tend to be outliers. More are in the two-year forward starting range, and the bulk of swaps are less than a year forward starting. “We’ve definitely seen an overall increase over the last year, and particularly of last six, maybe even three months,” Mr. Dhargalkar said.

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Coming FASB Proposal Helps Hedge Accounting
By John Hintze, iTreasurer
September 2, 2016
Under current hedge accounting guidelines, notes Aaron Cowan, head of Chatham Financial’s corporates accounting advisory team, companies have to hedge all changes in cash flows, a punitive approach because components of the cash flows may have little to do with the risk treasury is seeking to hedge. FASB’s proposal would allow companies to hedge components in hedging relationships involving nonfinancial items, as long as they are contractually specified.

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EU Delay on Swap Margin Rule Introduces New Risks
By John Hintze
August 3, 2016

Perhaps more likely would be non-U.S. parties choosing to avoid U.S. counterparties. Christina Norland, head of Chatham Financial’s global regulatory solutions practice, said industry data show that approximately half of all trades subject to U.S. margin requirements are with counterparties that are not subject to U.S. rules. “So when you impose those rules, it’s quite possible those counterparties will go elsewhere and seek to trade with other entities,” Norland said.
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Navigating Available FX Strategies
By John Hintze, iTreasurer
August 9, 2016
In terms of deal-contingent hedges, some of the least-known banks are the best at pricing them, said Amol Dhargalkar, managing director at Chatham. He suggested members look for banks with large portfolios of deal-contingent hedges reducing their risk and pricing. It was also suggested to AT30 members that they consider using the long-haul method, which can help organizations expand hedge accounting capacity. According to Aaron Cowan, Chatham’s executive director of corporate hedge accounting, this can also be accomplished by scrutinizing the company’s organizational structure and its various currency exposures.

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FX Week
Corporates caught out by Brexit and aftermath
By Laura Matthews
August 5, 2016

"So be prepared for them, and if for some reason you are convincing yourself that it was a once-in-a-lifetime event that won't happen again, we remind you there is a constitutional vote happening in Italy in the October timeframe, which could lead to all types of drama. After that there will be something else, and after that there will be something else, so it is really not something that can be swept under the rug any more," Dhargalkar, Chatham Financial Managing Director, says.
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Beware Zero-Based Floors
By John Hintze, iTreasurer
August 2, 2016

“On the surface, this seems like a pretty good deal. If rates go below zero, the borrower only pays its loan spread,” said Casey Irwin, a hedging consultant at Chatham, who conducted the recent webinar along with Amol Dhargalkar, managing director and head of Chatham’s global corporate sector. “That had a huge impact on the transaction the client was looking to put in place; specifically, it saved several million dollars on the hedge from a structuring standpoint, and it also gave them a nice template for future dealings with their bank,” Mr. Dhargalkar said.”
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Operational challenges for banks for uncleared derivatives
By Ying Luthra
August 1, 2016

As the implementation date for margining on uncleared derivatives approaches for MSP on September 1st, Christina Norland, head of global regulatory practice at Chatham Financial, says “there’s still a lot of work to be done” as the deadline would likely “hold firm.” Aside from documentation changes, she saw that banks are working on getting their various models approved by regulators and that the process of preparing “is going straight to the deadline.” Meanwhile, the EU is delaying its implementation date (some say to March 2017), and Norland found that participants are wondering “what kind of impact with the EU not being on line?” will have. As for end users, the usage of derivatives continues to be put under close scrutiny as far as cost effectiveness and Norland found that Chatham’s clients “are looking and evaluating which is the least expensive” and noted that in a recent Chatham webinar survey that some clients “are considering not hedging at all.”
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The Bumpy Road to Brexit
by Lynn Strongin Dodds: DerivSource
July 29, 2016

Amol Dhargalkar, managing director at Chatham Financial, would also not be surprised to see some modifications particularly when it comes to changing to a one-sided from two sided reporting obligation. This would switch the focus to reporting compliance from trade matching which is more aligned to Dodd Frank. Looking ahead, Dhargalkar believes that companies will look to re-evaluate their hedges and exposures in the UK. “Some of the questions that will be asked will be around the upfront and compliance costs involved. While the smaller companies may not have much choice around where and who they trade with, but the larger companies will be able to look at other jurisdictions.”
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To hedge, or not to hedge
By Nia Tam
July 04, 2016

Rob Dornton-Duff, who leads Chatham Financial’s global infrastructure and project finance advisory business, explains that infrastructure projects are not normally structured to provide sufficient headroom to absorb market risks – including currency risk – based on available cashflows to service debt. He suggests that a typical debt service coverage ratio of 1.2 could see a payment default if the debt and revenue are mismatched, say due to a foreign exchange rate movement in a 20 percent range. “And 20 percent isn’t severe by the volatility standard for any currency. We cannot assume the headroom is available to absorb such market risks,” he points out.
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Brexit Fallout: 8 Items for Treasurers to Consider
By Ira Apfel
June 24, 2016
“The markets don't expect a U.S. rate hike through February 2017,” said Amol Dhargalkar, Managing Director, Global Corporates Sector, Chatham Financial. “Mid-market U.S. corporates with around $1 billion in annual sales still haven’t focused on this,” he said. “You need a hedging program—or you need to get everyone comfortable with being unhedged.”
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Brexit Sinks In, Markets Sink
By John Hintze, iTreasurer
June 24, 2016

“One of the first questions [for companies] is what impact is there right here and now, and I think the answer to that there will be none,” said Luke Zubrod, director of risk and regulatory advisory at Chatham Financial. “That is, except from a risk-management perspective.”
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Synching Swap Margin Rules
By John Hintze, iTreasurer
June 17, 2016

“Aligning the start dates globally for margin requirements was the product of a pretty extraordinary coordination effort, so this is a pretty significant departure,” said Luke Zubrod, director of risk and regulatory advisory at Chatham Financial. He added that the question of whether the US should delay its margin rules was met by a “resounding chorus from the panelists that the US should endeavor to keep those dates in lockstep with the Europeans, lest there be competitive imbalances.”
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Delay US non-cleared margin rules, industry tells Congress
By Peter Madigan
June 14, 2016

"If I was a European entity and I had the choice of facing a European bank or a US bank, one who was subject to US margin rules that started earlier and another that is subject to European rules that had not come into effect, if those start dates did not match I would have an incentive to trade with the European bank," said Luke Zubrod, director of risk and regulatory advisory services at Chatham Financial, which advises derivatives end-users. "That is a real-world implication of that misalignment on those dates. We should endeavour to move forward in lockstep with Europe."
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Chatham Financial Expands Services for Financial Institutions with New FX and International Payments Practice

January 30, 2017 (Kennett Square, PA, USA) – Chatham Financial, a global leader in debt and derivatives solutions, has unveiled a new suite of FX and International Payments (FXIP) services within its Financial Institutions practice. Designed to assist community and regional financial institutions (FIs) in assessing needs, minimizing costs, and optimizing processes, the new FXIP services are the latest offering in Chatham Financial’s...
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Volatility in Foreign Currency Leaving More Exposed Than Ever, Chatham Financial Study Finds

As fewer companies hedge top financial risks and volatility increases, more companies are exposed to risk

November 1, 2016 (Kennett Square, PA, USA) – According to a recent study from Chatham Financial, many businesses fail to fully protect themselves against the most significant financial risks they face. Chatham Financial’s Read More


Chatham Financial Bolsters Financial Institutions Practice with Enhanced Capabilities and Key Hires

April 5, 2016 (Kennett Square, PA, USA) – Chatham Financial, the industry leader in debt and derivatives solutions, has significantly strengthened its Financial Institutions Group by expanding its business development and balance sheet strategies capabilities. To help oversee the expansion within these two areas, Matthew Tevis and Todd Cuppia have recently joined the firm, assuming respectively the roles of managing director of business development...
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Chatham Financial Launches New Hedging Diagnostics Toolkit for Community and Mid-Size Banks

Real-time, web-based market assessment tool for lending is the first of its kind

February 16, 2015 (Kennett Square, PA, USA) – Chatham Financial, an independent full-service advisory and technology solutions provider, today unveiled its proprietary Hedging Diagnostic Toolkit. The Toolkit is a new suite of products designed to help small and mid-size banks make more informed decisions...
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Chatham Financial’s Debt Valuation Practice Focuses on Open-Ended Funds

John Kjelstrom Joins as Practice Leader

November 9, 2015 (Kennett Square, PA, USA) – Chatham Financial, the industry leader in debt and derivatives solutions for commercial real estate investors, announced John Kjelstrom has joined Chatham as the Debt Valuation Practice Leader. This addition signifies continued commitment to Chatham’s debt valuation services, which currently values over $250 billion in debt....
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Chatham Financial Offers Enhanced Defeasance Solutions

With an unprecedented number of CMBS loans maturing in less than two years, new online defeasance calculator provides commercial real estate owners a high level of functionality in initial evaluation of defeasance options

July 7, 2015 (Kennett Square, PA, USA) – Chatham Financial, an independent full-service advisory and technology solutions provider, has unveiled an enhanced suite of defeasance services to correspond with a...
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Chatham Financial CEO Michael Bontrager Wins Ernst & Young Entrepreneur Of The Year® 2015 Award for Greater Philadelphia Region

June 16, 2015 (Kennett Square, PA, USA) – Michael Bontrager, Chairman & CEO of Chatham Financial, was recently honored by Ernst & Young (EY) as a recipient of its Entrepreneur Of The Year® 2015 Award in the Greater Philadelphia region. Mr. Bontrager won the award for the Services category, which features companies that provide a wide variety of value added services to their clients. Read More


EY Announces Winners for the EY Entrepreneur Of The Year® 2015 Greater Philadelphia Award

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June 11, 2015 (Philadelphia, PA, USA) – EY is pleased to announce the winners of the EY Entrepreneur Of The Year Award in the Greater Philadelphia Region. This group...
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