VIDEO: Portfolio Reconciliation Requirements Heather Fritzinger of Chatham Financial discusses the advantages of reconciling a portfolio of derivatives transactions with bank counterparties on a periodic basis. In addition, she explains which parties are required to reconcile trade portfolios under Dodd-Frank and EMIR, and describes how this reconciliation must be properly documented according to protocols published by the International Swaps and Derivatives Association (ISDA). A full transcription of the video is available below. window._wq = window._wq || []; _wq.push({ id: 'jw6sj1p4vw', onReady: function(video) { video.bind('play', function() { Munchkin.munchkinFunction('visitWebPage', { url: '/video/jw6sj1p4vw', params: 'video=started' }) }); video.bind('end', function() { Munchkin.munchkinFunction('visitWebPage', { url: '/video/jw6sj1p4vw', params: 'video=finished' }) }); }}); Video Transcript: Heather Fritzinger: The frequency of portfolio reconciliation varies by jurisdiction, and depends on two factors; entity classification and the number of trades between the counter parties. Under Dodd-Frank, swap dealers must make…

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Practical Guide to Asset Sensitivity Banks use several techniques to convert some of their asset-sensitivity to current period earnings. Download the Complete Guide Here

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Financial Institutions Case Study: Loan-level Hedging Our Client: A regional bank with an established hedging program. Situation: The bank was looking to expand its loan-level program under the supervision of a former derivatives marketer and had faced challenges on the accounting for its balance sheet derivatives. The bank called Chatham on the advice of its employee, who had prior interactions with Chatham in his former role as a counterparty to other Chatham clients. Summary: Chatham Financial assisted the bank by loading all of its existing trades into our proprietary system, including the balance sheet derivatives that needed accounting re-designations. Chatham reviewed the confirmations on all of the trades, along with the ISDA agreements with existing counterparties, to ensure appropriate terms and counterparty diversification. Chatham hosted management at Chatham’s campus to educate top officials on our turn-key approach to loan-level hedging,…

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Financial Institutions Case Study: Accounting Needs Our Client: A regional bank with over $10 billion in assets that had an existing hedging program and a pressing accounting need. Situation: The bank had executed balance sheet derivatives, but its auditors had expressed concerns about the hedge designation memorandums, encouraging the bank to contact Chatham as soon as possible. Reluctant to partner with a derivatives consultant on any portion of its hedging program, the bank called Chatham nonetheless to schedule a face-to-face meeting. Summary: Chatham Financial reviewed the company’s hedge documentation and traveled to the bank for the face-to-face meeting. Chatham addressed the prospect’s concerns about hiring a third-party advisor and walked the bank through Chatham’s process for creating hedge documentation, the experience in implementing hedge accounting, and the systems Chatham uses to run different types of effectiveness tests. Furthermore, by describing…

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Hedge Accounting for Financial Institutions Financial institutions that use derivatives to manage risk or offer derivatives to their clients are mindful of the associated regulatory and financial reporting involved. They expect reported results to accurately reflect the underlying economics of derivative and hedging activities. Effectively aligning the bank’s economics and reported results, while minimizing ineffectiveness can be challenging, especially since ASC 815 is nuanced and difficult to apply properly. It is critical for companies to successfully navigate these accounting complexities in order to avoid earnings surprises as well as scrutiny from external investors, auditors, and regulators. Benefits of Chatham’s Hedge Accounting Solutions Chatham has the expertise to help you navigate the complexities of ASC 815. We have assisted hundreds of companies with tens of thousands of such transactions. Our hedge accounting solutions are customized to your needs and reduce the…

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Lowering cost of funds with interest rate derivatives When properly structured, from both an economic and hedge accounting perspective, interest rate derivatives are usually the best solution for banks concerned about forecasted interest rate movements that negatively impact their financial performance. Chatham offers outstanding derivatives and hedge accounting advisory and systems designed to reduce this risk. What’s more, our experienced team of advisors can assist in navigating the new derivatives regulatory landscape of Dodd-Frank. Unlike broker-dealers or counterparties to derivative transactions, Chatham is an independent advisor. We are an unbiased partner with the expertise and resources you need to meet your interest rate risk management goals. How Chatham helps mitigate interest rate risk Chatham’s risk management consultants work with clients to develop and execute accounting-friendly hedging strategies that best meet the bank’s ALM objectives. We leverage our strong capital markets…

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