Every time we run to the grocery store or pharmacy for household staples like baking soda or ibuprofen, we’re faced with a choice – to buy the name brand or the store brand. On the one hand, there’s something reassuring about purchasing a nationally-recognized brand; after all, if they can afford to advertise during the Super Bowl, surely they must have a quality product! On the other hand, why should we pay three times the amount for cough syrup when the store brand has the exact same list of ingredients? In truth, we often use brand recognition as a proxy for quality, whether or not that conclusion is valid. If we consumers had perfect information, we would only buy name brands if the cost premium were clearly justified by higher quality or value. This implies that subject-matter experts, such as…

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Derivatives Regulation Case Study: Regulatory Compliance Assessment Our Client: A Fortune 100 technology company with international operations and multiple hedging programs involving exchange-traded and over-the-counter (OTC) derivatives across different asset classes, including foreign exchange, interest rates, and credit. Situation: The company was concerned about the impact of new derivatives regulations on its hedging programs, including how the parent company and numerous subsidiaries might be classified under Title VII, what new regulatory requirements might apply, and the extent to which hedging costs may increase due to new regulatory requirements. The client’s hedging programs spanned multiple global regulatory jurisdictions and included several different entities including both financial and nonfinancial entities. Summary: Chatham conducted an in-depth review of the hedging programs, spending two days onsite at the client’s premises to interview stakeholders within the company, including representatives from treasury, risk, operations, legal, and…

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Compliance without compromising hedging OTC derivatives continue to evolve in this era of financial regulatory reform. Dodd-Frank and EMIR regulation are now actively enforced. These new standards have increased complexity and rigor for real estate companies. They must manage derivative-related documentation, policies and resolutions, as well as risk management operations. While the changes in effect today present one set of challenges, continued adjustments in the rules further complicate the compliance process. This demands a watchful eye and sharp navigation skills. How Chatham’s regulatory compliance services provide optimized compliance Derivatives regulation understanding meets markets expertise: Chatham guides you through compliance with derivatives regulations with a powerful combination of proven regulatory expertise, practical derivatives experience, and technology solutions you can apply to your business. Our dedicated team of regulatory experts has been actively engaged in the global policy debate on derivatives regulatory…

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Regulatory Compliance Derivatives regulatory reforms, under Dodd-Frank for the U.S. and EMIR for Europe, have transformed the landscape of the OTC derivatives market. Chatham Financial has brought its 20-plus years of experience advising end users in the over-the-counter derivatives market to the global policy debate on financial regulatory reform. Experienced leadership: Our consultants have testified before the U.S. Congress and conducted educational briefings for Members of Congress and their staff. We’ve met with and written over 500 pages of comment letters to regulators in both the US and the EU, and been featured on panels of public roundtables hosted by the CFTC and SEC. We are also frequently quoted by news organizations in articles and opinion pieces which have appeared in numerous major publications. No other advisor to end users offers this powerful combination of market know-how and deep understanding…

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Navigating derivatives regulation The OTC derivatives market has undergone significant change as a result of global financial regulatory reforms under Dodd-Frank and EMIR. This makes derivatives as a tool for hedging risk much more complicated. Funds must now assess their structure and derivatives related strategies along with their related documentation, policies and post-trade procedures. Those with international operations face further complexity, as they must navigate multiple jurisdictions and regulatory regimes with new, complex reporting requirements dictated under EMIR and AIFMD as well as global documentation, risk mitigation, and margin requirements. Chatham offers a powerful blend of proven buy-side regulatory expertise, practical derivatives experience, and customized technology solutions. We provide clients both the expertise to navigate the regulatory and economic challenges to hedging, and the operational support and technology systems they need to manage their programs in a compliant and affordable…

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The Four Phases of Regulatory Engagement (aka the “LaRCO” Framework) End users of derivatives have had to consider a multi-faceted approach for engaging withderivatives regulation. This approach includes four phases: Legislation, Regulation, Compliance and Optimization (“LRCO” or “LaRCO”). Each phase requires different competencies, has different objectives and different action steps. This framework is described as follows. Legislation Key Objective: Establish end user exemption and preserve efficiency of OTC derivatives market. AIG’s synthetic bets (via derivatives) on the housing market contributed to its failure and government-funded bailout. In response, many policy makers questioned whether all derivatives should be forced into clearinghouses and exchanges or even banned altogether. Chatham, working together with numerous companies and the Coalition for Derivatives End-Users – a group of trade associations in Washington that represents the business community on derivatives policy issues – sought to tell how…

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The Foreign Account Tax Compliance Act (FATCA) The Foreign Account Tax Compliance Act (FATCA) goes into effect January 1, 2013, and may have an adverse tax impact on certain payments made in derivative transactions.

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