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. Read Complete Article

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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.Read More *Registration may be required

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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.” Read More *Registration may be required for Risk.net

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A Hedge! A Hedge! My Kingdom for a Hedge! Four centuries ago, the most influential English-language playwright in history was laid to rest in Stratford-upon-Avon. Yet since April 25th, 1616, William Shakespeare has captivated four centuries of audiences and readers with his masterful dramatic arcs, playful neologism, and comprehensive depiction of life’s full breadth. In fact, Shakespeare’s astonishing thematic scope led Ralph Waldo Emerson to declare: “What point of morals, of manners, of economy, of philosophy, of religion, of taste, of the conduct of life, has he not settled? What mystery has he not signified his knowledge of?” As we reflected on Emerson’s adulation, it dawned on us that if Shakespeare really did settle all points of the economy, he must have written plenty about risk management. We spent the weekend curled up with our college Shakespeare text and, as…

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LinkedIn Pulse: Foreign Exchange Risk in 2016: Laying the Foundations for Managing Value By Victoria Bell March 3, 2016 With the UK Referendum on EU membership scheduled for 23 June 2016, currency volatility is front and centre of many companies’ agendas. However, for businesses with multi-currency operations, volatility has been a concern for some time and the recent slide in Sterling is one of many considerations, with the US Presidential election, the stability of the Eurozone and the growth prospects for China ever present in the background. Company boards, Audit Committees and shareholders are increasingly considering risk management strategies in relation to foreign exchange, questioning whether their current strategy remains relevant in changed and changing market conditions. Questions we hear on a regular basis include: What happens to our business if GBP-USD moves 10%? Why would I take risk management…

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IEX revolution will restore trust in Wall Street December 23, 2015, CNBC.com By Michael Bontrager and Luke Zubrod “Our firm has spent the last six years responding to Dodd-Frank’s derivatives market regulations and it is our firm conclusion that the core problem in finance cannot be regulated away. To be sure, new regulatory guiderails are an essential response to the crisis. But there are limits to the power of government action in fixing the system’s most fundamental problem – the erosion of trust.” Commentary by Mike Bontrager and Luke Zubrod. Bontrager is the founder & CEO of Chatham Financial, a global risk management advisory and technology firm in the debt and derivatives markets. Zubrod leads the firm’s public policy efforts. Chatham has no financial interest in IEX. Read Complete Article

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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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This marks Warren Buffett’s 50th year publishing an annual letter of homespun wisdom and straight talk about his business. Despite his firm belief that you can’t teach a new dog old tricks, Buffett’s penchant for wry witticism was already in evidence at age thirty-five. “Our War on Poverty was successful in 1965,” he quipped. “Specifically, we were $12,304,060 less poor at the end of the year.” And although he (completely incorrectly) basked in the glow of having newly acquired a New England-based textile mill – “Berkshire [the textile business] is a delight to own” – Buffett’s investment record in the following five decades would be without parallel, over which period Berkshire [the conglomerate] would be an absolute delight to own. Buffett has never been one to shy away from speaking frankly, even in criticizing himself or crediting fortune rather than…

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Valuing Derivatives: Under AASB 13 Fair Value Measurement January 19, 2015, FTA Outlook, Australia By Steve Castleton and Andrew Brown AASB 13, Fair Value Measurement (“AASB 13”) was issued in 2011 and became effective January 1, 2013. Even though the standard has been effective for nearly 2 years, many companies are either still grappling with how to implement the standard with respect to derivative valuations or need to continue to refine their process based on feedback from auditors or an evolving derivative portfolio. Download Complete Article More information at:

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Ever notice how many more things come in clear packages at the grocery store? Gone are the days when juices, granola, and frozen pizzas languished in those opaque cardboard containers; now we can see right through most packages to the delicious goodness inside. Why reveal so much all of a sudden? As Sarah Nassauer recently wrote in the Wall Street Journal, it turns out that brand managers discovered in testing that transparent packaging promoted the perception of better taste and fresher ingredients among consumers. Tropicana used to dominate orange juice sales, but it lost share to Simply Orange once the challenger was first to market with a clear bottle – Tropicana has not recovered its fallen sales, but perhaps to prevent further attrition it has adopted the clear jug approach. How significant is see-through packaging to sales? Kind Healthy Snacks…

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