Two weeks ago on Sunday, September 7th, at about the same time that many of us were tuning in for the first professional football games of the season, planet Earth had a near miss. An asteroid 60 feet in diameter buzzed past New Zealand at a frighteningly close distance from of just 25,000 miles. In terms of astrophysics, that’s a hair’s breadth! Astronomers breathed a huge sigh of relief, fearful that a direct hit on Sunday could have had the same affect as an asteroid impact in Russia last year. On February 15, 2013 an asteroid roughly identical in size to last week’s asteroid collided with Earth in the Russian town of Chelyabinsk. When the space rock weighing more than the Eiffel Tower and hurtling at 40,000 mile per hour slammed into the atmosphere, it exploded into a fire ball…

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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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In the military they call it “mission creep”, when a campaign expands well beyond its original objectives. Goals begin to shift, and the resulting mission may look nothing like what was originally intended. To say that Thanksgiving shopping is experiencing mission creep is an understatement. Retailers, seeking a leg up on the competition, began to experiment with an earlier start to the holiday shopping season, and midnight of Thanksgiving became the new battle line. Ever emboldened to make the most of Black Friday, retailers like Wal-Mart, Sears and Target then shifted the line towards 8PM, figuring most turkeys had been cooked and consumed by then, and shoppers were surely ready for some spending action. Now, the front line has shifted yet again, as Retailer Kmart announced a 6AM opening on Thanksgiving. Black Friday, as it were, is now Thanksgiving, the…

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It looks like a lot of fun to be a world-class golfer or skier.  You get paid millions of dollars to do what costs the rest of us big sums of money, you bask in the constant adulation of thousands of screaming fans – whoops, bad example, for some inexplicable reason golfers need absolute silence while they play – and you visit the finest courses or slopes all over the world.  Best of all, sometimes you can even win a cow. After Luke Donald took the Dunlop Phoenix trophy in Japan late last year, he won a legendary Miyazaki beef cow – each member of this special breed of cattle gets a name, drinks beer, and experiences a sake massage to preserve its outstanding qualities.  When Lindsey Vonn won the Val d’Isère Super G in France, she elected the cow…

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Un-be-lievable! The 2013 NBA and NHL Finals were two of the most exciting championship series in recent sports history. Ratings were through the roof, with the NBA recording its 2nd best basketball viewership ever for the Miami Heat – San Antonio Spurs game seven final, and the NHL orchestrating a Chicago Blackhawks – Boston Bruins Stanley Cup series that goes down as the most watched in NHL hockey history. The Heat may be building a dynasty, but only a remarkable comeback in game six, not witnessed by many fans that had already left the arena in disgust, could preserve their season and make possible a game seven championship. So too, 17 seconds in game 6 powered the champion Blackhawks to tie and then make the go ahead goal for their 2nd Cup in four years. Injuries served as a dramatic…

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It’s amazing how time flies. Can this really be our first newsletter in June 2013? Why, that means our favorite holiday is one short week away! Of course, we’re talking about World Derivatives Day! To answer your first question: no, this is not a joke! If you’ve been reading our newsletters for a while, you may recall that in 1997, we at Chatham decided to dedicate one day a year to celebrating the mighty derivative and its use in financial risk management: more predictable than a LIBOR-Fed Funds dislocation; more foreseeable than a black swan event; and able to fix the largest of variable interest rate exposures with a single “done”! But this year, World Derivatives Day coincides with an important milestone in the now four-year-old realm of financial regulatory reform, and it is an inauspicious day for some. Beginning…

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The Uneven Global Playing Field of OTC Derivatives Reform June 2012, Risk Professional By Pam Brown Pam Brown discusses divergent regulations that are being adopted in the US and Europe which may significantly impact counterparty risk, liquidity and capital requirements. Download Complete Article Now

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Singapore has released its proposal for OTC derivatives regulatory reform. There is no trading requirement, but otherwise the proposed requirements are consistent with G-20 commitments. Noteworthy differences from US law include the following: 1) low use financial end users may be exempted from clearing requirements, 2) margin requirements for non-cleared trades appear to be focused exclusively on financial entities, 3) there is no real-time reporting requirement, and 4) the clearing requirement (albeit narrower in scope) is proposed to be retroactive. Given the concentration of derivatives activity amongst a handful of large banks, Singapore’s proposal addresses derivatives’ contribution to systemic risk, while being more flexible for non-financial end users, smaller financial end users and for financial end users who prefer to retain their freedom to determine the most efficient trading venue. Singapore currently holds 1.5% of the world swap market. Depending…

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Overview of OTC Derivatives Legislation July 21, 2010 On July 21, 2010, President Obama signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act, an historic piece of legislation that will enact the most sweeping set of rules for the financial services industry since the 1930s. Following is a summary of one of the sections of the legislation that specifically deals with regulation of over-the-counter (OTC) derivatives. The summary is intended to be used to understand the key elements of the derivatives title and can be used as a quick reference guide for market participants. Download Complete Article

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Preliminary Analysis of House-Senate Conference on OTC Derivatives Title June 25, 2010 Early Friday morning, negotiators for House and Senate reached a compromise on the OTC derivatives bill. The “conference report” which reflects this compromise will be sent next week to the House and Senate to be voted upon. It is expected to pass and be signed into law by the President not later than July 4th. The differences between the bills were negotiated through the night. Though it was televised on C-SPAN, many of the amendments were not made available to the public, including the final House “offer” that contained last minute changes. As such, many of the items below are subject to confirmation upon review of the actual language. Download Complete Article

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