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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In 1973, the Arab Oil Embargo and ensuing oil crisis in the US prompted Congress to react with new regulation. The Corporate Average Fuel Economy (CAFE) Standards introduced fuel efficiency benchmarks that were intended to “reduce energy consumption by increasing fuel economy.” Now more than 40 years later, the unpredictable outcomes of fuel economy regulations are instructive, especially as we embark on a similarly ambitious regulatory scheme for OTC derivatives. They teach that regulations are likely to have unexpected and undesirable effects, even while achieving their broad objectives. The current fleet-wide fuel efficiency standard in the U.S. of 27.5 miles per gallon will increase to 54.5 mpg by 2025. These ever-growing standards have forced automakers to rethink their entire line-ups, generally emphasizing economy over other factors like performance, safety, size and comfort. But performance is not something auto enthusiasts are…

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It’s amazing what you miss when you ignore social media for a few days. For example, take this declaration published in a recent article in the Minnesota Star Tribune: “The days when a convicted bank robber could get a job selling gold coins in Minnesota are coming to an end.” What? Over already? I only just learned that this is a thing! But alas, it’s true. It seems that unscrupulous numismatists are about as common as lakes up there in Minnesota, so much so that the state recently passed a law aiming to get the crooks out of the coin business. The new law shakes down around two central thrusts: regulate retail coin dealers, and formalize the transaction relationship. No longer can convicted felons pitch complete sets of American Silver Eagles as a retirement nest egg for Grandma. All dealers…

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Guest view: U.S. swaps need clearer reform July 25, 2014, BreakingViews By Luke Zubrod Clearer changes are needed for U.S. derivatives markets than the Dodd-Frank Act’s prescription. Four years after the regulatory reboot became law, many of the reformers’ hopes have been realized. Download Complete Article

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NEW YORK, N.Y. – Peter Beyers and Stanley Sellers, two former Wall-Street derivative’s traders, are leading a group of financial professionals in a quest to create a derivatives trading system completely untethered from financial regulation. The idea is to establish human and technological infrastructure robust enough to support a legitimate presence in the derivatives market that operates apart from any regulatory scheme. “Navigating the do’s and don’ts of the new and existing regulation across the world is becoming increasingly difficult and burdensome for market participants,” said Mr. Beyers. “Imagine the efficiencies you could create by cutting away all the red tape.” But finding a way to stay out of reach of regulation while still maintaining a presence in derivatives markets creates a unique challenge. “The regulatory landscape in today’s world is changing,” Beyers explained. “All of the major markets exist…

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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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Sizing Up the Impact of Derivatives Regulation on the European Property Sector June 2014, CRE Finance World By Luke Zubrod and Phong Dinh In the online published edition of CRE Finance World, Chatham regulatory experts Luke Zubrod and Phong Dinh contributed on the topic of “Sizing Up the Impact of Derivatives Regulation on the European Property Sector” reviewing the state of EMIR enforcement and the emerging requirements facing financial risk management programmes. Download Complete Article

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This is part two in a three-part series on the hedging outlook for 2014. Last week, we reviewed current Fed Policy and discussed the impact on hedging programs in 2014. This week, we look at the path of derivatives regulation and the expanding role of global regulation on domestic hedging programs. Part II: Derivatives Regulation. Hedging programs in the U.S. changed monumentally over the past year. A veritable alphabet soup of regulatory requirements was heaped upon market participants, including the following: – ECP: Now all market participants must be Eligible Contract Participants (ECPs), or be qualified so by virtue of certain qualifying owners or guarantors. – LEI: Each hedging party must obtain and maintain a Legal Entity Identifier (LEI). – End-User Exception: All parties to a new transaction who are eligible to do so must now preserve the right to…

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In some ways, the turning of the calendar to a new year does what no other deadline nor holiday can do – generally speaking, it stops you in your tracks. Your time and team ran out as if you just played the biggest bowl game of your life, and having secured the victory in the 4th quarter, commenced celebrating the season in grand fashion. Congratulations all around to your winning team! What followed was a well-deserved break, and time to reconnect with friends and family. Wrapping up and reflecting on the prior year, you can be proud of what you accomplished, but still resolve to come back stronger and better prepared next year. Welcome to next year. 2014, that is. Unlike in football, there is no offseason in your business. There is, however, a rhythm and routine that you will…

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Unsurpassed support for corporate debt, project, and acquisition finance As a result of the global financial crisis, market risk management for infrastructure borrowers has become exponentially more complex. Borrowers face many possible financing and interest rate mechanisms, as well as larger funding groups, increased lender negotiation power, shortage of derivatives capacity, and capability, extended transaction processes and a scarcity of suitable precedents. Properly hedging or debt breakage costs on a future refinancing is now a priority. How Chatham supports your risk management needs Our team identifies and analyses market risk as an integral part of the financing decision, as well as develops risk management strategies. We optimize your approach to funding and hedging markets, as well as manage hedging and funder relationships. We also negotiate and document hedging terms, manage the transaction process and all aspects of market execution and…

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