Featured White Papers
As the use of clearing houses has increased, clearing members have found that there is currently no way for market participants to compare the risk and default management procedures of CCPs on a consistent basis.
The first tentative steps to address this issue were taken on 11 March, 2015, when the Committee on Payments and Market Infrastructures (CPMI) and the International Organisation of Securities Commissions (IOSCO) announced a review of stress testing by clearing houses. CCPs regularly stress test their default management processes; however, as yet there is no global standard for a stress testing framework.
This paper details LCH.Clearnet’s proposed stress testing framework that will inform and assist the review process being undertaken by CPMI-IOSCO. A standardised stress testing methodology will help improve transparency around CCP risk management. It will allow clearing members and regulators to compare different CCPs on a relative basis, to evaluate the strength and resiliency of clearing houses and to assess the extent to which a CCP’s pre-funded resources (default fund contributions and CCP skin in the game) would be consumed under a uniform set of stresses. In addition, it attempts to place CCPs on a level playing field regardless of confidence levels used to calculate margin, holding and methodology for sizing default funds, etc. Read LCH.Clearnet's full white paper
New study by BNY Mellon and Nobel Laureate Dr. Harry Markowitz puts spotlight on the growing importance of risk management for institutional investors
‘Down’ with alpha and ‘up’ with targeted returns, greater use of alternatives
Risk controls should be integrated at the enterprise level
Over 80% of institutional investors expect risk management to play an even greater role in the investment decision process in the future, according to a new study published by BNY Mellon, a global leader in investment management and investment services, in collaboration with Nobel Prize-winning economist Dr. Harry Markowitz. In addition, over the next five years 73% expect to spend more time on investment risk issues, while 68% expect to spend more time on operational risk issues. Only 25% of respondents, however, had a chief risk officer.
Entitled New Frontiers of Risk: Revisiting the 360O Manager, the new study looks at a broad array of risk-related topics and issues, including: market risk; investment risk measures; performance vs. liabilities; credit risk management; emerging markets and non-domestic investing; alternative investments; asset allocation; diversification vs. returns; liability-driven investing (LDI); operational risk management controls; operational risk insurance; liquidity risk; political risk; regulatory change; and best practices.