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.
A White Paper published by SEB Economic Research
Gradual recovery – major economies will diverge
This autumn nearly all countries in Eastern (including Central) Europe have begun an economic recovery after growth bottomed out during the second quarter of 2013, consistent with the pattern in Western Europe. Their recovery over the next two years will be modest. Latvia and Lithuania will continue to grow fastest in the region and in the European Union. The three largest economies will diverge: with relatively strong fundamentals, Poland will regain its starring role after an unexpectedly deep growth slump; Russia, increasingly in need of reforms, has downshifted to slower growth than it enjoyed before the global economic crisis; and a pressed Ukraine will devalue its way out of an acute crisis.
In most Eastern European countries, the economic upturn is initially being driven mainly by private consumption, but also by increased exports. Consumption is being strengthened by good real wage growth, much of it due to continued low inflation. Unemployment will gradually continue to fall in the Baltic countries, remain relatively unchanged in Poland and Ukraine and increase slightly in Russia. Exports will be fuelled by gradually higher external demand, especially from Germany.
Capital spending will take time to rebound, due to lingering uncertainty about the growth outlook − internationally and in the region − combined with slowly thawing credit conditions. Mainly in the central and southern parts of Eastern Europe, credit conditions have been abnormally tight so far, due to the euro zone crisis and the relatively large foreign ownership of banks. Read full white paper