China adopted its first corporate governance code in 2001, ahead of many APAC peers, with updates in 2011 and 2016. As China’s market becomes more accessible to global investors, corporate governance practices will likely face increased comparison to global standards. Our report references MSCI ESG Research’s rich corporate governance data to examine the opportunities and risks to minority shareholders presented by current corporate governance practices in the MSCI China Index.
|Challenges in FRTB Implementation|
LONDON (Reuters) – Most banks will not have to hike capital significantly to meet stricter rules to counter trading risks, a survey showed on Tuesday, after Asian nations sought to delay introducing the code citing concerns about the need for more funds.
The code, known as the “fundamental review of the trading book” or FRTB, was drawn up by the Basel Committee on Banking Supervision and tightens “market risk” capital requirements.
LONDON (Reuters) – Global debt may be under-reported by around $13 trillion because traditional accounting practices exclude foreign exchange derivatives used to hedge international trade and foreign currency bonds, the BIS said on Sunday.
Bank for International Settlements researchers said it was hard to assess the risk this “missing” debt poses, but that the main worry was a liquidity crunch like the one that seized FX swap and forwards markets during the financial crisis.
Financial regulators around the world have sought to reduce the systemic risk to liquidity caused in periods of market volatility. SEC 22e-4, the US’s most recent regulatory response to liquidity risk, will start to require compliance as early as of June 2018 and while it may feel like there’s enough time to prepare, the challenge of implementing liquidity risk systems at financial firms is actually a significant undertaking.
Contingent Convertible bonds – known as “CoCos” – have grown popular among European (and increasingly Asian) financial institutions since the 2008-09 financial crisis. They offer attractive yields but come with a challenge: figuring out when a CoCo bond is at risk of being converted to equity, which effectively can eradicate the bond’s value.
The answer, as MSCI’s Gergely Szalka writes in a new blog post, may lie in having a dedicated risk model that picks up on early warning signs. Gergely shows how MSCI’s CoCo pricing podel would have detected the rising risk that preceded this year’s collapse of Spain’s Banco Popular ahead of a standard risk model.
ISDA will host an introductory webinar tomorrow (Thursday, September 14) at 8:00 am NY time / 1:00 pm London time to provide an overview of an initiative to facilitate the adoption of emerging technologies, such as distributed ledger and smart contracts. The webinar will cover the importance of common data and process standards to aid interoperability, and will provide an update on ISDA’s work to identify and define core lifecycle events and actions and consolidate them within a so-called common domain model (CDM).
All participants must register in advance to listen to the webinar by clicking here.
Commentary: A decade after the August 2007 “Quant Liquidity Crunch,” Peter J. Zangari, global head of research and product development, writes about the changes and lessons learned from this event and the ensuing financial crisis. Among them: Best-in-class risk management is now integrated into the investment process and investors have placed greater emphasis on alternative sources of return, from factor investing to private asset classes.
Yale University economics professor Robert Shiller has a warning for investors.
The Nobel laureate says low volatility paired with a questionable price-earnings ratio could wipe out a chunk of the stock market’s value.
In June 2017, the $23 billion Vodafone-Idea Cellular merger got the go ahead from the Competition Commission of India. A few days later, the government announced a deal between two public sector undertakings (PSUs) – the Oil & Natural Gas Corporation (ONGC) and Hindustan Petroleum Corporation Ltd (HPCL). The Rs. 28,000 crore ($4.4 billion) merger involves ONGC buying up the 51% government stake in HPCL.
As of January 1, 2018, IFRS 9 will replace the current IAS 39 across several jurisdictions, including many European countries.
By focusing on expected credit losses, IFRS 9 will represent a significant shift from IAS 39 (incurred losses) since the new impairment requirements determine that expected losses will have to be computed not only for non-performing assets, but also for performing assets, with a direct impact on Profit and Loss (P&L).
In the tailwinds of 2016 when LIBOR finally crossed 1%, and given the prospect of further rate hikes, senior loans are poised for an uptick in demand. But is there room for more?
Join us as we explore why the fundamentals of floating-rate instruments are increasing institutional allocations to senior loans at home and abroad.
Leading industry practitioners will examine:
A risk/reward analysis of leveraged loan fundamentals
How index-based strategies and ETFs impact depth of liquidity in primary and secondary senior loan markets
The refinancing effect – how stronger demand is weighing on credit spreads and yields
- Ted Basta, Senior Vice President, Market Data, Loan Syndications and Trading Association
- Myles Gilbert, Managing Director, Cambridge Associates LLC
- Jason Giordano, Director, Fixed Income Product Management, S&P Dow Jones Indices
- James Meyers, CFA, Director of Fixed Income ETF Product Strategy, PowerShares by Invesco View the Speaker Bios
LONDON (Reuters) – Banking regulators will postpone their next meeting in another bid to agree on global capital rules, taking more time to try to overcome objections from European banks to minimum capital levels, people familiar with the talks said.
The negotiations are being closely watched by thousands of lenders, even though the rules would not come into force until 2024 or 2025, and Standard Chartered said on Wednesday it would not pay a dividend because of the regulatory uncertainty.
(Reuters) – Borrowing by small U.S. companies hit a nearly two-year high in June, driven by restaurants and hotels, PayNet Inc said on Tuesday, as businesses invested to meet customer demand.
The Thomson Reuters/PayNet Small Business Lending Index for June rose to 139.9, its highest since July 2015, from an upwardly revised May reading of 138.3.
Early this year, Venezuela issued $5 billion in new bonds to a state owned entity to help raise cash needed for essential imports (“Venezuela issues $5bn in bonds as it seeks cash to ease shortages”, Financial Times, January 3, 2017). In June, Venezuela engaged a Chinese securities firm, Haitong, to resell these bonds reportedly at a steep discount of more than 70% (“Venezuela Discounts $5 Billion in Bonds”, Wall Street Journal, June 6, 2017). Soon, a Canadian firm, Crystallex, obtained a restraining order against Haitong, as a first step towards attaching the bonds. (“Crystallex Moves Closer To Collecting $1.2B Venezuela Award”, Law360, July 17, 2017). Perhaps, this time, the courts will actually decide this question as to whether a debtor’s bonds can be treated as its assets and attached by the creditors.
One of the lessons from the August 2007 “quant liquidity crunch” – now about to mark its 10-year anniversary – was that institutional investors underestimated the speed and magnitude of losses that can take place over very short periods. The challenge that remains for investors today is to find real-time data to help them respond to market events as they unfold. This need for transparency is especially true where fund managers have exposure to factors that may experience high volatility in crisis periods.