Tuesday 3rd March 2015
NEWS TICKER, TUESDAY, MARCH 3RD 2015: The number of Spaniards registered as unemployed fell by 13,538 people in February, a fall of 0.3%. Even so, the government acknowledges that a massive 4,512,153 people remain without work. In a press release, the Ministry for Employment says said reduction in jobless was best monthly improvement in February since 2001. Seasonally-adjusted unemployment fell by 49,653 people. The government also says 300,333 fewer unemployed people since February 2014 was: "the largest year-on-year reduction in unemployment since 1999". The total number of unemployed Spaniards this month—the fourth February with Mariano Rajoy as Prime Minister—was still higher than all of the February data points for the last four years of the Zapatero government. The number of people registered with Spain's social security system rose by 96,909 in February - Record high inflows send Japanese ETFs’ AUM higher, surpassing $160bn. The Apac region excluding Japan has also seen strong inflows, pushing the AUM mark past $78bn. Investors are still avoiding the riskiest names in the region; firms whose CDS spreads have widened the most have seen negative returns - CBOE Futures Exchange reports February average daily volume in VIX futures was 166,547 contracts, a decrease of 23% from February 2014 and a decrease of 27% from January 2015. Total volume in VIX futures for February was 3.2m contracts, down 23% from a year ago and down 31% from the previous month - The Straits Times Index (STI) ended +1.03 points higher or +0.03% to 3403.89, taking the year-to-date performance to +1.15%. The FTSE ST Mid Cap Index declined -0.39% while the FTSE ST Small Cap Index declined -1.14%. The top active stocks were SingTel (+0.47%), DBS (-1.48%), OCBC Bank (-0.86%), Noble (-3.08%) and UOB (-0.04%). The outperforming sectors today were represented by the FTSE ST Consumer Goods Index (+0.68%). The two biggest stocks of the FTSE ST Consumer Goods Index are Wilmar International (+0.31%) and Thai Beverage (+2.14%). The underperforming sector was the FTSE ST Basic Materials Index, which declined -3.44% with Midas Holdings’ share price gaining +1.61% and Geo Energy Resources’ share price declining -1.57%. The three most active Exchange Traded Funds (ETFs) by value today were the STI ETF (-0.29%), IS MSCI India (+0.37%), SPDR Gold Shares (+1.10%). The three most active Real Estate Investment Trusts (REITs) by value were Ascendas REIT (+1.62%), CapitaCom Trust (-0.57%), CapitaMall Trust (+1.90%). The most active index warrants by value today were HSI25000MBeCW150330 (-7.69%), HSI24200MBePW150429 (-3.94%), HSI24400MBePW150330 (-7.32%). The most active stock warrants by value today were OCBC Bk MBeCW150803 (-13.56%), UOB MB eCW150701 (-1.97%), DBS MB eCW150420 (-22.61%).

Blog

Regulatory Update

Lessons from an Industry Titan: Jamie Dimon’s Testimony

Friday, 15 June 2012 Written by 
Lessons from an Industry Titan: Jamie Dimon’s Testimony This week, J.P. Morgan Chase’s CEO, the highly regarded Jamie Dimon, testified before the US Senate banking committee regarding the failures of its Chief Investment Office (CIO), the group responsible for certain well-publicized losses. We thought his testimony provided more than a few lessons on governance matters and the state of the world generally. Here they are: http://www.ftseglobalmarkets.com/

This week, J.P. Morgan Chase’s CEO, the highly regarded Jamie Dimon, testified before the US Senate banking committee regarding the failures of its Chief Investment Office (CIO), the group responsible for certain well-publicized losses. We thought his testimony provided more than a few lessons on governance matters and the state of the world generally. Here they are:

"[W]e are still reviewing the facts...”

Lesson: Never speak out publicly in a definitive way until you fully know the facts.  You will not fully know the facts for months.



"...I will explain everything I can to the extent possible."

Lesson: Even for Dimon, transparency matters.

"CIO's strategy...was poorly conceived and vetted.  The strategy was not carefully analyzed or subjected to rigorous stress testing.... CIO's traders did not have the requisite understanding of the risks they took.”

Lesson: Didn’t we learn this lesson in 2008? Back then we learned that some strategies had assumptions that seemed poorly founded in retrospect. This was particularly true about the behavior of the mortgage markets and their derivatives.  Guess the lesson is that most people never learn this lesson. Before a system or strategy is implemented, and periodically thereafter, management (including the board) should ask the probing questions. Make no assumptions on this score.

"Personnel in key control roles in CIO were in transition and risk control functions were generally ineffective in challenging the judgment of CIO's trading personnel.”

Lesson: The press reported that the CIO’s then-current chief risk officer began to internally express his concerns about London office trading strategies last year. This past January, he was replaced as the head of risk by a former trader who, at least according to the press reports, had no prior risk management experience. This lesson relates to human nature: it's very hard to appreciate someone who has a different point of view. Watch out – he may be right.

"Risk Committee structures and processes in CIO were not as formal or robust as they should have been.”

Lesson: Assessments have to be substantive, robust, and “real”, and be tested and documented regularly as assumptions and/or reality changes. Structure, process and formality may not protect you from all losses, but they can provide a protective shield that will hopefully mitigate them. Be sure to build your protective shield. 

 

Deborah Prutzman

Deborah Prutzman is the founder and CEO of The Regulatory Fundamentals Group (RFG), a New York-based firm that designs and implements business and risk solutions for alternative asset managers and institutional investors. RFG's senior-led team employs a robust suite of tools, including practical alerts on new and potential industry developments and its powerful RFG Pathfinder® knowledge management platform which simplifies the challenges of operating in a regulated environment.  To learn more about The Regulatory Fundamentals Group call (212) 537-4058, email a representative at Information@RegFG.com or visit RegFG.com

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