Wednesday 4th March 2015
NEWS TICKER, WEDNESDAY, MARCH 4TH 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%).

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Regulatory Update

The Euro: Preparing for the Unthinkable

Tuesday, 26 June 2012 Written by 
The Euro: Preparing for the Unthinkable One day in 1974, payments failed to move across the leading US dollar payment mechanism, CHIPS, operated by The New York Clearing House. Earlier that day, German regulators had closed a relatively small bank, Bank Herstatt, in Cologne.  Following this closure, banks stopped sending funds to one another; no bank knew whether the recipient might have exposure to Herstatt (and thus might experience unacceptable losses). To their credit, bank regulators spent much of the following decades addressing this risk, both in the payments market and in the FX market through the CLS system. http://www.ftseglobalmarkets.com/

One day in 1974, payments failed to move across the leading US dollar payment mechanism, CHIPS, operated by The New York Clearing House. Earlier that day, German regulators had closed a relatively small bank, Bank Herstatt, in Cologne.  Following this closure, banks stopped sending funds to one another; no bank knew whether the recipient might have exposure to Herstatt (and thus might experience unacceptable losses). To their credit, bank regulators spent much of the following decades addressing this risk, both in the payments market and in the FX market through the CLS system.

Although I was General Counsel of the Clearing House and CLS, participating in these and related developments, it took the events of 2007 and 2008 to drive home their significance. Now, with  a slow-down in the world economy and even the possible demise of the euro, do we once again need to prepare for the unthinkable? And how can any individual firm do so?

At the very least firms need to recognize that these types of risks cannot be managed in silos; there must be a cohesive approach across all business areas and breakpoints – from liquidity and credit risks to regulatory and reputational risks.  If the euro is redenominated, businesses may face market closures, reversion to and rapid devaluation of legacy currencies, mandatory bank holidays, restrictions on convertibility, and a lack of liquidity.  A scenario analysis can help identify how such developments might impact key clients, key markets, and most critically –in the short term – liquidity needs. The information gathered in this analysis should be factored into credit and risk management plans. But most importantly, it needs to be communicated to key people. Your board and your staff need to be prepared for various scenarios, and you may also need to communicate with regulators and suppliers.  A careful analysis of and preparation for all contingencies can help a firm survive even the unthinkable.

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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