Monday 24th November 2014
NEWS TICKER: November 24TH 2014: This morning, US time, President Obama accepted a letter of resignation from US Secretary of State for Defence, Chuck Hagel, who says he will service until his successor is confirmed by the US Senate. “You should know I did not make this decision lightly. But after much discussion, the President and I agreed that now was the right time for new leadership here at the Pentagon,” he wrote in an official statement announcing his resignation - .Bank of America Corporation today announced it will report its fourth-quarter 2014 financial results on Thursday, January 15th 2015. The results are scheduled to be released at 7am ET, followed by an investor presentation at 8:30am ET - The Straits Times Index (STI) ended -4.79 points lower or -0.14% to 3340.53, taking the year-to-date performance to +5.55%. The FTSE ST Mid Cap Index gained +0.23% while the FTSE ST Small Cap Index gained +0.34%. The top active stocks were Forterra Trust (+20.97%), SingTel (-0.77%), CapitaLand (+1.53%), DBS (-0.45%) and Suntec REIT (-0.52%). Outperforming sectors today were represented by the FTSE ST Technology Index (+0.88%). The two biggest stocks of the FTSE ST Technology Index are Silverlake Axis (+1.22%) and STATS ChipPAC (+1.12%). The underperforming sector was the FTSE ST Telecommunications Index, which declined -0.68% with SingTel’s share price declining -0.77% and StarHub’s share price unchanged. The three most active Exchange Traded Funds (ETFs) by value today were the IS MSCI India (+0.26%), SPDR Gold Shares (+0.47%), STI ETF (+0.30%) - Moody's Investors Service has today upgraded SCHMOLZ + BICKENBACH AG's (S+B) corporate family rating (CFR) to B2 from B3 and probability of default rating (PDR) to B2-PD from B3-PD. The rating of the senior secured notes due 2019 issued by SCHMOLZ + BICKENBACH Luxembourg S.A. (a wholly owned subsidiary of S+B) is also upgraded to B2 from B3. The outlook on the rating is stable. -- The Nasdaq Stock Market says that trading was halted today in MOL Global Inc at 09:10:08 Eastern Time for "additional information requested" from the company at a last price of $4.09. Trading will remain halted until MOL Global Inc. has fully satisfied Nasdaq's request for additional information - The ICE January Brent futures contract settled $1.03 higher at $80.36/b Friday after a surprise interest rate cut by the Chinese central bank lifted hopes the world's second largest economy could grow faster. Crude benchmarks on both sides of the Atlantic closed at their highest levels since November 12. NYMEX January crude futures ended the session 66 cents higher at $76.51/b.

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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