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As part of the on-going Dodd-Frank Act rules and regulation implementation, section 619, more commonly known as the Volcker Rule (Rule), was finalized in December 2013 with a few tweaks during the first quarter of 2014.[i]The main undertow of the Rule is to prohibit, “[a] banking entity and nonbank financial…

What were the Reasons for the Subprime/Credit Crunch in 2008? There have been a plethora of reasons given by the media for what created the subprime/credit crunch crises. However, in speaking with people within the industry, as well as friends and family, it appears not everyone understands the various reasons…

Collateralized loan obligations (“CLOs”) are structured financial transactions where certain types of loans, usually highly leveraged syndicated commercial credits, are pooled together and transferred to a trust entity called a special purpose vehicle (“SPV”). The commercial credits are usually loans issued by financial institutions that are funding high-risk ventures such…

Detecting Early Warning Signs Appreciating that volatilities and uncertainties in our financial markets are accelerating, the ability to anticipate problems in individual issuers/borrowers is a highly valued skill. The effectiveness of how we can best spot the numerous red flags, and subsequently, how we interpret them, will be the determinate…

Interest Rate Swap Futures: An Introduction Since the G20 Summit in 2009, Operations Departments of financial services firms have been hard at work re-engineering work flows, upgrading and implementing new systems, and acquiring new skill sets to support the requirements of the Dodd-Frank mandate for clearing OTC Derivative contracts. Some…

The financial crisis has brought about many changes to the global financial system. One of these changes are the clearing requirements implemented by the Dodd-Frank Act for over the counter (OTC) derivatives such as interest rate swaps. These complex requirements have also increased interest in interest rate swap futures as…

If there was ever any doubt about the importance of electronic trading in today’s capital markets, surely the acquisition of the New York Stock Exchange by ICE (the Intercontinental Exchange, Inc. based in Atlanta, and one of the first electronic derivatives exchanges) would put the notion to rest. Looking at…

The municipal market has been around for over 100 years and has been the primary engine for state and local governments to finance schools, hospitals, homes and all types of basic infrastructure. The market is deep and liquid and stands at about $3.7 trillion as compared with the $8.4 trillion…

Risk reversal is a commonly used term in the FX markets. Specifically, a risk reversal is: An option strategy combining the simultaneous purchase of out-of-the-money calls (puts) with the sale of out-of-the money puts (calls). The options will have the same expiration date and similar deltas. A market view on…