December 19th, 2018

Regulatory Update and 2019 Preview

by Rob McDonough Senior Research Manager, Angel Oak Capital Advisors, LLC Regulatory Update and 2019 Preview There have been several significant regulatory changes to the financial services environment in 2018, and more are anticipated in 2019. Following is a brief summary of some of the most significant of those changes. Stress Testing Randal Quarles, Vice […]

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November 12th, 2018

LIBOR SCHMIBOR: What’s Next? SOFR Part II

by Kenneth Kapner President and CEO, GFMI   LIBOR SCHMIBOR: What’s Next? SOFR Part II InLIBOR SCHMIBOR: What’s Next? SOFR Part Iwe covered the following topics: Explanation of LIBOR Potential replacements Repurchase agreements (repos) and Tri-party Repo International benchmarks Looking ahead This article looks to: Define SOFR Discuss applications and new products Update international benchmarks […]

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November 12th, 2018

LIBOR SCHMIBOR: What’s Next? SOFR Part I

by Kenneth Kapner President and CEO, GFMI LIBOR SCHMIBOR: What’s Next? SOFR Part I The LIBOR manipulation scandal has led regulators to recommend new money market benchmarks. This article briefly reviews LIBOR and what the potential replacements will be. LIBOR LIBOR, or London Inter-Bank Offered Rate, is a money market benchmark/index, less than one-year, that […]

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November 12th, 2018

VIX, Volatilities and Exchange Traded Products

by Kenneth Kapner President and CEO, GFMI VIX, Volatilities and Exchange Traded Products Volatility in the stock market was subdued through 2017 as can be seen in Figure 11. Many people began to sell volatility to capture this “non-movement.” In trading parlance, it is referred to as a short vol trade. But in February of […]

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March 22nd, 2018

Settlement Risk and Blockchain

by Kenneth Kapner President and CEO, GFMI   Settlement Risk and Blockchain Settlement risk has been part of the capital markets since its inception. Blockchain is the new kid on the block. Can Blockchain, sometimes referred to as Distributed Ledger Technology (DLT), help mitigate settlement risk or is it all a pipe dream? Speaking of […]

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July 11th, 2017

Electronic Trading and Flash Crashes – Part II

by Kenneth Kapner President and CEO, GFMI Electronic Trading and Flash Crashes – Part II Part I of this article discussed electronic trading, the differences between algorithmic trading (AT) and high frequency trading (HFT), types of systems/platforms, exchange traded versus OTC transactions, and other considerations such as colocation. In Part II, we will address different […]

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May 12th, 2017

Blockchain – Where We Have Been & Where We Are Going

by Michael McDonald, PhD Subject Matter Expert, GFMI Blockchain – Where We Have Been & Where We Are Going The Rise of Blockchain 2016 was the year that saw the rise of blockchain. Increased interest from the mass media, corporate titans across America, and the US government all led innovative approaches to using the technology. […]

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April 6th, 2017

Electronic Trading and Flash Crashes – Part 1

by Kenneth Kapner President and CEO, GFMI Electronic Trading and Flash Crashes – Part 1 Quite often, the media has pointed its fingers at electronic trading as the cause of various flash crashes. When delivering training on Electronic Trading, I often find that people are confused by the various terms and intricacies of this market. […]

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September 6th, 2016

The New Fiduciary Rule

by Aileen Doherty Subject Matter Expert, GFMI The New Fiduciary Rule On April 6, 2016, the U.S. Department of Labor (DOL) issued its final rule expanding the “investment advice fiduciary” definition under the Employee Retirement Income Security Act of 1974 (ERISA), modifying the complex of prohibited transaction exemptions for investment activities in light of that […]

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May 31st, 2016

The Long and Short of It: An Overview of XVA

by Kenneth Kapner President and CEO, GFMI Charles Gates Subject Matter Expert, GFMI The Long and Short of It: An Overview of XVA Introduction to Counterparty Credit Risk The evolution of counterparty credit risk started with counterparty (credit) limits, settlement limits and exposure measurements such as potential future exposure. This progressed to the use of […]

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April 20th, 2016

Migration to T+2 Settlement

Migration to T+2 Settlement Overview of T+2 Settlement The late J. Carter Beese Jr., former SEC commissioner, gave a speech in 1993 where he famously said, “Nothing good ever happens to a trade between trade date and settlement date.” His remarks were meant to encourage the industry to shorten the existing T+5 settlement cycle to […]

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April 19th, 2016

The Long and Short of It: An Overview of STACR and CAS

by Kenneth Kapner President and CEO, GFMI and Rob McDonough Senior Consulting Manager, Angel Oak Capital Advisors, LLC The Long and Short of It: An Overview of STACR and CAS Introduction to STACR and CAS Fannie Mae and Freddie Mac now have issued numerous credit risk transfer notes in this ever evolving market. This article summarizes some […]

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April 18th, 2016

Enterprise Risk Management: A Modern Consensus from Corporate Studies

Enterprise Risk Management (ERM) Introduction Enterprise Risk Management (ERM) is one of the hottest areas in the risk management discipline today, with new advances in technology and communications creating both opportunities and challenges in the area. Experts have conducted considerable research in the field of ERM in the last fifteen years and it’s useful to […]

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April 17th, 2016

Understanding Central Counterparties (CCPs)

Understanding Central Counterparties (CCPs) Central counterparty clearing houses, or more simply central counterparties (“CCPs”), have emerged from the 2008 financial crisis as lynchpins of the global derivatives markets, and therefore, a critical part of the infrastructure of the global financial system. This article addresses the following questions: What are CCPs, and what role do they […]

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April 16th, 2016

Stressed Over Stress Testing

Stressed Over Stress Testing The financial crisis exposed a number of critical weaknesses across the largest banks and highlighted that many BHCs had a limited ability to effectively identify, measure, and control their risks, and to assess their capital needs. CCAR Review 2015, March 2015, Board of Governors, Federal Reserve Stress testing has been an […]

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April 16th, 2016

The Birth of a New Type of Bond — Reverse Yankee

The Birth of a New Type of Bond – Reverse Yankee Low interest rates equals strong currency? The idea of borrowing on an uncovered basis in a low interest rate foreign currency has been around for many years. The Swiss franc in the 1980s, the Japanese yen in the 1990s and more recently, Hungarian consumers […]

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April 15th, 2016

Comparing and Contrasting CCAR and DFAST

by Rob McDonough Senior Consulting Manager, Angel Oak Capital Advisors, LLC Comparing and Contrasting CCAR and DFAST The Federal Reserve System’s (the Fed) regulatory responsibilities include the oversight of bank holding companies (BHCs), savings and loan holding companies, state member banks, and systemically important nonbank financial institutions (SIFIs). The Fed has reacted to some of […]

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April 15th, 2016

The Federal Reserve Tools: Past and Present

The Federal Reserve Tools: Past and Present Pundits all seem to agree that, later this year, the Federal Reserve will finally raise rates. Some seem to think that will occur in June while others believe it will be September. Regardless of when it happens, now would be a good time to review how the Federal […]

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April 13th, 2016

Municipals Update: the Good, the Bad, and the Groundbreaking

by Ethel Yamamoto, MBA GFMI Subject Matter Expert Municipals Update: the Good, the Bad, and the Groundbreaking We thought it might be helpful to update our municipal bond market view from last year with our “crystal ball” for 2014. First, we will examine the overall market for any changes and insights to the future. Next, […]

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April 13th, 2016

Accepting a Regulatory Gift: Exceeding Rising Credit Risk Quantification Standards

by Drew H. Boecher, CFA Managing Director, Darling Consulting Group Accepting a Regulatory Gift: Exceeding Rising Credit Risk Quantification Standards Encountering a New Standard “That did not go too well” said Barry, my investment expert friend as we left the testing center. He was an extremely intelligent financial expert who would later become well-known for […]

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April 12th, 2016

Binary Options: Portfolio Destruction Theory or Market Wizardry?

by Billy Viljoen Subject Matter Expert, GFMI Binary Options: Portfolio Destruction Theory or Market Wizardry? Two Sides of the Same Coin Let’s imagine you play a game of Roulette at a Casino. You stand at the table and see there are two blocks, one red and one black. You ask the dealer and she explains […]

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April 12th, 2016

GSEs and Housing Finance Reform

by Liz Ward Subject Matter Expert, GFMI GSEs and Housing Finance Reform GSE History Affordable housing has been a goal of the US Government since the Depression. Fannie Mae and Freddie Mac (the government-sponsored enterprises, or GSEs) were created to lower the cost of, and make financing more available for, Americans to purchase a home. […]

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April 11th, 2016

The Volcker Rule—Where to Begin?

by Lisa Kim Estrada, JD, MBA, CAMS Executive Consultant, Bekker Compliance Consulting Partners, LLC The Volcker Rule—Where to Begin? 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 […]

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April 10th, 2016

The Perfect Storm: October 2008

by Ken Kapner, CEO and President, GFMI The Perfect Storm: October 2008 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 […]

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April 9th, 2016

Collateralized Loan Obligations

by Rob McDonough Chief Risk Officer, Angel Oak Capital Advisors, LLC 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 […]

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April 8th, 2016

Detecting Early Warning Signs

by Henry Pullman, Subject Matter Expert, GFMI 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 […]

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April 5th, 2016

The Impact of OTC Clearing on Operations Departments

by Charlotte Scott, Subject Matter Expert, GFMI 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 […]

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April 4th, 2016

Interest Rate Swap Futures: An Introduction

by Ken Kapner, CEO and President, GFMI Interest Rate Swap Futures: An Introduction 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 […]

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April 3rd, 2016

Looking through the ICE at Electronic Trading

by Charles Gates Subject Matter Expert, GFMI Looking through the ICE at Electronic Trading 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 […]

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April 2nd, 2016

Unlucky 2013 for the U.S. Municipal Market—Fact or Fiction?

by Julie Barnum, Subject Matter Expert, GFMI   Unlucky 2013 for the U.S. Municipal Market — Fact or Fiction?  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 […]

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March 20th, 2014

Risk Reversals

by Ken Kapner, CEO and President, GFMI Risk Reversals 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. […]

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