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Jun 30, 2022

The Complexities of AEOI Compliance: How Outsourcing Can Help

AEOI compliance presents enormous challenges for financial institutions. First, there are the basic differences between FATCA, which targets only US taxpayers investing abroad, and CRS, which targets taxpayers from all participating countries investing in any other participating country. Interpreting the reporting requirements adds still more complexity, as they vary widely among different jurisdictions—such as the requirements for what is reportable or non-reportable. So do the definitions of accounts and individuals which must be reported. Moreover, as with all types of financial regulation, simply keeping up with changes and updates is an onerous task in itself. In such a tangled regulatory web, the risk of critical details falling through the cracks is acute.

Jun 14, 2022

Integrated Market & Credit Risk: An Active Risk Management Dialogue

The economic impact of the COVID-19 pandemic, similar to the 2008 Global Financial Crisis, shows that correlations between market and credit factors tend to be more pronounced in extreme market conditions. In order to respond to, or even stay ahead of such impacts, an integrated approach to market and credit risk analytics is key to success.

May 18, 2022

Challenges & Future Developments for LIBOR Transition for ALM

In the years following the 2008 financial crisis, manipulation attempts by LIBOR panel banks, false reporting, and declining liquidity in interbank funding markets generated doubt in LIBOR benchmark rates, and ultimately led to plans for their replacement with more reliable benchmarks. Without backing by underlying transactions, LIBOR depended more on expert judgment than quantifying true bank funding cost, and huge volumes of derivatives and cash products referencing it was a concern. Alarmed regulators established new benchmark regulation (BMR), and alternative reference rates (ARR) or risk-free rates (RFR) that comply with the BMR were developed and recommended by national working groups of several jurisdictions.

May 11, 2022

The Foundations of Good ESG Governance and Policy

Momentum behind ESG investing continues to grow. Firms who develop a solid approach to incorporating ESG policies at both the firm and the fund level will have a competitive advantage over their peers.

May 6, 2022

Benefits of Internal Models for Solvency II

As predicted in a recent blog post, we are observing an expansion of partial and full Internal Models to meet the pillar I capital requirements of Solvency II. The debate around its advantages vs its costs has resurfaced, with a special focus on the market and credit risk modules. Here, we provide our perspective on the main benefits of Internal Models based on proven enterprise solutions.

Apr 22, 2022

The ECB & Trade Flows: The Road to Hell is Paved With Good Intentions

Those of us who have followed the regulatory approach to internal models over the years have witnessed a remarkable evolution from its infancy, when it was very principles-based, to the current state, where it has become much more rules-driven; an evolution that has moved the focus from “modeling” into “compliance.”

Apr 19, 2022

Anticipating Investors’ ESG Needs

Fully integrating a robust ESG approach can be a steep learning curve. As interest in ESG increases, both regulatory pressure and investor expectations can change quickly.

Fund managers would do well to be prepared and get ahead of these needs.

Apr 14, 2022

Reporting and Monitoring for ESG

In a recent ESG webinar with three subject matter experts, we posed the following question: “How are managers monitoring their ESG risks and opportunities and how are they reporting this to the investors?”

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