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Top 10 op risks: AI arms race leaves risk teams playing catch-up
As firms invest for fear of being left behind, op risk managers urge caution on data, controls and access
Fed’s Bowman to ‘prioritise’ SLR exemption for US Treasuries
Reinstating Covid-era relief is a ‘no brainer’, dealers say, as bond markets reel from tariff chaos
US tariffs spur rush to European dividend futures
Turnover hits €3.5bn in three days as traders brace for fallout on corporate balance sheets
Risk data
New FX swap matching platform aims to bridge voice and e-trading
FXswapX seeks to electronify “the last bastion of voice trading” in the interdealer market
The end of the world, or an artificial crisis?
Bimodal tariff threat leaves investors grappling with uncertainty
Here’s what investors said about trade wars in January
A global trade war ranked third and a stock market crash fourth in Risk.net’s list of top investment risks, earlier this year. Some described how US tariffs would lead to “bimodal” outcomes – slowing growth on one hand, but with the chance of positive effects if targeted countries capitulated. Participants also worried about stock market panic in the face of new risks. “Investor confidence is going to evaporate,” predicted one.
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CCP models vulnerable to Trump risk
Volatility of ‘will he, won’t he’ tariff strategy could confound clearing house risk models
A peek under the hood of Canadian banks’ new CVA machine
Disclosures from the country’s top dealers offer first glimpse of how FRTB reforms can reshape capital gauge for potential losses on derivatives
Basel tweak may weaken counterparty hedging, industry warns
Proposed technical revision risks dissuading bespoke CDSs and guarantees covering derivatives exposures
Market turmoil
Trump tariffs turn swap spreads into ‘pain trade’
Hedge funds bet big on Treasuries to outperform swaps. The opposite happened.
Tariff turbulence piles pressure on banks’ VAR models
Backtesting breaches start to mount, but too early to tell if regulatory intervention needed
Deutsche’s Americas CRO on risk-taking in choppy markets
Risk Live Boston: Risk managers must stay alive to sudden market moves, but volatility can also bring opportunity, says Jonathan Hummel
Hedging playbook goes ‘out the window’ as Trump tariffs slam markets
Dispersion, put spreads and VKOs paid off as stocks plunged, but outlook remains wildly uncertain
Risk Quantum
Data insights, delivered daily
Risk Quantum tracks thousands of data points across hundreds of metrics from organisations that represent a cross-section of the financial system. Published daily, articles are short and broken into chunks – the facts, the context and a brief commentary – and use data visualisations to get each story across.
US tariffs spur rush to European dividend futures
Turnover hits €3.5bn in three days as traders brace for fallout on corporate balance sheets
Counterparty Radar
Matchmaking and benchmarking for OTC derivatives
Counterparty Radar is based on position data from around 20,000 US mutual funds and ETFs, rolled up to the manager level – it shows the OTC derivatives they have on their books, and who they traded them with, providing unique insights into an important market segment. More info
BlackRock bucks trend in shrinking IRS market for Ucits
Counterparty Radar: Pimco boosts pay-fixed book by $27.5 billion in H1 2024
Bank regulation
Can Europe’s FRTB refurb bring banks back to Club IMA?
Softening the NMRF regime permanently might have the most impact, but the output floor still hurts
Trading desks want regulators to face down the NMRF monster
Rule-makers in Australia and the European Union are open to changes to the unpopular FRTB test
FRTB may bite harder for Europe’s CVA modellers
Farther reach of advanced approach and lighter load on total requirements mean limited takeaways from Canada and Japan’s implementation
UBS takes standardised approach for FRTB – for now
Swiss bank is one of the largest to drop internal models; sources say it could switch later
For US Treasury algos, dealers get with the program
Four banks now offer execution algos on Bloomberg, with plans to go further, faster
Clearing
Ice eyes year-end launch for Treasury clearing service
Third entrant expects Q2 comment period for new access models that address ‘done-away’ accounting hurdle
No need for repo clearing ‘cannon’ in Europe, says industry
Observers question rationale for a clearing mandate, calling for clearer incentives
NSCC liquidity shortfalls raise T+1 concerns
Lagging FX settlement processes could become a problem for clearing houses
Basis traders mull UST self-clearing as response to SEC mandate
Inter-affiliate exemption requested by hedge funds could ease shortage of clearing capacity
Op risk benchmarking
Our new research service compares op risk practices at financial institutions – from staffing to AI safeguards, key controls to board reporting packs.
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