Tag Archives: incentives

Is the Forex market beyond control?

How big is too big to rig? Can the scale of a market put it beyond anyone’s ability to manipulate? Forex trading may soon answer these questions, as investigations into possible breaches begin on both sides of the Atlantic. Even a market that trades $5.3 trillion per day may not be beyond the ability of […]

Continue reading

Key themes from the Final Report of UK Parliamentary Commission on Banking Standards

A global financial sector within a medium-sized economy A comprehensive report, for the most part well argued and with some practical proposals for improving banking. But in some parts the Commission seems to go beyond its remit, and sets out some ideas that would be hard to implement, or could conflict with existing initiatives. RBS […]

Continue reading

Universal bank model challenged by global divergence in bank regulation

Synopsis: Bank regulation appears to be diverging globally, with doubts that Basel will provide a reliable and consistent basis for international co-operation on bail-ins involving depositors. The flexibility to change VaR models, re-classify financial assets and adjust risk weights is driving regulators to set rules that cannot be gamed away by banks. This will involve […]

Continue reading

Conflicts of Interest: What You Need to Know

New article by Colin McLean in CFA Institute’s Inside Investing. Conflicts of interest are now getting more attention from clients and regulators. It is not enough just to “do the right thing” for clients. Instead, a rigorous framework for managing and reporting conflicts is needed.http://cfa.is/15KuJmz Clients need to know which questions to ask and what […]

Continue reading

Retail investors do better if a fund has an institutional twin

New research from CFA Digest shows that governance and results are better in a retail fund when there is a parallel institutional class running alongside it. Investors get better risk-adjusted performance driven by stronger governance, reflecting the increased scrutiny that twin funds get. http://cfa.is/13Knpcu This averaged an annual 1.5%, well above the typical extra fees […]

Continue reading

Barclays not alone on LIBOR; other frauds will emerge

Soon, many other banks will join Barclays in facing the consequences of the LIBOR scandal. But as the net widens, the affair is telling us about more than just banking. Regulators, politicians and many other sectors will be called into question as the affair unravels. LIBOR fixing has some broader lessons for public morality. The […]

Continue reading

Kay Review & Executive Incentives

The flurry of consultations on executive pay now looks like a damp squib. The topic featured in the Kay Review and also Vince Cable’s Department for Business Innovation and Skills consultation – but both have missed the opportunity for real reform. Remuneration consultants, in particular, have escaped much criticism. Yet, reform of the way they […]

Continue reading

Gaming monthy returns – perverse hedge fund incentives

Why are so many hedge funds struggling this year?  Volatile markets should help active traders, and this year’s rollercoaster has given ample opportunity to demonstrate defensive skills.  Yet, many hedge funds are doing little better in 2011 than their conventional long only counterparts.  Does this reflect unusual market conditions, or might the key to the […]

Continue reading