The use of relative value credit analytics is not new, but the importance of this methodology has come into sharper focus and has been the subject of increased investor attention over the last 12 months.
As a recognised thought leader, Quantifi publishes whitepapers and articles that offer valuable insight on key topics related to the financial markets.
Portfolio managers and traders that use over the counter (OTC) derivatives often lack an accurate real-time view of the valuations and risk of their derivative positions, especially when trading exotic derivatives. Unlike liquid securities or exchange traded products, there is not always a market price available for OTC derivatives. These products therefore need to be valued according to models that accurately calculate their theoretical fair value.
The London Interbank Offered Rate, is often referred to as ‘the world’s most important number’, as it is a global benchmark interest rate upon which trillions of financial contracts rest, including mortgages, consumer loans and credit cards.
In the post-crisis world, an increasing number of banks have set up a centralized XVA desk. With the introduction of new regulations to ensure banks are adequately capitalized, it has become common practice to include certain costs in the pricing of OTC derivatives that, in many cases, had previously been ignored.
The COVID-19 (C19) pandemic has severely affected global markets, causing economic disruption at an unprecedented speed and on a hitherto unknown scale. News of the virus first appeared in late December 2019 and by mid-January reports emerged that it was no longer contained within China. With the spread of the virus accelerating by mid-March 2020, the US economy has been severely impacted and there are understandable concerns about the damage caused to the worldwide economy.
Historically, liquidity risk has been the poor cousin of market risk and credit risk. While the global financial crisis of 2008/2009 first pushed the issue of liquidity risk to the forefront of attention, the most recent market dislocation due to the COVID-19 pandemic has once again highlighted the salient significance of the topic. This is particularly so for institutional investment managers who have to meet margin calls, perform regular fund rebalancing, execute redemptions, among other potentially liquidity-threatening activities. Failure to afford liquidity risk management the focus and priority jeopardizes the health of an institution, perhaps fatally so.
The Global Financial Crisis (GFC) of 2008 underscored the importance of credit risk in the financial markets. Since 2008, regulatory reform has been introduced to restore stability and confidence in the banking industry.
Cryptoassets are digital assets which use cryptographic techniques to generate a medium of exchange of financial transactions. Cryptocurrencies, utility coins, security tokens are all different types of cryptoassets.
One of the most talked about topics in the financial markets today is blockchain. The global financial markets are investing in blockchain technology to revolutionise many aspects of financial products and services.
Schedule a personalised demo today