Treasury Compliance Market Abuse
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Treasury code of conduct and treasury compliance training presentation sampler for treasury, risk, compliance and audit teams
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Treasury Compliance Market Abuse
- 1. Treasury Compliance Market Abuse Code of conduct Alchemy Technologies (Pvt.) Ltd. alchemya.com FinanceTrainingCourse.com
- 2. Agenda Overview Model Code Cases Review
- 3. Overview
- 4. Overview Market Abuse Model Code Libor Case Study Framework for morality
- 5. Who is the treasury regulator? • SBP, SECP, CCP Local • FMA & ACI Code of conduct • OCC, Federal Reserve, FSA International • North American and EU regulations • Broadest definition. Morality • How do you teach morality to smart people?
- 6. The Gambit – Rational thinking Expected Payoff > Penalty Expected Payoff < Penalty
- 7. In an imperfect world? • Impact Social Costs • Group behavior • Recognition Personal Costs • The desire to get caught The cost of • Direct being caught • In Direct Regulatory • Paradigm shift compensation • Make an example – The bite & teeth
- 8. Themes • Client confidentiality Information • Front running Exchange • Insider trading • Cartel formation Collusion & • Sanctions Brokerage • Pay for flow - Brokerage • Pricing, gouging, miss-selling • Suitability Misrepresentation • Truths, False Truths, Silence • Client communication standards
- 9. Cases Misrepresentation • Margin Call Collusion • FSA Libor Crisis Client • Front Running, Insider Confidentiality Trading
- 10. The Pre Test Margin Call
- 11. Consequence • Fines, penalties Bank wide • Loss of license impact • Civil Suit, Class Action Suit • Suspension & Termination Management • Negative lists • Future prospects • Suspension & Termination Dealers • Negative lists
- 12. Probability of Default - Pre & Post Crisis 80.00% 70.00% 60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00% 1/1/2008 1/1/2009 1/1/2010 1/1/2011 Barclays - PD Royal Bank of Canada - PD BAML - PD JP Morgan Chase - PD HSBC - PD
- 13. Probability of Default - Barclays 45.00% 40.00% 35.00% 30.00% 25.00% 20.00% 15.00% 10.00% 5.00% 0.00% 1/1/2008 1/1/2009 1/1/2010 1/1/2011 PD
- 15. Rajat Kumar Gupta • Ranked 15th in Indian Standard Exams • HBS Baker Scholar • Earliest Indian hire at Mckinsey • Made partner in 8 years • Estimated Net worth US$ 130 million • Goldman, P&G, Gates Foundation, Indian School of Business • Expected Sentencing 3 years
- 17. Rationality • What is the cost of rationality gambit?
- 19. In the words of one CEO, how do I make decisions when I don’t even know how to think about this issue? R. Edward Freeman.
- 20. If everyone is held accountable…
- 21. If every one is held accountable…. No one is accountable
- 22. Model Code
- 23. Cases
- 24. You get fired for missing on integrity not for missing numbers. How does that help us figure out what to do all over the world? ---CEO Industrial Products (c) 2008 R. Edward Freeman. 5/28/2008 All rights reserved.
- 25. The Post Test Margin Call Four clips 10 minutes
- 26. Questions? • Moral Issue • Role Models • Choice • Compensation • Questions
- 27. Contact • Jawwad Farid • www.alchemya.com • FinanceTrainingCourse.com • jawwad@alchemya.com
- 28. Jawwad Intro • Fellow Society of Actuaries, Investments • MBA, Columbia Business School • 20 years consulting: US, UK, ME & Pakistan • Risk Management, Product Development, Regulatory Reporting, Actuarial Practice • Prefers - Jawwad http://FinanceTrainingCourse.com http://www.alchemya.com jawwad@alchemya.com 28
- 29. Alchemy Intro • Actuarial & Risk Advisory firm • 10 years, 4 Markets • Derivative & Risk Management models, ALM, ICAAP, Stress Testing, Financial Product Development • 150 workshop - 2500 trained professionals