Treasury code of conduct and treasury compliance training presentation sampler for treasury, risk, compliance and audit teams

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?

18. Ed Freeman
Darden, UVA

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