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Understanding Risk Management and Compliance, May 2012

Understanding Risk Management and Compliance, May 2012

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Published by George Lekatis
Understanding Risk Management and Compliance, May 2012.

International Association of Risk and Compliance Professionals (IARCP)
http://www.risk-compliance-association.com

Every Monday
Top 10 risk and compliance management related news stories and world events
Do you want to receive (at not cost) every Monday the Top 10 risk and compliance management related news stories and world events that (for better or for worse) shaped the week's agenda, and what is next?
You can register at:
http://www.risk-compliance-association.com/Top_10_Risk_Compliance_Management_Stories_Events.html

Receive the New Member Orientation Newsletters
You will have the opportunity to learn (at not cost) what members registered before you have already learned. Understand better risk and compliance management, projects, careers, challenges and opportunities.
You can register at:
http://www.risk-compliance-association.com/New_Member_Orientation_Newsletters.html
Understanding Risk Management and Compliance, May 2012.

International Association of Risk and Compliance Professionals (IARCP)
http://www.risk-compliance-association.com

Every Monday
Top 10 risk and compliance management related news stories and world events
Do you want to receive (at not cost) every Monday the Top 10 risk and compliance management related news stories and world events that (for better or for worse) shaped the week's agenda, and what is next?
You can register at:
http://www.risk-compliance-association.com/Top_10_Risk_Compliance_Management_Stories_Events.html

Receive the New Member Orientation Newsletters
You will have the opportunity to learn (at not cost) what members registered before you have already learned. Understand better risk and compliance management, projects, careers, challenges and opportunities.
You can register at:
http://www.risk-compliance-association.com/New_Member_Orientation_Newsletters.html

More info:

Published by: George Lekatis on May 14, 2012
Copyright:Attribution Non-commercial

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09/21/2013

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International Association of Risk and ComplianceProfessionals (IARCP)
1200 G Street NW Suite 800 Washington, DC 20005-6705 USA  Tel: 202-449-9750  www.risk-compliance-association.com  Dear Member,Do you know thatinvestor in Londonarebetting on whena  particular set of US citizens  will dieand, if these people live longer than anticipated,
the investment may not function as expected 
 
… and that the UK 
Financial Services Authority (FSA) has confirmedguidance that this is ahigh risk productthat shouldnotbe promoted to the vast majority of retail investors in the UK?  We live in (mad) financial times.
 These “high risk products” are
called Traded Life Policy Investments (TLPIs). Yes, risk management is veryimportant. The risk is that policyholders will not die the day we wantthem to die.Investorshope to benefit by buying the right to the insurance payoutsupon the death of the original policyholder.
 Well, we speak about London, let’s see the interesting definition of 
theshadow banking sectorfrom Mr Paul Tucker, Deputy Governor forFinancial Stability at the Bank of England, (speaking at the EuropeanCommission High Level Conference, Brussels, 27 April 2012).He said that
“shadow banking” is not the same as the non
-bank financial sector.For example, the vast majority of hedge funds are not shadow banks,
and don’t trade in the credit markets or especially illiquid markets.
  Also,non-bank intermediation of creditis not a bad thing in itself.Indeed, it can be a very good thing, helping to make financial servicesmore efficient and effective and the system as a whole more resilient.But, as we know from this crisis and from previous ones, true shadow banking can weaken the system.Regulatory arbitrage, which is always with us, can distort and disguise channels of intermediation.Shadow banking comes inlots of shapes and colours.There aredegrees  to which any particular instance of shadow banking replicates banking.
 
 The liquidity offered by some shadow banks relies pretty well entirely,and more or less openly, on committed lines of credit from commercialbanks.In these cases, theliquidity insurance offered by the shadow bank is
“derivative”;
there is a real bank in the shadows.Butfor other shadow banks, liquidity services are offered without such back-up lines.In those cases, claims on the shadow bank have, in effect,become a monetary asset. Examples probably include money marketmutual funds and an element of the prime brokerage services offered bysecurities dealers to levered funds.Interesting!

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