With over 350 attendees, Risk magazine's annual risk and derivatives summit was certainly an event to remember packed with individual sessions, panel debates and case studies all comprised within a pre-summit day with two streams a five streamed main agenda and a post-conference seminar day too!
Highlights of the event included:
- A fascinating insight into the risk management challenges for asset managers and fund sponsors presented in a keynote address given by Sung Cheng Chih, Director - Risk and Performance Management, GOVERNMENT OF SINGAPORE.
- Chief Risk Officer’s roundtable featuring: Tim Barker, Markit, Mark Griffin Genworth Financial, Colin Church, EMEA Citigroup, Kenneth Winston, Morgan Stanley Investment Management and Kanwardeep Ahluwallia, Bear Stearns International who debated how is risk management being influenced by the regulatory environment.
- A keynote session on the examination of the Reinsurance Directive: a European solution for a global strategy given by Peter William Skinner, Member of the European Parliament, COMMITTEE OF ECONOMIC AND MONETARY AFFAIRS.
- A controversial look at the effect of regulation on risk management through a keynote presentation given by Jerry del Missier, head of rates and private equity and regional head of Europe at Barclays Capital. “We’re at risk of rolling back 20 years of progress…We’re no closer to a single European financial system than we were five years ago”.
- A roundtable with the CROs of hedge funds on how does risk management in hedge funds differ from risk management in other financial institutions? With contributions from: Frederic Berney, Executive Director and Chief Risk Officer, HARCOURT INVESTMENT CONSULTING AG; Luca Celati, Chairman and Chief Investment Officer, ABRAXAS CAPITAL MANAGEMENT; Luc Estenne, Chief Executive, PARTNERS ADVISORS S.A.; Richard Szwagrzak, Chief Financial Officer, TRAFALGAR CAPITAL MANAGEMENTLTD.; Subu Venkataraman, Managing Director and Chief Risk Officer, HIGHBRIDGE CAPITAL
- Keynote address: cross-border implementation of operational risk models: the regulatory aspects presented by Michel Martino, Secretary General of the EU Banking Advisory Committee, EUROPEAN COMMISSION
- Plenary address: what's missing from corporate finance risk models? By Alla Gil, Managing Director and the Head of Capital Markets Strategy Group, CITIGROUP
- Traders’ panel debate: are traders too reliant on modelling/procedures? Stephen Blyth, Managing Director, DEUTSCHE BANK; Christian Hille, Trader, International Credit Structuring Group, NOMURA INTERNATIONAL PLC; Philippe Jeanne, Head of Eastern Europe, Middle East, Africa and Brazil Trading, CALYON
- Plus the networking - delegates were able to relax at the cocktail reception complete with live jazz band accompaniment, whilst watching the sun go down on the cote d’azur!
The event is covered in Risk magazine's daily news alert. See below for the articles that ran on the day of the event:
- European financial integration in peril, says BarCap's del Missier
- Hedge fund risk managers dispute need for transparency
- Derivatives business must better state its case, says del Missier
European financial integration in peril, says BarCap's del Missier
28 April - The integration of Europe's financial markets faces an acute danger from resurgent nationalist self-interest among its regulators, Barclays Capital's head of rates and private equity and regional head of Europe, Jerry del Missier, told delegates attending Risk's Global Risk Management Summit in Monte Carlo today.
“We’re at risk of rolling back twenty years of progress,” said del Missier, using his keynote address to highlight his fears.
“I’m a bit worried about what I see in Europe,” he said. “We’re moving away from a pan-European way of doing things to an environment where national interests are filtering through. We’re no closer to having a single European financial system than we were five years ago.”
Using the example of the introduction of International Accounting Standards in January this year, he said it had “noble aims" but "counterproductive impacts". "Decisions will now increasingly be driven by accounting and not profitability,” he said.
Del Missier's comments echo those made by a panel of risk managers yesterday, who said the amount of new regulation has reached an unprecedented
Patrick Fletcher, risk.net
Hedge fund risk managers dispute need for transparency
28 April - A panel of hedge fund risk officers disputed the need for increased transparency in the industry today during a debate held at Risk’s Global Risk Summit in Monte Carlo.
“Full transparency is not what we need. We do need risk aggregation reporting, but not transparency at a position level,” said Luc Estenne, chief executive of Partners Advisors. Subu Venkataraman, chief risk officer at Highbridge Capital, added: “To me, telling the client is a trade off. As a risk manager, you constantly confront the problem of wanting to tell the client what is driving returns, without ‘throwing the baby out with the bath water’, so to speak.”
Frederic Berney, chief risk officer of Harcourt Investment Consulting, believes this different approach to risk management and transparency has something to do with the innate differences between risk management practice at investment banks and hedge funds. “Compare risk management in a fund to an investment bank. At the fund, you’re more involved in the decision-making process. I have to understand the risk, which is certainly different to my experience in a bank,” he said.
At the same time, others feel that some risk management practices demand by investors are cosmetic and pointless. “Frankly it’s disheartening to have a conversation with an investor that boils down to ‘are you checking the right boxes?’" said Luca Celati, chairman and chief risk officer at Abraxas Capital Management. ”That is audit,” he added.
“In a hedge fund, there is no such thing as a daily risk report that will be of any use to an investor,” Berney added. “Hedge funds are not transparent, but it’s more a question of liquidity than transparency. And there is a misunderstanding between transparency and liquidity,” he said.
Patrick Fletcher, risk.net
Derivatives business must better state its case, says del Missier
28 April - The global derivatives industry must make a concerted effort
to educate people
about the usefulness of derivatives and deal with misconceptions, Jerry
del Missier, head of rates and private equity and regional head of Europe
for Barclays Capital, told delegates attending Risk’s Global Risk
Management Summit in Monte Carlo. “We must embrace transparency as
an industry,” he said.
Del Missier highlighted the misperception of derivatives in the mainstream media, such as the representation of the Enron failure as a derivatives-based problem rather than a breakdown in corporate governance. “We need to focus on pushing back those misperceptions,” he said, adding that the industry has “an obligation to educate analysts and the press at large”.
To achieve this transparency, however, some dealers will have to take strategic risks, such as introducing electronic derivatives trading, which has created enhanced price transparency for interest rate swaps and credit default swaps (CDS). “Electronic trading was initially resisted; the increased transparency was thought to lower profitability,” said del Missier. “But more people are now accessing the market because they can see the costs,” he added.
He also believes there will be a steady migration of other products towards electronic trading platforms, which will promote transparency in other areas. “Once you start with [interest rate] swaps and CDS, the benefits of the more exotic products will be seen in the face of greater transparency. The focus of mark-to-market calibrations will help drive this,” he said.
It may also help to highlight some of the issues facing the industry, which may not become apparent until it is too late. Specifically, he mentioned the problem of unsigned confirmations in the credit derivatives market, which grew out of the sheer success of the business. Barclays Capital is participating in a number of industry initiatives to try and rectify the problem, such as Swapswire.
Patrick Fletcher, risk.net
