All GLG News Analyses Filed Under: Exchange & Other Regulatory Bodies

Anthony CatanachDirectorDI2 Associates, LLC

What the Former SEC Chairmen Missed...

November 19, 2009

Analysis of:Don't Let Banks Hide Bad Assets | online.wsj.com

Conceptually, the arguments favoring fair value accounting are sound and quite appealing. Unquestionably, financial statement users will benefit from data about how a company’s assets and liabilities change in value during a reporting period. However, there are two major issues associated with fair value reporting that accountants, investors, legislators, and regulators need to address in the wake of our most recent financial crisis.

Why Not? What Would Happen If We Did?

August 23, 2009

Analysis by: GLG Expert Contributor

Analysis of:Transparency in Derivatives | norris.blogs.nytimes.com

The first question that comes to mind is “What are they tiring to hide and why”? Under ordinary circumstances when two or more parties are conducting any type of financial transaction for as little as one cent up to Billions of Dollars, Yen, Euro’s or any other currency, transparency is provided through various documents. But, in the financial industry non disclosure is the standard operation procedure.

Nitish GroverPrincipal, OwnerNitish Grover and Associates

The Fed, The Economy, Accounting and Regulation - Changing Landscape for a New Century

June 24, 2009

Analysis of:US Groups Face Regulatory Revamp | www.ft.com

Banks, Insurance companies, Investment bankers, Hedge funds - they are all up against the wall facing new regulatory pressures. The Alan Greenspan era is over. Alan Greenspan was supposed to have a magic wand with which nothing went wrong. Its like Napoleon asking for a few lucky generals - Greenspan was one such in the financial world of today. Bernanke obviously is not. In this analysis I look at some of the aspects of the changing regulatory landscape.

Bubbleburst of derivative market and its consequences

November 3, 2008

Analysis by: GLG Expert Contributor

Analysis of:The $1,300 Trillion Derivative Market | maxkapital.blogspot.com

The derivative market has grown to such a massive proportion due to the speculative activities and the intention of the players to make quick profit.  The market operation in derivatives requires only the margin money which is about one tenth of the value of underlying security, the expansion of credit in the derivative market depends on the liquidity flow and each operator's ability for risk taking.  However, simultanous credit expansion in the economy, flow of funds from productive investment to speculative operations, and the reckless operations of several big players had fuelled the expansion of derivative market out of proportion, and its ultimate collapse.   The operators inject more and more funds into the derivative trading, which reduces the availability of funds/credits in other economic areas, and the failure of some of the operators triggers the fire, and the collapse of the market, effecting normal economic activities badly. 

Derivative Market Risk - Bad But Not End Of World Scenario

October 23, 2008

Analysis by: GLG Expert Contributor

Analysis of:The $1,300 Trillion Derivative Market | maxkapital.blogspot.com

This post looks at the size of the derivative market and seeks to understand the economic exposure to the financial system from risks embedded in this market.

Paul MillerProfessorREGENTS OF THE UNIVERSITY OF COLORADO

Exacerbation or exposé?

October 13, 2008

Analysis of:Alls Fair: The Crisis and Fair-Value Accounting | www.cfo.com

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Method of Valuation of Assets - How useful in preventing the turmoil.

October 10, 2008

Analysis by: GLG Expert Contributor

Analysis of:Alls Fair: The Crisis and Fair-Value Accounting | www.cfo.com

In the present context, Mr. John McCain rightly says that "Fair value rules may be exacerbating the credit crunch", since the market reacts and stabilizes on sentiments. While strictly applying the valuation rule of mark to market accounting, the assets held by the investment companies will be vaued at current market rates which has already fallen considerably.  For those assets, which are valued at mark-to-model accounting would still find a dilemma in its valuation, and if the assets are valued at distress sale price, it would take several companies towards failure, as the investors will line-up for the redemption of their investment at throw-away prices, which will automatically reduce the possibility of survival of several investment banks.   Those "sound" assets that had suffered undue valuation may be allowed to be suspended, so that there is always a possibility of better recoveries, but liquidity is the factor to be considered in such a situation. 

Robert McCabePartnerMcCabe & Associates, PhDs

More Attacks on Fair Value

October 3, 2008

Analysis of:Alls Fair: The Crisis and Fair-Value Accounting | www.cfo.com

Why does the SEC not enforce the rule against "naked short selling?"

How to eliminate souvereign funds!

May 12, 2008

Analysis by: GLG Expert Contributor

Analysis of:The invasion of the sovereign-wealth funds: The biggest worry about rich Arab and Asian states buying up Wall Street is the potential backlash. | www.economist.com

1. Souvereign funds based on the undue accumulation of unproductive foreign reserves can only exist in a mercantilist system of fixed or pegged exchange rates. 2. By moving towards a complete floating exchange rate system, foreign reserve accumulations will be driven to zero and, ergo, also the souvereign funds. 3. So, instead of regulating souveraeign funds, create free-working futures markets on the pegged exchange rates in Chicago and London and the "invisible hand" of goods and services arbitrage will force the pegged currencies to become floating and the souvereign funds will disappear like snow before the sun.

Epistemological Risk or Why the SEC Can't Determine What Fair Value Is

April 14, 2008

Analysis by: GLG Expert Contributor

Analysis of:SEC fails to douse debate over ‘fair value’ | www.ft.com

Investors and traders need "buy," "hold" and "sell: signals based on intrinsic value models, e.g., bond, stock, futures, options, swap, real estate, etc. models, but there is no consensus, even among expert economists, what are "fair" intrinsic value models, although a minority consensus is emerging, based on "risk-neutral pricing" models. But even "risk-neutral pricing" experiences epistemological problems regarding the measurement, modeling and analysis of empirical risk. Some classical economists contend that "the market is always right" and, therefore, that the fair value is what the market determines it to be But this assertion presumes complete and efficiently working markets. When markets are incomplete (e.g. often real estate markets lack buyers or sellers during some periods in time) or when they operate inefficiently (most of them do in some form or another), aka non-neutral persistently, there are opportunities for arbitrage, i.e., trading.

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