SEC proposes sweeping new liquidity risk management rules for mutual funds and ETFs

2016 ◽  
Vol 17 (1) ◽  
pp. 74-82 ◽  
Author(s):  
Michael Rosella ◽  
Bill Belitsky ◽  
Alexandra Marghella
Keyword(s):  
Risk Management ◽  
Mutual Funds ◽  
Financial Services ◽  
Management Practices ◽  
Liquidity Risk ◽  
Securities And Exchange Commission ◽  
Exchange Traded Funds ◽  
Content Type ◽  
Asset Value

Purpose To discuss a September 22, 2015 Securities and Exchange Commission (“SEC”) proposal for a set of broad and sweeping rules mandating that open-end mutual funds and exchange-traded funds (“ETFs”) develop and implement formalized and written liquidity risk management programs (“LRMPs”). Design/methodology/approach Describes the purpose of an LRMP, the six “liquidity buckets,” the nine factors that must be considered in determining an instrument’s liquidity, the need to continuously monitor the liquidity of each position, the set of eight mandated factors used to assess a fund’s liquidity risk, the requirement for a fund to define a three-day liquid asset minimum, the role of the fund’s board of directors, a separate rule permitting “swing pricing” to adjust net asset value to take into account the costs of unexpected redemptions or cash infusions, disclosure requirements, and proposed compliance dates. Findings In proposing this new program, the SEC stated that its goal was to enhance effective liquidity risk management practices by funds and thereby reduce the risk that funds will be unable to meet redemptions under reasonably foreseeable stressed market conditions. Originality/value Expert guidance by experienced financial services lawyers.

Determinants of voluntary formation of risk management committees

2014 ◽  
Vol 29 (7) ◽  
pp. 649-671 ◽  
Author(s):  
Nkoko Blessy Sekome ◽  
Tesfaye Taddesse Lemma
Keyword(s):  
South Africa ◽  
Risk Management ◽  
Corporate Governance ◽  
Management Practices ◽  
Emerging Economy ◽  
Board Structure ◽  
Content Type ◽  
Listed Firms ◽  
Practical Implications

Purpose – The aim of this paper is to examine the nexus between firm-specific attributes and a company’s decision to setup a separate risk management committee (RMC) as a sub-committee of the board within the context of an emerging economy, South Africa. Design/methodology/approach – The authors analyse data extracted from audited annual financial reports of 181 non-financial firms listed on the Johannesburg Securities Exchange (JSE) by using logistic regression technique. Findings – The results show a strong positive relationship between the existence of a separate RMC and board independence, board size, firm size and industry type. However, the authors fail to find support for the hypotheses that independent board chairman, auditor reputation, reporting risk and financial leverage have an influence on a firm’s decision to establish RMC as a separately standing committee in the board structure. The findings signify the role of costs associated with information asymmetry, agency, upkeep of a standalone RMC, damage to the reputation of directors and industry-specific idiosyncrasies on a firm’s decision to form a separate RMC. Research limitations/implications – As in most empirical studies, this study focuses on listed firms. Nonetheless, future studies that focus on non-listed firms could add additional insights to the literature. Investigating the role of firm-specific governance attributes other than those considered in the present study (e.g. gender of directors, ownership structure, etc.) could further enhance the understanding of antecedents of risk-management practices. Practical implications – The findings have practical implications for the investment community in assessing the quality of risk management practices of companies listed on the JSE. Furthermore, the results provide insights that are potentially useful to the King Committee and other corporate governance regulators in South Africa in their effort to improve corporate governance practices. Originality/value – The present study focuses on firms drawn from an emerging economy which has profound economic, institutional, political and cultural differences compared to advanced economies, which have received a disproportionately higher share of attention in prior studies. Thus, the study contributes additional insights to the literature on corporate risk management from the perspective of an emerging economy.

SEC approves new continued listing standards for ETFs

2017 ◽  
Vol 18 (3) ◽  
pp. 21-25
Author(s):  
Adam Teufel ◽  
Christopher J. Geissler
Keyword(s):  
Financial Services ◽  
Investment Decision ◽  
Securities And Exchange Commission ◽  
Exchange Traded Funds ◽  
Law Firm ◽  
Content Type ◽  
Securities Exchanges ◽  
Rule Changes ◽  
Significant Compliance ◽  
Key Industry

Purpose To introduce and analyze recent amendments to the rules of three US securities exchanges to add specific continued listing standards applicable to exchange-traded funds (ETFs). Design/methodology/approach Provides an introduction and summary overview of the topic, summarizes the scope of the rule changes, discusses the industry reaction to the proposed rule changes and the regulator’s response, notes the applicability of the rule changes to ETFs relying on their own fund-specific regulatory relief, and identifies compliance dates. Findings Each of three US securities exchanges filed separate proposals to amend their listing standards to add specific continued listing standards for ETFs. Notwithstanding various concerns expressed in comment letters from key industry participants, by March 2017 the Securities and Exchange Commission (SEC) approved all three proposals in substantially the form proposed. Practical implications ETF sponsors should note that significant compliance enhancements may be required to ensure proper and continuous testing of securities in an ETF’s underlying index and/or portfolio in lieu of testing for compliance solely at the time of initial listing or at the time of an investment decision. The rule changes are scheduled to take effect by October 1, 2017. Originality/value Practical analysis from a premier financial services law firm on the issues presented by the ETF rule changes.

SEC fines alternative mutual fund adviser for improper handling of fund assets

2015 ◽  
Vol 16 (2) ◽  
pp. 35-37
Author(s):  
Michael McGrath ◽  
Pablo J. Man
Keyword(s):  
Mutual Funds ◽  
Mutual Fund ◽  
Financial Services ◽  
Securities And Exchange Commission ◽  
Investment Strategies ◽  
Investment Company ◽  
Content Type ◽  
Enforcement Action ◽  
Policies And Procedures ◽  
Repurchase Agreements

Purpose – To explain that the Securities and Exchange Commission (“SEC”) brought and settled charges against an investment adviser to several alternative mutual funds alleging, among other charges, failure to comply with the custody requirements of the Investment Company Act of 1940, as amended (the “1940 Act”). Design/methodology/approach – To explain that the Securities and Exchange Commission (“SEC”) brought and settled charges against an investment adviser to several alternative mutual funds alleging, among other charges, failure to comply with the custody requirements of the Investment Company Act of 1940, as amended (the “1940 Act”). Findings – The enforcement action serves as an important reminder for the growing number of advisers of alternative mutual funds to be mindful of specific restrictions and obligations when managing registered funds that do not apply to private funds and separate accounts. This action shows that the SEC will bring charges even when the alleged violations do not result in harm to investors. Practical implications – The 1940 Act, the rules thereunder, and SEC staff guidance relating to alternative investment strategies are complicated and not intuitive. These standards can constrain a registered fund’s ability to employ options, futures, swaps, prime brokerage, repurchase and reverse repurchase agreements, enhanced leverage through securities lending, and other facilities. As the SEC continues to examine alternative mutual funds, advisers to these funds should remain cognizant of the obligations arising under the 1940 Act and the implementation of fund policies and procedures. Originality/value – Practical guidance from experienced financial services lawyers.

scholarly journals Walking into the room with IP: exploring start-ups’ IP licensing strategy

2017 ◽  
Vol 55 (6) ◽  
pp. 1209-1225 ◽  
Author(s):  
Paola Belingheri ◽  
Maria Isabella Leone
Keyword(s):  
Management Practices ◽  
Management Strategies ◽  
Innovation Process ◽  
Securities And Exchange Commission ◽  
Content Type ◽  
Start Up ◽  
The Us ◽  
Start Ups ◽  
Ip Management

Purpose The purpose of this paper is to explore the trends and features of one of the most visible intellectual property (IP) management practices, IP licensing, in the context of start-ups, accessing external technology at the outset of their lifetime. In particular, it compares start-ups and incumbent firms, in terms of licensing strategy pursued, role of in-licensed technologies relative to the internal innovation process and successively implemented IP management strategies. Design/methodology/approach A mixed-method study is presented using quantitative data on licensing deals from the US Securities and Exchange Commission and cases on start-up companies involved in inbound technology licensing. Findings Evidence indicates start-ups have different IP licensing strategies than incumbents, and their successive IP management strategies are more flexible than for incumbents. Originality/value The authors shed light on IP licensing, which is gaining momentum in open innovation (OI) settings, in an understudied segment of SMEs, namely, start-ups. The authors display interesting evidence of the portion of start-ups that license-in from external companies, indicating that this practice is more widespread than literature would suggest; the authors demonstrate that licensing-in is a valuable strategy for start-up companies, possibly providing additional channels for acquiring know-how on the market. The authors therefore contribute to, and advance, entrepreneurship, IP and OI literature.

scholarly journals Liquidity Risk Financial Disclosure: The Case Of Large European Financial Groups

2011 ◽  
Vol 7 (7) ◽  
Author(s):  
Abderrahim Boussanni ◽  
Jean Desrochers ◽  
Jacques Préfontaine
Keyword(s):  
Risk Management ◽  
Financial Services ◽  
Management Practices ◽  
Liquidity Risk ◽  
Cash Flows ◽  
Financial Disclosure ◽  
Annual Reports ◽  
Foreign Exchange Risk ◽  
Exchange Risk ◽  
Financial Groups

This paper examines the informational content and the usefulness of financial groups' liquidity risk public financial disclosure. This theme is of interest since the factors that influence the level of liquidity risk are complex, and they strongly interact with other originating factors from related financial risks. These characteristics have made it more difficult for financial services industry regulators and private sector ERM experts to recommend a practical and well defined framework for the management and subsequent public disclosure of liquidity risk financial information. The results of the study are based on an in-depth content analysis of the Annual reports (2004) published by twenty-one of Western Europe's largest financial groups using the liquidity risk management factors proposed by the Basel Committee on Banking Supervision and its Joint Forum (2003, 2006). The results of the study revealed a disparity between commercial banks from the same or different European countries as to the level and extent of liquidity risk public financial disclosure. The same was also found for the description of the risk management structures and the accompanying explanatory comments on liquidity risk management practices. In addition, the study documented the overall scarcity of quantitative data which supports qualitative discussions on liquidity risk management. There were also areas of more complete financial disclosure that apply to factors explaining the origins of cash flows, and the explanations and discussion about foreign exchange risk management.

Cybersecurity and the new firm: surviving online threats

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Vallari Chandna ◽  
Praneet Tiwari
Keyword(s):  
Risk Management ◽  
Data Privacy ◽  
Small Firms ◽  
Management Practices ◽  
Privacy Management ◽  
Privacy Risk ◽  
Entrepreneurial Ventures ◽  
Content Type ◽  
New Firm ◽  
Established Firms

Purpose Nascent firms and startups are often subject to challenges that their more mature counterparts can avoid. While cybersecurity is an issue that all firms contend with, it is especially challenging for new entrepreneurial ventures who lack the resources and capabilities of established firms. The purpose of this paper is to seek to delve deeper into the cybersecurity and risk management needs of small firms and startups. Design/methodology/approach Extant literature and available tools are explored to develop a usable framework applicable to small firms and new entrepreneurial ventures. Findings The liabilities of newness and smallness make entrepreneurial ventures a unique context in which to study the significance of cybersecurity and data privacy risk management. The authors offer an overview of issues and potential solutions relevant to entrepreneurial ventures. Research limitations/implications While offering practical insights, the work is a theoretical framework. The framework will enable researchers to develop more nuanced theory when it comes to cybersecurity and data privacy risk management. Practical implications The framework illustrates four distinct contexts for cybersecurity and risk management when it comes to the needs of small firms and startups. Adoption levels are explained, and small business operators and entrepreneurs can thus use the framework to determine the most appropriate approach for their enterprise. Originality/value The authors develop a framework illustrating adoption of different security and risk management practices by entrepreneurial ventures based on their specific needs and context. The authors thus offer practical solutions for startups and nascent firms regarding cybersecurity and privacy management.

Optimising building performance through integrating risk management and building information modelling during the design process

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Ayman Ahmed Ezzat Othman ◽  
Fatma Othman Alamoudy
Keyword(s):  
Risk Management ◽  
Literature Review ◽  
Case Studies ◽  
Design Process ◽  
Building Performance ◽  
Building Information Modelling ◽  
Content Type ◽  
Information Modelling ◽  
Building Information

Purpose This paper aims to develop a framework for optimising building performance through the integration between risk management (RM) and building information modelling (BIM) during the design process. Design/methodology/approach To achieve this aim, a research strategy consisting of literature review, case studies and survey questionnaire is designed to accomplish four objectives. First, to examine the concepts of design process, building performance, RM and BIM; second, to present three case studies to explain the role of using RM and BIM capabilities towards optimising building performance; third, to investigate the perception and application of architectural design firms in Egypt towards the role of RM and BIM for enhancing building performance during the design process; and finally, to develop a framework integrating RM and BIM during the design process as an approach for optimising building performance. Findings Through literature review, the research identified 18 risks that hamper optimising building performance during the design process. In addition, 11 building performance values and 20 BIM technologies were defined. Results of data analysis showed that “Design budget overrun”, “Lack of considering life cycle cost” and “Inefficient use of the design time” were ranked the highest risks that affect the optimisation of building performance. Respondents ranked “Risk avoid” or “Risk transfer” as the most risk responses adopted in the Egyptian context. In addition, “BIM As Built” was ranked the highest BIM technology used for overcoming risks during the design process. These findings necessitated taking action towards developing a framework to optimising building performance. Originality/value The research identified the risks that affect optimising building performance during the design process. It focuses on improving the design process through using the capabilities of BIM technologies towards overcoming these risks during the design process. The proposed framework which integrates RM and BIM represents a synthesis that is novel and creative in thought and adds value to the knowledge in a manner that has not previously occurred.

The role of big data analytics capabilities in bolstering supply chain resilience and firm performance: a dynamic capability view

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Mohamad Bahrami ◽  
Sajjad Shokouhyar
Keyword(s):  
Risk Management ◽  
Big Data ◽  
Supply Chain ◽  
Firm Performance ◽  
Data Analytics ◽  
Big Data Analytics ◽  
Content Type ◽  
Supply Chain Resilience ◽  
Management Culture

PurposeBig data analytics capability (BDAC) can affect firm performance in several ways. The purpose of this paper is to understand how BDA capabilities affect firm performance through supply chain resilience in the presence of the risk management culture.Design/methodology/approachThe study adopted a cross-sectional approach to collect survey-based responses to examine the hypotheses. 167 responses were collected and analyzed using partial least squares in SmartPLS3. The respondents were generally senior IT executives with education and experience in data and business analytics.FindingsThe results show that BDA capabilities increase supply chain resilience as a mediator by enhancing innovative capabilities and information quality, ultimately leading to improved firm performance. In addition, the relationship between supply chain resilience and firm performance is influenced by risk management culture as a moderator.Originality/valueThe present study contributes to the relevant literature by demonstrating the mediating role of supply chain resilience between the BDA capabilities relationship and firm performance. In this context, some theoretical and managerial implications are proposed and discussed.

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