Background: Exposure Monitoring is a key component of risk management for banks and lending institutions. At an enterprise level a bank will decide its risk appetite / risk tolerance. There are various ways in which the risk appetite is inculcated in every action that the bank takes — be it…

Background: This article is a part of the series of articles pertaining to regulatory capital charge for banks that I had published a couple of months back which spoke about the technique for computation of Capital charge for fixed income products And also the methodology to calculate the Capital Charge…

For any business, capital happens to be key component from the point of view of growth and stability. A bank that is well capitalized is better positioned to pursue new business opportunities, enhance customer experience, and most importantly stay robust in times of market stress; all of which leads to…

Globally, the options market is huge. Options trade on both: Organized Exchanges and the much bigger Over the Counter (OTC) market. Further, this derivative product can have any asset as the underlying. When I say any asset, it means that once the counterparties to the options contract agree on using…

For any business, capital happens to be key component from the point of view of growth and stability. An organization that is well capitalized is better positioned to pursue new business opportunities, enhance customer experience, and most importantly stay robust in times of market stress; all of which lead to…

Introduction: Bonds (fixed income) are an important asset class in the market. Bonds are used by market participants for various reasons, to name a few: a. Trading b. Risk Management c. Regulatory requirement for banks d. Safer investments e. Asset Liability Management f. Source of Capital for the firm etc. Talking…

Overview An economy has certain sectors that are considered as its centerpiece, and a large part of economic activities are driven by these sectors. One such key sector is the banking, financial services and insurance (BFSI) industry. BFSI sector finds its presence in most activities that happen around us. For example…

Primer to risk in capital markets: Risk by definition is the uncertainty in any transaction. Risk may manifest itself in multiple forms including market risk, credit risk, operational risk, legal & compliance risk etc. While, a few of these types are quantitative risks, other tend to a more qualitative interpretation. Over the years, banks and financial…

Options form an important part of the portfolio of banks, financial institutions and investors. Traded on regulated Exchanges as well as the Over-the-Counter (OTC) market, they are popular derivative products which serve multiple purposes including: hedging, speculation or arbitraging. Plain vanilla options are primarily classified as Call and Put options…