Should a lender of last resort lower interest rates to near zero in the hope that liquidity will drown systemic sorrows? Bagehot argues for a contrary approach. The interest rates for loans made to desperate borrowers should be high. “This will operate as a heavy fine on unreasonable timidity, and will prevent the greatest number of applications by persons who do not require it. The rate should be raised early in the panic, so that the fine may be paid early…."

The phrase “hybrid pension system,” as you might expect, refers to systems that can be categorized neither as defined contribution nor as defined benefit simply. This may involve for example risk sharing amongst employees, within or between generations of recipients, in the context of a collective defined contribution (CDC). The essential argument of this study, by Samuel Sender, Applied Research Manager at EDHEC, is that demographics will push both DC and DB plans to hybridize.

by Doug Friedenberg We had the good fortune whilst we were in London to make the acquaintance of Nicolas Clavel, chief investment officer of Scipion Capital, a hedge fund that invests in financing imports and exports.  Not just any imports and exports, mind you. Imports and exports of commodities related to Africa. We asked Nicolas about [...]

New columnist Charles Skorina interviews Peter Stein, veteran alternative investments professional.

By Ron S. Geffner, Partner, Head of Financial Services, Sadis & Goldberg LLP On April 5, 2012, President Obama signed the Jumpstart Our Business Startups Act, H.R. 3606 (“JOBS Act“). The JOBS Act requires the Securities & Exchange Commission (“SEC“) to revise existing rules to implement many of the provisions of the JOBS Act. This article [...]

Quite aside from the neat through-the-planet short-cuts they might allow: how fast is a neutrino? This turns out to be a very controversial matter. Last year, scientists working at CERN set off weeks of feverish speculation with reports indicating that neutrinos travel faster than light. If I understand this at all, it would mean if true that a New York or London trader could in theory accept a Tokyo trader’s offer before the offer had actually been made. Now that would be the ultimate in HFT: negative latency.

The issue of restitution for loss has been very much on the midns of the asset management industry over the last four years. As EDHEC observes in its new report on non-financial risks, “The collapse of Lehman not only [showed] the world that a systemically large institution could fail; it put … the question of international cooperation and rules harmonisation on centre stage. Restitution may be rendered impossible, at least under reasonable delays, in extreme cases such as the default of an institution – reputable as it might have been.”

Awkward and unexpected results from insolvency are among the legal risks to which inadequate financial market infrastructures (FMIs) can lead. There are also credit risks, liquidity risks, and in a future time of crisis or stress: contagion.

From Lynne Feldman, Director of Marketing at the CAIA Association: John Ruffolo, Chief Executive Officer of OMERS Ventures and Head of Knowledge Investing for OMERS Strategic Investments, discusses opportunities now and in the future for private equity, venture capital, and the benefits of a direct investing approach. Mr. Ruffolo spoke with Wendy L. Coleman, CAIA, CFA, [...]

Kathryn Kaminski tackles the tough question of volatility and how it affects managed futures.

The Goldstein case has arisen because Massachusetts prohibits an issuer of unregistered securities sold only to sophisticated investors from running a website accessible to not-so-sophisticated folks, or from contacting them with emails in response to interest expressed on the website. The trial court upheld the law and regulation at issue against Bulldog’s first amendment arguments, finding that the scheme was justified because it was narrowly tailored to the state’s interest in protecting the integrity of the capital markets. The state's Supreme Judicial Court agreed, offering a somewhat surprising and indirect explanation. It is the SJC decision that Bulldog wants the U.S. Supreme Court to overturn.

Any quantitative strategy is susceptible to being reduced to an index, and along with this, to transparency and routine. Once this happens, that "alpha" becomes "beta," and the 2 + 20 fees are no longer available. A manager in search of alpha will have to move beyond that strategy, peeling away that layer of the onion and going to a deeper, not-yet-indexable, strategy.

"Over the next decade, impact investment will constitute an investment opportunity of between US$400 billion and US$1 trillion, generating profits of between US$183 billion and US$667 billion..."

What was clear after even Level 1 adoption last year was that the AIFMD would require managers to disclose a good deal more to their home market authorities than has been their wont; that leverage shall be closely monitored once it is deemed to have been employed “on a substantial basis at the level of the AIF,” and leverage may well be limited outright; further, it was clear that depositary institutions will be saddled with new liabilities. These bullet points might be implemented with various degrees of rigidity, and that is the continuing subject of debate.

"This industry will perhaps never really shake off the aura of secrecy and inevitable rumor mill, but investors and risk managers need to really start to judge funds on the metric against which the funds judge themselves: performance."