111–120 of 184 posts
Earlier quoted context omitted.
Or an actual real bank...
Most banks are relatively okay now , as by now they have already spent thousands of man-hours to migrate their trades. The transition has been a major talking point for the last two years.
I was working at an investment bank (as a developer) when this scandal hit. My entire department was laid off as a result. Not because we were involved or complicit in the scandal, but because the scandal indirectly caused a big financial hit to the bank and we were part of the cost cutting measures. It was a traumatic and tragic moment for me at the time. But in hindsight it was the event that lead to my eyes being…
>we were part of the cost cutting measures. >the event that lead to my eyes being opened to the world of Silicon Valley tech companies I found that being aware of whether you will be part of the cost center or profit center in a company is very useful when deciding where you should work.
The problem with most tech companies these days is they dont make profits.
"Libor is survived by several successors, each making a claim to its crown. The Secured Overnight Financing Rate, or SOFR — a rate produced by the Federal Reserve Bank of New York that is based on transaction data, not estimates — has already been embraced by many banks in the United States and has the endorsement of the Fed. Others, like the American Interbank Offered Rate, or Ameribor, and the Bloomberg Short-Term Bank Yield Index, or BSBY, have their adherents. In Britain, the Sterling Overnight Index Average, or SONIA, seeks to inherit Libor’s place as the do-it-all benchmark."
My only remaining question is, since we used to have a single reference rate, and now we have multiple reference rates - how does this impact existing contracts?
I was working at an investment bank (as a developer) when this scandal hit. My entire department was laid off as a result. Not because we were involved or complicit in the scandal, but because the scandal indirectly caused a big financial hit to the bank and we were part of the cost cutting measures. It was a traumatic and tragic moment for me at the time. But in hindsight it was the event that lead to my eyes being…
For derivatives, it wasn't so bad because ISDA (the industry association for derivatives users) published an IBOR fallback protocol which counterparties could adhere to. All contracts between two adherents to that protocol were deemed amended so as to include market-standard fallback language.
There was no such neat solution for bonds and loans, so banks had to look at them pretty much one-by-one. The economic and legal terms of the amendments required to replace LIBOR were mostly standardised across the market, so they typically didn't involve any tough negotiation - the issue was more the operational burden of amending many thousands of contracts.
In a simple bilateral loan the process is straightforward: bank reaches out to borrower, borrower and bank sign amendment agreement, done. But bonds which are widely held through clearing systems posed a much bigger problem, because material amendments typically need the consent of at least half (or sometimes two thirds or three quarters) of bondholders.
A single bond issuance can be held by thousands of (ultimate) investors, and ownership can be heavily intermediated: an investor might hold her bonds in an account with her broker, that broker might hold the bonds in an account with a custodian, that custodian holds them in an account with a securities depositary, etc. The issuer does not know who the ultimate holders are; it can only send out a consent solicitation through the clearing systems. Even if that solicitation manages to work its way through the ownership chain to the end investors, most of them will probably just ignore it.
So a lot of consent solicitations fail even for routine, unobjectionable amendments. When this happens (or is likely to happen), issuers need to look at other ways to push the amendments through, like asking the security agent (who basically represents the bondholders as a class) to consent to the amendment without first receiving the consent of the underlying bondholders. Most deal documents allow security agents to do this where the proposed amendments are not materially prejudicial to bondholders, but security agents are very reluctant to make that determination.
Earlier quoted context omitted.
>we were part of the cost cutting measures. >the event that lead to my eyes being opened to the world of Silicon Valley tech companies I found that being aware of whether you will be part of the cost center or profit center in a company is very useful when deciding where you should work.
This one really hit me personally. When I was young, my father advised me that in my career I should stay "close to the money". It made a lot of sense, and I tried, but I ended up moving increasingly into financial services technology. Now, 25+ years later, I am the head of technology (C-Level) for a large financial services firm (Fortune 200). I report to the CEO, I lead thousands, I am handsomely compensated, but I…
When I first heard about LIBOR in 2002, I was surprised that the number is just based on a survey of bankers. Surely there would be accuracy issues with that? But at that time I was young and had no finance experience, so though that the adults in the room knew best. Turns out not! I don't think the base problem is that people shaded their numbers one way or another, it's that the system is designed wrong.
Traditionally the banking community of London was super close and built on reputation. People do huge deals based on people's word and people were expected to be honorable. That might sound naieve in the 21st century when global trade is much bigger but it worked for hundreds of years.
Secondly LIBOR really was pretty accurate, people talk a lot about how it could have been manipulated but the evidence is isn't so solid. Yes in aggregate a few bps adds up to a lot of money but for individual parties it doesn't really make a difference.
When I first heard about LIBOR in 2002, I was surprised that the number is just based on a survey of bankers. Surely there would be accuracy issues with that? But at that time I was young and had no finance experience, so though that the adults in the room knew best. Turns out not! I don't think the base problem is that people shaded their numbers one way or another, it's that the system is designed wrong.
The more I've learned of the banking system, the more examples of this I see. It seems that much of the banking system was designed by bottom-line-oriented, non-systems-thinkers, who just wanted an immediate, good-enough solution to a problem. Accuracy, reproducibility, scalability, systemic integrity, and similar concerns often weren't a factor.
That's pretty much everyone everywhere in every industry. LIBOR really was good enough which is why it lasted.
Earlier quoted context omitted.
>we were part of the cost cutting measures. >the event that lead to my eyes being opened to the world of Silicon Valley tech companies I found that being aware of whether you will be part of the cost center or profit center in a company is very useful when deciding where you should work.
This one really hit me personally. When I was young, my father advised me that in my career I should stay "close to the money". It made a lot of sense, and I tried, but I ended up moving increasingly into financial services technology. Now, 25+ years later, I am the head of technology (C-Level) for a large financial services firm (Fortune 200). I report to the CEO, I lead thousands, I am handsomely compensated, but I…
I was working at an investment bank (as a developer) when this scandal hit. My entire department was laid off as a result. Not because we were involved or complicit in the scandal, but because the scandal indirectly caused a big financial hit to the bank and we were part of the cost cutting measures. It was a traumatic and tragic moment for me at the time. But in hindsight it was the event that lead to my eyes being…
Let me guess. Now you think that the pinnacle of a SWE career is working at Google it Facebook, right?