Tom McCartan

Articles from Tom McCartan

  • DON'T DISCOUNT THE EFFECT OF DISCOUNTING

    Changes to the swap discounting methodology have created an additional risk for many pension schemes, thankfully there is a way to understand and mitigate them. There is a new market standard for discounting swaps. Pre-financial crisis, all interest rate swaps were projected and discounted using a LIBOR curve (the reference rate for swap fixings). Following the crisis, market participants realised LIBOR did not truly reflect a risk-free rate. The significant jump in LIBOR versus Overnight Index Swap (OIS) rates in 2007-8 (see chart) was due to fears over the creditworthiness of banks. ... ..read more
  • CENTRAL CLEARING - COLLATERAL MANAGEMENT FOR THE FUTURE

    The OTC (over the counter) derivative market is due to change significantly in the next couple of years, with a knock-on effect to all pension funds running an LDI strategy. In short, schemes will face a shift in focus from OTC bilateral transactions (between two counterparties) towards centrally cleared transactions, driven by new regulations in Europe (EMIR) and US (DoddFrank Act).   This change is taking place because, in the wake of the Global Financial Crisis, G20 ministers agreed to introduce changes to OTC derivative markets to prevent a repeat of the systemic failure within ... ..read more
  • 2013 THE YEAR OF EMIR

      The year of EMIR, it's finally here.Publication of the regulatory technical standards draws near.Initial margin, reporting, requirement to clear.Act in good time, there'll be no cause for fear.   A number of deadlines for the introduction of EMIR have fallen by the wayside, but ESMA appears now to have set some harder end dates, targeting September 2013 at the earliest, and September 2014 at the latest for the publication of the technical regulatory standards. If this target proves realistic, then 2013 really is the 'Year of EMIR' and pension funds ... ..read more
  • READY OR NOT, EMIR I COME

    In 2013, the European Securities and Markets Authority (ESMA) will introduce new OTC derivative regulations that aim to reduce counterparty credit risk, increase transparency and ensure that, should we ever experience a repeat of 2008’s events, market participants will be protected from counterparty default. The European Market Infrastructure Regulations (EMIR) were introduced in August 2012, but the Regulatory Technical Standards to accompany them have not yet been published, meaning many of the crucial aspects of the regulation are still up in the air. Contrary to what the ti ... ..read more

Tom holds a BSc in Actuarial Science from University College Dublin and is currently studying for the Actuarial Fellowship.

Outside of pensions, you will most likely find Tom on a football pitch (regular or Gaelic) or on the back of a bike.

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