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NEWSLETTER Issue #8 ⎟ December 2015
(¯ˉ`*•. (¯ˉ`*•. WE WISH YOU A WONDERFUL NEW YEAR. MAY 2016 BE YOUR BEST YEAR YET .•*´¯ˉ) .•*´¯ˉ)
Our selection this month:
Risk Analytics Market Expected to Worth USD 9.2bln in 2020⎟ The Basel Committee Restores the Rating Role in Banks’ Credit Risk Assessment⎟ Trade Finance Presents a Low Risk Profile ⎟ New Mortgage Rules in Canada to Deal with a Higher Housing Risk ⎟ Bloomberg Acquires the Barclays’ Risk Analytics and Index Unit. Risk Analytics Market Expected to Worth USD 9.2bln in 2020: A recent research report from MarketsandMarkets predicts the global analytics market to grow from USD 2.74bln in 2015 to USD 9.2bln by 2020. The report relies on extensive interviews of key people such as CEOs, VPs, Directors and Executives. This growth will be fostered by the increasing use of cloud platform. According to the report “The rapid transformation from traditional Business Intelligence (BI) techniques to advanced analytics techniques and massive amount of unstructured data is compelling organizations to use predictive analytics techniques”. The North America region is expected to be the largest revenue generator region for predictive analytics vendors for the next five years. The Basel Committee Restores the Rating Role in Banks’ Credit Risk Assessment: A second and revised December draft from the Basel Committee on Banking Supervision reintroduces the use of external ratings in a “non-‐mechanical manner” into the Banks’ Credit Risk capital framework. The US banking agencies claimed that the propose revision would apply “primarily to large, internationally active banking organizations and not to community banking organizations”. In addition, the regulator also eased proposals that would force banks to consider borrowers’ ability to pay back their loans to set mortgage Risk weights. This method was considered has problematic as property value could decline sharply and Banks in some jurisdictions may have problems seizing properties. Trade Finance Presents a Low Risk Profile: According to a recent ICC trade register survey, export letters of credit are 80% less likely to default than the Moody’s average for all investment grade transactions. The survey indeed shows that export letters have an exposure-‐weighted default rate of 0.02% compared to 0.11% default rate calculated by Moody’s for the investment grade universe. According to ICC, this “strongly reinforces the
hypothesis that trade finance products have a relatively low likelihood of default”.
New Mortgage Rules in Canada to Deal with a Higher Housing Risk: The New Liberal Canadian party announced that lending rules for residential mortgage will tightening setting a minimum down payment of 10% on the portion of home prices over USD 500k. Years of surging prices, combined with a boom in construction and low borrowing costs have drawn the attention of the IMF and the Canadian Housing Agency. The federal government is particularly concerned about soaring real estate prices in Vancouver and Toronto. Bloomberg Acquires the Barclays’ Risk Analytics and Index Unit: In order to focus on its core businesses, Barclays agreed to sell its Risk Analytics and Index Solutions to Bloomberg for about GBP 520mios. The deal is expected to be completed mid-‐2016. A co-‐branding arrangement has been agreed for 5 years between Bloomberg and Barclays on the benchmark indices. According to Mr. Michael Bloomberg “Combining the market-‐leading Barclays indices and their superb team with our data management, analytics and distribution will provide more independence, liquidity and transparency to the marketplace, improve industry innovation and further meet the diverse needs of our global client base”.