All Clear: Clearing Houses Reduce Systematic Risk

In order to understand a clearing houses role in the global financial sector it’s important to start with the basics. Clearing houses are essential to manage and reduce systemic risk in the derivatives market.

What is a Derivative?

A derivative is a contract between two parties and the value is determined on the fluctuations in the value of the asset – the underlier. Examples of underliers could be interest rates, stocks, credit default swaps or goods the most common type of derivative contracts are forwards, futures and swaps.

The benefit of a derivatives contract is that they help improve the risks involved in transactions. The interest rate swaps market is responsible for the vast majority of the other-the-counter market.

Counterparty Systematic Risks

Even when a derivative is performed correctly, the contract leaves its two counterparties at risk for a potential loss in two primary ways:

  • Performance of underlying asset: In some derivatives contract, when one party loses, the other one gains depending on the agreed upon asset.
  • The default of the counterparty: a systematic risk is that the counterparty on the trade will not meet its obligations of the contract by defaulting.

The amount risk can be assumed by the counterparties depends on the structure of the swap or trade. The derivative can be bilaterally negotiated, known as other-the-counter trades between the buyer and seller or it can exchanged through a centralized facility. The over-the-counter trades often expose the counterparties to more risks of defaults than trades through the exchange. However, the other-the-counter trades are able to be customised to meet the specific needs of the counterparties. One way that parties decrease risk through the other-the-counter trade or exchanges is by clearing the trade through a clearing house.

The Role of the Clearing House

Clearing houses are a third party institution that acts as the middleman between the two original counterparties. The clearing house assumes the obligations of both parties and acts as both the buyer and seller. The clearing house offers several benefits to the parties including improved risk management and improved transparency. Through its procedures the clearing house reduces the systemic risk with derivative contracts such as a cross currency swap. The clearing house will assume responsibility of both parties and therefore assumes the risk.  The clearing house also simplifies the management of collateral for all members to help improve risk-management.

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12 August

How to Get Your Fussy Eater to Follow a Healthy Eating Plan

When you realize that you have a fussy eater on your hands, you will have a hard job to get him/her to eat healthily again. A balanced diet is extremely important for your kids health and you need to tackle fussy eating before it gets out of control. There is no use simply turning round one day and throwing away all the junk food and replacing it with fresh fruit and vegetables; a radical change like this will never work.

What you need to do is to get your child involved in your shopping and cooking; children love to feel important and they will love to help you to make some easy recipes for kids. Firstly, introduce your child to healthy eating by looking at some healthy eating books for kids meal ideas; point out all the food groups and just how lovely all the bright colours of the fruit and vegetables look.

Next, you can ask your child to choose one food from each group that he/she would like to try; one per group is plenty and this could involve choosing one fruit, one vegetable, one type of lean meat or fish, and one type of carbohydrate as a treat. Note down their choices and then go to the grocery store with them. Turn healthy eating into a fun game and get your child to hunt down the carrots they chose or the bright red apples.

When you involve your child in your shopping and cooking, they will start to take a more healthy interest in their diet. Each week you could introduce one more healthy food to their diet, slowly but surely cutting down on the high fat and sugary snacks until you find that your child is not just eating a healthy diet but that she loves trying out new recipes for kids and can’t wait for your next trip to the grocery store.

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4 August

Are You Considering the Stamp Duty?

It’s tremendously exciting when you’re ready to Buy a house but it’s also chaotic getting everything in order for your big purchase. In the midst of the excitement and chaos it’s easy to forget a big expense: the stamp duty land tax (SDLT).

The SDLT is a sell-assessed transfer tax on all land transactions and first time and even second or third time house buyers often overlook this tax. Research from TSB found that 25% of people who Find property forget to calculate the expense and 14% of second/third time buyers forget.

Interestingly enough, the numbers show that consideration for SDLT varies from one region. A significant 59% of buyers in East England, 48% in South East and 49% in the South West set aside a specific amount of money for the tax. On the other hand, only 26% of buyers in North West and 25% in Wales consider that they might have to spend an additional 5,000 when they make an offer.

The rates of the SDLT are:

  • Up to £125,000 – 0%
  • From £125,001 to £250,000 – 1%
  • From £250,001 to £500,000 – 3%
  • From £500,001 to £1,000,000 – 4%
  • From £1,000,001 to £2,000,000 – 5%

The average STLD exceeds 5,000, more than 10% of the average deposit and for first time buyers the average cost is more than 15% of their deposit. The cost can be so expensive that 9% of buyers cap their bid to fall into a lower stamp duty bracket.

With more than 36% of first time buyers and 41% of second/third time buyers paying tax from their personal savings and with housing prices surging, it really is something that cannot be overlooked buy homebuyers.

If you have been hunting for Property to rent for a while you know that it can be exhausting, irritating and down right discouraging. You don’t have to find your dream home and then discover that it’s 15% more than you thought.

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31 March

Why Companies Use Interest Rate Swaps

With interest rates having risen out of control with all kinds of borrowing in recent times of recession and turmoil, many companies are finding that the interest alone on their liabilities is more than their income. The same scenario has been noted with housing prices, many people who bought a property at the time of the financial boom opting for a flexible rate mortgage that was predicted by the EURIBOR. So many people simply cannot meet their mortgage repayments, and are finding that their homes are less than the value that they were mortgaged for.

Thankfully, in the investment market, an interest rate swap can ease the pain for many companies, allowing them some breathing time to try and recoup their losses after the market crash. New businesses and firms will often use interest rate swaps as an alternative to refinancing debt as they simply have little or no credit rating; but these OTC clearing swaps are an excellent derivative for small and large firms alike.

Many of the large banks make millions each year by offering to swap their attractive interest rates for that of small companies. As the bank can use the interest rate to their interest on their assets, they can make large profits as well as charging a small fee for the swap. The smaller firm however can use the swaps in essentially the opposite way, lowering high interest rates they have on liabilities to make repayments more possible.

When a company is struggling to pay the interest on their liabilities, there are different derivatives that can be used to try and adjust their debt. However, an interest rate swap is less complex than investing in forwards or futures, the OTC clearing derivative allowing for two parties to swap rate without it having an affect on the paperwork of the business.

An interest rate swap between two parties will be conducted with the use of a clearing house, a contract being drawn up that will stipulate the criteria of the swap. The swap will take place over a specified period of time, and the frequency of coupons will also be laid out. However, as interest rates are purely notional, no cash will change hands with the coupons, allowing the small company to really breathe more easily.

Interest rate swaps are used by companies primarily to less their exposure to the interest rates of today’s volatile markets. By swapping their interest rate payment for a lower one, they can begin to recoup losses whilst the other party makes money on their assets. The swap would seem almost foolproof, but if that were the case then all companies would be using them every day of the week.

What needs to be remembered about interest rate swaps is that the rate charged are decided by looking at the swap curve and the floating LIBOR index. As interest rates are notional and speculative, there is never a guarantee that the future will pan out exactly as expected. For this reason then, when a company hopes to manage its debt or portfolio with interest rate swaps, the use of sound financial advice and a London clearing house are absolutely necessary.

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12 March

Taking Flight, Penguin Algorithm

The internet has become a go to place for most services, and especially major businesses. To some, what they do in the internet is not just a sideline job anymore. Some even make this as the main money making resource. In that case, understanding the culture of the internet is very important.

Google has made changes recently with regards to the algorithms which they are using. These are aimed to cut down on websites which are spamming the system. With their presence, Google’s system becomes slow with these chucking up their system.

Among the three updates that Google made over the summer, one of them was named Penguin. This has become one of the challenges that every SEO agency london currently has.

If you are not well informed about it, Google’s algorithms are being named after animals. It is just like the other two algorithms that they use such as Hummingbird and Panda. However, along with the changes in the algorithms also comes the adjustment. Companies such as SEO Agency London and every Reputation Company Management have to do in order to become successful with the updates.

It is imperative that you know about these updates, especially those who are part of a PPC agency london. In this regard, here is a run down of the changes that each Penguin update has done in the culture of the internet.

First there was Penguin 1, which was released on April 24, 2012. This was the first time that the world knew about this update, and this is also the first time that Google has been aggressive with regards to killing websites which are using aggressive methods of trying to up their site’s ranks. White Hat SEO is not included in this case. As a result of the update, at least three percent of websites were affected.

On May 26, 2012, Google released another update of the Penguin, which was aptly named as Penguin 2. This update targeted websites which have violated Google’s quality guidelines. That is why they reminded webmasters and agencies such as SEO Agency London to provide high quality content. However, this was only a minor update, which affected only 0.1 percent of sites online.

With Penguin 3, Google targeted several languages which are used in the search engine. Again, this is another minor update that only affected approximately 0.3 percent of queries.

On May 22 of this year, the fourth Penguin update, but only the second that covers major changes in its algorithms. In this one, the more spam that a particular language has, the greater the effect it will have on them.

In hind sight, this will be affecting the way some companies will be dealing with their clients, and though Penguin 5 was released, it still runs on the same system. This should give every reputation management company confidence since it gives them more time to adjust.

Google will continue to make adjustments in order to make sure that their system will run better. What web masters can do is adapt, especially that it has become more of a business than just a past time.

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18 February

Data Transfer Using Wearable Technology

Wearable Technology has come a long way since those long cords and large capsule shaped devices. Running technology has evolved and a modern running gadget is nothing short of a wondrous device. Measuring various attributes of your body when you are exercising and displaying them is the primary function of pieces of wearable technology. However, this feature is incomplete on its own. One needs a detailed record of such measurements if the readings need to be illustrated and put to better use. When you run or jog, your focus is on exercising and not on monitoring the measurements. If these measurements are recorded in real time and you cannot access them then a further analysis becomes impossible.

Fortunately, wearable technology doesn’t just record all measurements but it makes sharing of those readings extremely simple and convenient.

Bluetooth

Bluetooth remains to be a very popular data transfer method in wearable technology. Most products found on the Sensoria website have integrated Bluetooth. If you have a computer or any device that can receive data through Bluetooth then you can pair your running gadget and access all the readings that have been recorded through one session or multiple sessions. Some products have a substantial memory to save readings of several days and even weeks. With a running gadget having such storage capacity, you can plug in once a week and transfer all the data.

USB

USB is another popular data transfer method in wearable technology. Some gadgets can be directly plugged into computers or laptops while some can be plugged in using a USB cable. Regardless of how the USB feature is used, it is certainly a handy method of data transfer.

Android / iOS

With the phenomenal popularity and widespread use of smart phones, it would actually be a surprise if wearable technology doesn’t accommodate Android and iOS in particular among other mobile operating systems. Such Running Technology facilitates the pairing of your smart phone or tablet with the running gadget. Some of these gadgets may be connected through Wi-Fi while some have integrated apps which enable data transfer. These gadgets have integrated software that boast of very convenient user interfaces. Not only would these types of software allow you to transfer all the data but you would get an interactive display of the different readings and a guide to understand what the readings actually imply and signify.

Data transfer is one of the most basic features that you would expect from your Running Gadget and you should choose the wearable technology accordingly.

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10 February

Preparing Your Vehicle for Long Term Storage

When you travel overseas or decide to take public transport instead of driving, you may want to consider storing your vehicle in a safe way until you’re ready to start driving it again. Many falsely believe that you can simple park cars in garages and allow it to sit indefinitely until you’re ready to use it. When we discussed the options for storing a vehicle, car service mechanics informed us that allowing a car or truck to simply sit is not a good way to care for it. It can lead to dead batteries and dirty fluids building up. Instead, use these tips if you’re in need of storing a vehicle.

Before you store it, get your vehicle serviced to ensure there aren’t any pending problems that will only get worse with time. Your mechanic should also know your intentions to store the vehicle for an extended period of time. He or she will most likely have some really helpful information that could be specific for your vehicle and what you can do to safely store it. You need to make sure all the fluids are at appropriate levels and that the tire pressure is safe.

If you know your vehicle is going to be stored in a freezing area or somewhere very cold, talk to your car servicing manager about flushing out regular fluids for ones that can withstand ice cold temperatures. This will save you lots of hassle when you’re ready to drive again. Also ensure that all the hinges and oiled parts are adequately oiled so nothing rusts or gets jammed over time.

You should store the car with at least a half tank of gas so you are able to safely let it sit while running once you start it again. Using these simple tips will ensure your vehicle is safe and secure when you store it.

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29 January

Key Trends in Outsourcing

Outsourcing finances to accountants Portsmouth is an extremely popular trend that helps companies maintain a competitive edge by avoiding certain cost on non-core activities and outsourcing can help small or mid-sized companies level the playing field with larger companies. As outsourcing continues to grow and formalize, the trends within the industry are continuously changing. It’s important to understand the direction of trends as a business owner in order to properly understand the present and the future of outsourcing.

1. It’s not primarily about cost

Outsourcing to accountants in southampton has traditionally been about taking advantage of the low-cost labour in emerging nations. However, although the cost-effectiveness of outsourcing is still a primary reason for companies to outsource the reasons to outsource and sometimes offshore has grown. The competitive agility, scalability, and innovation are key reasons that outsourcing is no longer focused primarily on the cost saving but rather the competitive edge offered by outsourcing providers.

2. ‘Near Shoring’

Outsourcing has become intertwined with the idea of off-shoring; conversely, businesses are focusing more and more on closer outsourcing. As mentioned above, the cost-saving on labour cost is a big incentive, but in today’s competitive market it’s more about quality over quantity. A lot of off-shoring companies and emerging nations are seeing a relatively large drop as more businesses search for high-skilled labour solutions near-shore so that they don’t have to sacrifice talent for price.

3. Outsourcing is Expanding with Mid-Sized Companies

The amount of mid-sized companies utilizing the benefits of outsourcing to accountants southampton has continuously increased in recent years because mid-sized companies can benefit from the access to effective global companies.  A staggering 73% of mid-sized businesses reported that they plan on expanding their outsourcing over the next 1-2 years, up from 55% from the year before. On the other hand, among large-companies 41% answered that they planned on using outsourcing over the next 1-2 years, down from 52%.

4. Outsourcing Structure and Process is More Standardized

Since the turn of the 21st century and the rapid growth of the Internet, both organizations and individuals have made it their goal to transform and formalize the outsourcing business. As the industry continues to grow this trend will improve consistency, reliability, and security. This growing trend indicates the positive growth for the outsourcing industry and reflects the success for both providers and clients.

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10 December

What Acids Are Bad for Your Teeth

A lot of food is bad for your teeth. Many people fail to realise that even healthy foods are bad for the teeth due to acid. It’s time to learn about the acids that are bad for teeth and how to protect them. Afterwards, you will definitely want to know “where is a dentist near me?”

Eating Your Five a Day Does Damage Your Teeth

An apple a day keeps the dentist away…this is a saying that many people hear but doesn’t quite hold a lot of truth to. The problem is that apples, and many other fruits, are full of natural sugars and acids. The worst for your teeth is citric acid, which is found in lemons, oranges, limes and grapefruits etc. It is important to watch the amount of these citrus fruits you eat.

Even drinking your five-a-day is bad. Orange juice and other favourites are full of acids. If you really want a healthy drink that isn’t water, consider vegetable juices as they are lower in calories, sugars and acid—apart from tomato juice!

Drink Soda—Including Diet—Is Bad

 Soda may taste refreshing but you will be doing a lot of bad to your teeth. These drinks—even the diet varieties—are full of various acids. Scientists state that drinking soda throughout the day is just as bad for your teeth as taking illegal drugs! The acid wears away the enamel, weakens the teeth and makes it easier for sugars to cause cavities.

Protecting Your Teeth from Enamel Erosion

 Drinking or eating acidic foods throughout the day is worse than just having one. The acid will continually work on eroding the enamel. Limit the amount of the acid and bad foods that you eat to protect your teeth as much as possible.

Chewing sugar-free gum after eating or drinking something with acid in is an excellent idea. The gum helps the mouth to create more saliva, which means the acid is taken out of the mouth and away from the teeth. It doesn’t completely clear the problem but it is a start. The best thing to do is brush your teeth after anything acidic to remove the acid completely and strengthen your enamel.

Visit your dentist on a regular basis. Finding one close by shouldn’t be difficult, just use zesty. All you need to do is search in your local area, eg: dentist Islington.

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29 October

Pop Culture in Eastern Asia

Oriental popular culture is quite unique and continues to expand its vast horizons. Many different Asian cultures are well known are their incorporation of anime, a Japanese style of television and movie animation. But Asian pop culture has evolved over the last few decades into something that no other culture has.

Oriental pop culture makes use of many bright and whimsical colors. Most of the common fashion trends right now include outfits made with plastic type materials and durable fibers. Many young girls are dying their hair wild colors like bright, baby blue or fire engine red. These bold statements make anyone stand out and look quite unique. Many are also using artificial furs that have been painted different colors to wear as shoes or a coat. While not every Asian person walking the streets can be found dolled up in such attire, it does seem that these fashion trends are originating out of most Asian countries. This flamboyant style is most commonly seen on television and film.

The dining experiences in most oriental pop culture spots is usually exquisite. Some of the best seafood comes from many Asian countries and is prepared like nowhere else in the world. Compared to many large countries, the serving size in many Asian restaurants is smaller these days. They prefer to serve more meals that have smaller proportions rather than one large meal.

The modern oriental street culture has also evolved over the recent years. The architecture in these Asian countries is considered to be some of the most beautiful and fascinating. Many modern and popular apartment buildings take advantage of tall buildings and small living space. The rooms are usually very sleek and incorporate lighting to set a certain ambiance.

Oriental pop culture is ever changing and morphing into spectacular things right before our eyes. If you haven’t explored this culture before, be prepared for a wonderful surprise.

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10 September