Financial Markets, Regulation and Ethics Assignment

Financial Markets, Regulation and Ethics Assignment Words: 1850

The contract is funded by an international aid bank but is administered by the local officials. The Hopple team is led by Marcella. One day he is asked to go and see the manager of the local client team. The manager says that he and his deputy would like to go on a study tour of the UK so that they and their team can be in a better position to understand more about Hopple. The local manager points out to Marcella that they don’t have the funds to do this so they would Like to pay for It through the project.

The best way to do this would be for Marcella to pay for all the flights and accommodation and provide some money for meals etc. Marcella can invoice all this through the contract by enhancing the hours billed and the manager will approve it. Applying the SFA ethical code and any other suitable framework, make a practical recommendation for Marcella . The local client team wants to visit UK to understand Hopple Consultants better. This is acceptable because, the local team will be interacting with Hopple for a long time, until the project is completed.

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This trip would make them acquainted with Hopple Consultants better and can in the process they can understand the working, the working methods, the technology used and several other factors of Hopple consultants, which the local team would be exposed to In the future and this will cake them better prepared. However, the solution the local client team is proposing is wrong because, Marcella cannot invoice the expenses by inflating the bills as SFA code of ethics says that, members should not make knowingly misrepresent things related to any of the work they are associated with.

However, if she does this she is acting against the code, and hence is wrong ethically. The other alternative would be, for Marcella or for Hopple consultants to fund from their own money, to the local client team to VISIT t I-J Ana unreason Hopple netter. However, tons too Is galls SFA ethics code, as the code says that, members must not offer any benefit or compensation, that could compromise other’s independence or objectivity. Hence, they cannot fund the local team from their own pockets.

The only solution to the problem Marcella is having would be, to ask the international aid bank to fund the local client team for all the expenses incurred by the team when in the I-J. The local client team and Hopple consultants should make a presentation to the aid bank, giving them appropriate reasons as to why this trip is beneficial for the both the teams involved. This trip would bring in better understanding of the teams which is beneficial for both the teams in the long run. I see no reason, as to why international aid bank would not support the local team if they give appropriate reasons for their travel.

If, the international aid bank does not support the idea of the local client team, then the local client team should raise money from other sources to go to I-J. Peter is the treasurer of a FETES listed company. He is phoned by Andrew from an investment bank where Peter has done some business with another division. Andrew invites Peter to go skiing for a weekend with other clients in Switzerland. There will be many useful contacts including direct competitors of Pewter’s company. Peter doesn’t ski but can see the distinct business benefit. How should he respond?

Would your answer be different if the invitation came after a major piece of work had Just been completed with Andrews team? According to me, Peter should go to skiing with Andrew. The SFA ethical code says that, members should be loyal to their clients. Since, Peter has done business in the past with a division of investment bank, which Andrew is a part of, he should go to skiing with Andrew since he has invited him. However, there are certain conditions which Peter should follow, if he has to go to skiing: * Peter, during skiing should always act from the point of view of the company I. . Peter, since he is meeting Andrew and other people who are direct competitors to the Peters present company, shouldn’t be influenced by the competitors to disclose the trade secrets of the * During the skiing session, even though he gets to know any company. Information about the competitors operations or about their trade secrets, he must to use this for his personnel advantage or to the advantage of his company or this may lead to insider information and hence negatively affect Peter and his company. If there is any deal offered by Andrew or by any of Peters’ competitors, he has to disclose it his higher authorities. * He must not go to skiing with Andrew with the thought that, he might get better remuneration or might get any personnel gains out of it. * He should go with a clear mind that, he will have good time skiing for the first time, have a nice experience, meet new people and thereby growing his social network. Hence in the future there will be no bias in the decisions he makes, towards the people he meets during the skiing trip.

My answer would not be different from the one I have answered now, even if the invitation came after a major piece of work had Just been completed with Andrews team, as I still would say that, he should go to skiing with Andrew, with a clear picture In Nils mina Tanat en Is not going to get any personnel galas, or Locales any AT ten company’s secrets but only with the intention of having fun and meeting new people. Write a brief analysis of the following statement.

Bullet points are acceptable: The LABOR scandals at Barclay Bank aren’t really scandals in that no one in the general public was affected. It was only traders dealing with each other. After all borrowers that had used swaps to fix rates they weren’t impacted. ” * LABOR – London Interbrain Offered Rate – is the rate at which banks borrow from each other. The rate is set everyday on ten different currencies over different loan periods. Once this is set, the upper and lower quarters are removed and the average of remaining 50% is calculated to give the interest rate. This rate is used as a benchmark for setting other interest rates. Mortgages, loans, savings and other financial instruments are pegged on this interest rate. Hence, the interest rates are set on hundreds of trillions of dollars. Thereby, moving the interest rates even by the slightest percentage is worth millions of dollars and hence extremely lucrative. * Fixing the LABOR rate is easy as it involves putting together a trade group of 18 banks, and this process is not governed by any government regulations.

Hence, fixing the LABOR rate totally depends on the co-operation between the banks. * The traders of Barclay were speculating on the movement of the interest rates. Depending on the way they were speculating, they would urge their friends or former employees in other banks to increase or decrease their interest rates. And since, there is no government body regulating this, all this could happen over a simple phone call. * The interest rate submitted by the bank for the LABOR calculation is generally taken as the benchmark to know as to how “healthy’ is the bank. Before the 2008 financial crisis, banks submitted higher rates, and hence made more money than what would have been the actual profits. After the 2008 crash, all he banks reduced their interest rates, because if the bank submitted higher interest rate, it means it is expensive to borrow money and hence the bank is considered to have a bad financial health. * Barclay feared that the rate submitted by them, might be higher than compared to its peers.

Hence, they intentionally reduced their interest rate to look stronger in the market. Hence, they made us believe what was not real, to make themselves look good by showing that, they were able to borrow money at a lower rate. * This means that Barclay charged high interest rates before the financial crisis, and hence dad high level of profits than it was supposed to. I Nils manipulation In ten Interest rates affects ten general puddle In many ways. Some of which are given below.

If we are paying loans on an floating interest rate basis which is pegged to LABOR, then the movement in LABOR could have affected us positively or negatively depending on the movement in direction of the LABOR. Consider a company, and that company has entered into a swap agreement with the bank to hedge the interest rate movements. It will inevitably lose money because the rationale with which the company went for the hedging option will be completely improvised as the interest rates were pre-determined by the bank at the first place.

Also, the company has to pay interest on debt, and this interest rate is depended on LABOR. Securities which generate income, pension funds are based on LABOR. Hence, everyone in the general public is affected by the rigging of LABOR in one way or the other. Regarding the statement that says “all borrowers that had used swaps to fix rates weren’t impacted”, I would like to say, in a swap deal with a bank where it pays fixed if the corporation was involved were not impacted by the changes in the interest rates rates, then they caused by Barclay.

But if they had entered into a swap deal, where the corporation or the company has agreed to pay in floating rate, then pulling up of the interest rates by Barclay has negative effect on the cash flows of the corporation. Suppose, if Barclay were to receive a huge amount of money as interest, and if Barclay is receiving floating interest rates then they would ask the other banks to raise their interest rates as well and hence Barclay receives a higher amount, which means that the corporation has to pay more money to maintain the swap agreement with Barclay. This in turn has negative effects on the cash flows of the

For decades, people and the regulators thought that, banks will want to keep up the reputation which has been carried on for decades and hence in order to protect the reputation they will be honest and hence they would not be involved in any malpractices. Scandals like this one, show that self-regulation is not possible and hence the regulators should be more involved to make the market efficient and make the market participants not lose confidence. The actions taken by the regulators on Barclay, by imposing a fine shows that, regulators are trying their best to maintain integrity in the market.

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