How the financing/banks should approach the setting of their risk tolerance with a trader ?
First by capacity, what’s the trader risk-capacity, how much risk Gerald can withstand as a whole? This is typically calculated using metrics such as capital, leverage metrics, those are the risk-out bounds of the firm.
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Abacab Asset Management's flagship investment fund, the Abacab Fund, had a "very strong" 2020, returning 25.9% net, that's according to a copy of the firm's year-end letter to investors, which ValueWalk has been able to review. Commenting on the investment environment last year, the fund manager noted that, due to the accelerated adoption of many Read More
Next is the risk appetite profile of the trader and it should be a subset of the group’s overallmore transparent, the better and for obvious reasons, a classical banks-trader principal-agent dilemma
Next are the risk thresholds and limits. What are the risk limits and what are the protocols that would happen if any of those limits and thresholds are broken ?
“Our TCF/risk has received this letter from Craig Dean, by risk I mean the big guys not my collateral kind. Given the recent punch lines, of course, you understand I can not discuss this .. ? On the client side I am not that familiar yet with all the trades and concepts but it’s always interesting to read your ‘checks and balances posts’. A simple message of support for your work “
While most of the people would feel horrified at the idea of getting quoted in the company letter, (I just found it awesome).
Awesome because remember what was said here on
“The demise of Gerald Metals is totally avoidable, they are condemned to produce a lot of headwinds without right to error. If Gerald Metals sinks, it will be only because of its management failure to acknowledge its own reality, not because of others“…
“As our operations, financial, market positions and legal position will continue to materially improve in 2018, they are trying to discredit Gerald with hope they may hace a negative impact on us”.
-Craig Dean, Gerald Metals Ceo’s letter sent to Lenders
In an email sent to Gerald Metals, I have respectfully asked the financial statements of Gerald FY16 and FY17 to verify some assumptions, what improvements, giving my thoughts on how the financing/banks should approach the setting of their risk tolerance with the trader stating that:
- Each trading company has a business model of its own.
- Although I am ready to reconsider my views of the surface.
- I’m not a lender, not the buy-side or a PR specialist.
What I am is a third-party and independent analyst whose work, foremost, should be regarded as such.