Practical Ethics: Introducing a New Framework for Ethical Decision Making

More than any other factor, investors look for individuals and firms they can trust when hiring investment professionals to safeguard and grow their financial assets. Earning trust goes beyond compliance with applicable laws and regulations. Developing trust can only be earned by engaging in ethical conduct.

Recognizing and understanding the relevant ethical principles is the first step. The CFA Institute Code of Ethics and Standards of Professional Conduct embodies the fundamental ethical principles applicable to the investment profession. These include fair dealing, full disclosure, loyalty, and diligence, among others.   

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Equity Opportunities in Canadian Capital Markets

Toronto Stock Exchange (TSX) and TSX Venture Exchange (TSXV) – Canada’s major equities markets – are home to more oil and gas and energy services companies than any other global exchange group. Ranked first in the world by the number of listings in the energy sector, TSX and TSXV are the world’s leading marketplaces for oil and gas companies to list and go public.

More than 360 oil and gas companies are listed on TSX and TSXV, with a total market capitalization of over $407 billion. About 10% of these companies are headquartered outside of Canada. Supported by reliable access to North American and global capital, these companies have operations on several continents and maintain strong ties to key markets globally.

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Flash Boys May be Yesterday’s Story


Michael Lewis’ newest Wall Street bestseller, Flash Boys, claims that equity markets are “rigged” by high frequency traders who invested millions in fiber optic cables that enabled them to shave microseconds from the time it takes to trade stocks. Launched just a week ago in a blizzard of TV interviews with unknowing, uncritical journalists, it is the latest bomb to drop on an industry still struggling to regain its balance after the financial crisis of 2008. 

Like his two other very popular books about financial firms and markets (Liar’s Poker and The Big Short), Flash Boys, tells a compelling, if improbable story of how a few really smart tech guys, investing millions in their own high speed cables, have outwitted the usual bunch of dull institutional investors by hijacking billions of dollars of other people’s trades. 

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Six Signs You Have to Quit Your Banking Job in the Next Six Months


Your bonus is (probably) in the bank. Should you stay? Should you go? Are you still ‘learning in your job’? Are you still climbing the corporate edifice? How can you determine, quickly, easily and with minimal sentiment that it’s time to move on? Banking headhunters volunteer the following six leading indicators.

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Five Reasons to Consider Mongolia As Your Top Investment Destination

Mongolia submission

It's the second fastest growing economy in the world: Strong economic growth is expected for the mineral resource–rich Mongolia, with rising mining output from world-class mining projects such as Oyu Tolgoi—a copper and gold mining operation, where Rio-tinto owns 66% and the government owns 33%. This project is expected to contribute 1/3 of Mongolia GDP alone. The Economist Intelligence Unit has projected that Mongolia will be the second-fastest growing economy in the world in 2014 with gross domestic product rising 15.3% thanks to the first full year of operations of Oyu Tolgoi. And, though IMF predicts that growth will slow down to 9.5% (owing to a slow-down in China, the main export destination for Mongolian minerals), the economic growth is high even by regional, let alone international, standards.

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Office Politics Surviving and Thriving—If You’re Savvy

Being politically savvy is a vital competence for anyone working in an office/organizational environment, but it’s not taught often and, in many cases, understood. In fact, in my practice as a coach the term “office politics” has received a bad rap. (Words like “Machiavellian,” “manipulative,” and “conspiratorial” come to mind.) Tales of political sabotage, power plays, and turf wars are part of any organization’s history. Nonetheless, political competence is the one skill everyone wishes to have more of—but no one talks about it. When you ask people how they achieve results within their organizations, they cite market analysis,strategic planning, and brainstorming. They almost never mention politics.

–Jeffrey Cohen

Jeffrey Cohen's services as a career and executive coach are now available to NYSSA members. Click here for more information.

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Rating Agencies


For decades credit rating agencies were viewed as trusted arbiters of creditworthiness and their ratings as important tools for managing risk. The common narrative is that the value of ratings was compromised by the evolution of the industry to a form where issuers pay for ratings. In this paper we show how credit ratings have value in equilibrium and how reputation insures that, in equilibrium, ratings will reflect sound assessments of credit worthiness. There will always be an information distortion because of the fact that purchasers of ratings need not reveal them. We argue that regulatory reliance on ratings and the increasing importance of risk-weighted capital in prudential regulation have more likely contributed to distorted ratings than the matter of who pays for them. In this respect, much of the regulatory obsession with the conflict created by issuers paying for ratings is a distraction.


 –Harold Cole and Thomas F. Cooley

Please note that the second author was previously a member of the Board of Managers of Standard & Poor's Financial Services LLC and also serves as a consultant to the company. The opinions and views expressed in this article do not necessarily reflect the opinions and views of Standard & Poor's Financial Services LLC. We thank Steve LeRoy, Larry White for helpful comments. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.

NBER working papers are circulated for discussion and comment purposes. They have not been peer eviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications.

© 2014 by Harold Cole and Thomas F. Cooley. All rights reserved. Short sections of text, not to exceed two paragraphs, may be quoted without explicit permission provided that full credit, including © notice, is given to the source.

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Tips for Telling Your Story

Whether you’re launching a job search, lobbying for a promotion, taking over as the new team leader, or bonding with colleagues and customers, you may want to tell your story. Doing so builds people’s trust in you.    

The ability to tell your story is vital in your life, both personally and professionally. Below are tips to help you tell your story in today’s business world.

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“Old-Fashioned” Study Methods a Hit

A recent Internet search for “online CFA exam prep” yielded over a million results, and included a dizzying array of study options. Test banks, mobile apps, instructional videos, digital study guides, virtual study groups, and forums just to name a few. Trying to figure out what works best can make your head spin, so to help cut through the noise, I reached out to people who should know. I asked current exam candidates, as well as those who recently earned their charter, for advice.

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Macroprudential Stress Tests Should Not Rely on Regulatory Risk Weights

The capital ratio of a bank1 is usually defined as the ratio of a measure of its equity to a measure of its assets. Regulatory capital ratio usually employs book value of equity and risk-weighted assets, where individual asset holdings are multiplied by corresponding regulatory ‘risk weights’. Macroprudential stress tests rely on models that translate an adverse macroeconomic scenario into losses to assets on the balance sheet of banks. These losses are assumed to be first borne by equity. The resulting capital ratios determine which banks fail the test under the stress scenario, and what supervisory or recapitalisation actions are undertaken to address this failure.

Recent concerns on the denominator of capital ratios – the risk-weighted assets – have been expressed in multiple surveys that point out the inconsistency in the calibration of risk weights (Le Lesle and Avramova 2012, Mariathasan and Merrouche 2013, BCBS 2013, Haldane 2012). This column argues that the inadequacy of risk-weighted assets is also responsible for producing an inadequate ranking of the required capitalisation of banks in stress tests. In order to establish the inadequacy of risk-weighted assets, Acharya et al. (2013) examine complementary approaches to measuring capital ratios and relate them to capital ratios based on risk-weighted assets.

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Recent Research: Highlights from March 2014

"Mortgage Option Deltas"
The Journal of Retirement (Winter 2014)
Michael Landrigan and Danny Sun

Mortgage options are European options on TBA contracts that are forwards on securitized pools of agency-backed mortgages. Because of the significant negative convexity of TBAs, calculation of option deltas is a delicate issue. It is common to model TBA options with the S-curve framework. Mortgage option prices, however, may be significantly higher than such a model predicts. There are various ways of dealing with this price discrepancy, including adjusting the TBA DV01 curve, applying a scaling factor to swaption volatilities used in calibration, or adding an extra rate-independent variance to TBA prices. These different modifications of the base S-curve framework may lead to the same option prices but different deltas. In this article, the authors estimate deltas using local price volatility and compare the deltas resulting from different modifications of the base S-curve framework to these “model-free” estimates. The analysis is primarily important for risk management in terms of mark-to-the-market pricing of mortgage options and its implication for the deltas. Although in practice only at-the-money mortgage options are marked to market, the authors also discuss the implications for skew and some valuation implications.

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Yellen’s 2.25% Target for 2016 May Be a Huge Mistake

Janet Yellen surprised almost everyone on March 19 by speaking off-script and providing forward policy guidance that can undermine the Fed’s credibility, at best, or cause another crisis, at worst. If the economic data comes in weak by the end of tapering and the markets swoon, the Fed will have no choice but to implicitly admit it was wrong and keep interest rates close to zero indefinitely. However, if the Fed continues with its plan to raise rates in the face of a weaker economy and declining market, the actions may cause another violent crash.

Zero short-term rates and the first round of QE were essential to avoid a complete financial meltdown. Subsequent rounds did little for the real economy yet unintentionally produced high leverage and asset bubbles in various places by providing cheap financing for companies, investors, and speculators alike. The policy also resulted in a massive transfer of wealth from labor to asset owners leading to the largest wealth and income inequality in recent history.

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How to Dress Like You Should Be a Banking Big-Shot


Late July in Cambridge and the swarms of tourists are given a rare photo opportunity. It is graduation day and the university’s students walk in procession from their ancient colleges, through the city’s cobbled streets to the Senate House, where they are awarded the degrees that will give them access to the highest levels of Britain’s society. To the untrained eye, the gowns are all pretty similar – Harry Potter-style wizard robes – but the differences are intricate and infinite.

For those who haven’t yet graduated the college gown must be worn to formal occasions, each with their subtle variations – a bow here and a plait there. When graduating or matriculating, the type of gown and hood worn depends on the type of degree you are doing – whether it’s a BSc, BA, MPhil, MLitt, Phd, MusD and so on – and what your academic discipline is. If you’ve completed a doctorate at the 804-year-old institution, the Doctor’s gown – a little crimson silk number with a comical gold tasselled hat – must be worn.

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Don’t Sabotage Your Website’s News Page

A news page featuring your firm’s mentions in the media can boost your credibility as long as you avoid one financial advisor’s mistake.

“Wow! This advisor hasn’t gotten any press since 2006.” That was my first thought when I looked at this advisor’s news page earlier this year. I immediately thought, “He should delete his news page.”

But then I scanned the rest of the page. I realized that the advisor had listed his media coverage in chronological order. He started in 2006 and continued up to the present day way, way down the page.

Unfortunately, most readers won’t scan the entire page. They’ll stop with the misperception that the advisor is a dud at getting the attention of the press.

The lesson for you? List your news coverage in reverse chronological order, putting the most recent items at the top of your page. For an example, see my “In the News” page.

Using the proper order is a small step with a big impact.



–Susan Weiner, CFA, is the author of Financial Blogging: How to Write Powerful Posts That Attract Clients, which is tailored to financial planners, wealth managers, investment managers, and the marketing and communications staff that supports them. Read her blog or follow her on Twitter, Google+ or the Investment Writing Facebook page.


The Paths to a Career in Investment Management

More than one third (37%) of all CFA® Charterholders are portfolio managers or research analysts. The remaining 63% are strewn across a variety of job functions. Before becoming a CFA candidate, check the CFA Institute website to make sure your dream career aligns with the job functions held by current CFA Charterholders.

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NYSSA Career Chat™: The Challenges Women Face on Wall Street
Wednesday, September 3, 2014

Join NYSSA to enjoy free member events and other benefits. You don't need to be a CFA charterholder to join!


CFA® Level II Weekly Review – Session A: Wednesdays

Wednesdays, January 8–April 30, 2014
Instructor: O. Nathan Ronen, CFA

CFA® Level II Weekly Review – Session B: Mondays

Mondays January 27–May 12, 2014
Instructor: O. Nathan Ronen, CFA

CFA® Level II 6-Week Saturday Condensed Review

Saturdays, March 22–May 3, 2014
Instructor: O. Nathan Ronen, CFA

CFA® Level II 4-Day Boot Camp

Thursday, May 15–Sunday, May 18, 2014
Instructor: O. Nathan Ronen, CFA

CFA® Level III Weekly Review – Session A: Tuesdays

Tuesdays, January 7–May 6, 2014
Instructor: O. Nathan Ronen, CFA

CFA® Level III Weekly Review – Session B: Thursdays

Thursdays, January 23–May 15, 2014
Instructor: O. Nathan Ronen, CFA

CFA® Level III 6-Week Sunday Condensed Review

Sundays, March 16–May 4, 2014
Instructor: O. Nathan Ronen, CFA