Paterson's Bond Trading Opportunities for Hedge
analyzes portfolio risks for interest rates, credit, currency,
trading and audit for financial institutions
Paterson helps report these risks to senior management, and the board
Patersonís risk model forecasts the effects of changes in interest
rates, stock prices, risk levels, and alternative investments,
techniques for monitoring and managing these risks in the cash,
futures, swaps, and options markets.
Paterson's risk models suggest pricing, investment, and hedging
can sometimes outweigh interest rate risk by a factor of 10, leading to
the bankruptcy of the institution.
Paterson works with
the company's credit department, credit rating
agencies, and market forces to measure, nalyze and manage this risk.
given tremendous authority to
adjust the asset mix in a portfolio, implement and manage hedge
positions, and structure new asset types. Without strict and
knowledgeable policies and procedures, the company can lose billions of
From the first,
Paterson has advised internal auditors, audit firms,
and boards of directors on the tools and techniques to manage trading
risk and audit traders' behavior.
values fluctuate as monetary policies,
trade patterns, and central bank actions change. The company must
monitor these changes and insulates earnings from potential
risk model is unique in the industry in its ability
to quantify the current risks and project the effects of changes in
controls over treasury and audit
functions, there is a reporting problem. But more importantly, there
are both fraud and embezzlement problems.
Paterson works with
the Accounting Committee of the Board of Directors
to ensure the controls are in place to eliminate fraud and embezzlement.
As the yield curve
risk expands, and as spreads between US Treasuries and other
instruments widen, financial institutions will find profitable
opportunities in money market arbitrage.
yields can be matched against both changes in rates and the