Securitization Pros Essay Example for Free

Securitization Pros Essay The introduction of financial sector reforms in India has led to innovations in financial markets and instruments. One of the most prominent developments in the international finance in recent times that is likely to assume even greater importance in future is ‘securitisation’. Securitisation is the process of pooling and re-packaging of homogenous illiquid loans into marketable securities. Increased pressure on operating efficiency, on market niches, on competitive advantages, and on capital strength, all provide fuel for rapid changes. Securitisation is one of the solutions to these challenges. 2. Reserve Bank of India, as a facilitator, has attempted to explore the intricacies of securitisation as a process of financial engineering and its applicability to the Indian financial system especially in the mortgage and infrastructure sectors. The in-house Working Group constituted by the Bank had the benefit of presentations of and interaction with market intermediaries, regulators, industry experts and international agencies on various aspects associated with securitisation. 3. The report defines asset securitisation and makes a reference to future flow securitisation. Motivation and benefits in the form of capital relief, improvement in return on equity and return on assets, use as a strategic tool, asset liability management, improved liquidity, upgradation in system, Originator discipline, etc. have been highlighted. 4. Various impediments viz. , lack of investors’ base, capital market infrastructure, regulatory framework, legal provisions, accounting and taxation issues besides good quality assets, past data and standardisation of documents have been identified. In the process of exploring opportunities in India, the ideal conditions for success of securitisation in USA and other countries are highlighted. 5. Experience of securitisation in a few developed countries (USA, Japan, Australia, etc. ) and emerging markets like Thailand, Argentina and Morocco has been discussed in detail. The report also identifies securitisation of impaired assets. 6. The disclosure norms and rating will provide touchstones. The Offer Document should give rating rationale which should seek to comment on the quality of the receivables, payment structures, adequacy of the credit enhancement, risks and concerns for investors and the mitigating factors, etc. Rating agencies have already acquired a fair degree of expertise in India through rating of structured obligations and other issues that are quite similar to securitisation. 7. True sale characteristics of securitisation transactions are required to be reflected in the books of accounts, statements to be furnished to the concerned regulators as also to the tax authorities. Since there are no guidelines for accounting treatment of these transactions, the accounting procedures with appropriate guidelines need to be framed by the Institute of Chartered Accountants of India for the sake of uniformity. A background paper has been prepared in this regard and attached to this report which may serve as a guide in the interregnum. The background paper includes a few illustrations for the guidance of the financial entities. 8. The role of various regulators (RBI, SEBI, etc. ) and other agencies / entities has also been discussed. 9. The recommendations have been categorised into short-term, medium-term and longterm with definite timeframe in each category. The major recommendations on legal issues (short-term) are incorporated in Chapter 9. These include: i) Defining securitisation in the Transfer of Property Act to lend uniformity of approach and restrict the benefits provided by law/regulation for genuine securitisation transactions. ii) Rationalisation of stamp duty to make it uniform at 0. 1 per cent for all securitisation transactions. Attempts may be made to bring the subject under the purview of Indian Stamps Act 1889 from the State Stamp Acts. ii) Reduction of registration charges by amending Section 17(2) of the Registration Act. iv) Inclusion of securitised instruments in Securities Contract Regulation Act. v) SEBI may consider removal of prohibition on investment in mortgage backed securities by Mutual Fund Schemes. vi) Tax neutrality of Special Purpose Vehicle. Recommendations for tax reforms also in clude the spread of upfront income received by Originator over the tenure of the loan securitised, extension of benefits under Section 88 of Income Tax Act for repayment of housing loans after the loans have been securitised etc. 10. Other recommendations are summarised below: i) The most significant impact of securitisation arises from the placement of different risks and rights of an asset with the most efficient owner. The training institutes of the financial institutions should attempt to spread awareness of the benefits and scope of securitisation increasingly among financial community. ii) Spell out the risk weights and NPA norms on securitised paper. Insurance Companies and Provident Funds need to be encouraged to invest in the securitised paper. Besides, suitable regulatory framework may have to be evolved to encourage Foreign Institutional Investors. ii) Listing requirements for various securities to be issued may be stipulated which may include minimum issue size, eligible stock exchanges etc. iv) Include the securitised paper in demat trading. v) While identifying the key characteristics of special Purpose Vehicle (SPV) to keep the structure â€Å"remote† from the bankruptcy of the Originator, t he Group recommends flexibility in the structure of SPV. SEBI may formulate detailed guidelines in this regard. vi) Accounting treatment should enable the ‘off balance sheet’ effect for securitised assets. Such treatment for future flow securitisation, credit enhancer etc. has been clarified. A Research Committee of the Institute of Chartered Accountants of India is already working on minute details of accounting treatment. vii) Adequate disclosure norms are recommended for an ‘informed† decision by the investor. A model Offer document has been attempted by the Group to give information on description of assets, historical performance, end use of funds, transaction structure, and statement of risk factors. The Group also recommends continuous disclosures. iii) The report has suggested prudential guidelines for banks, developmental financial institutions, non-banking finance companies, etc. including broad creteria for true sale. Model prudential guidelines have been prepared which incorporate issues such as off balance sheet treatment, credit enhancement, servicing, etc. ix) Medium term measures include increased flow of information thorough credit bureaus, standardisation of documents, improvement in the quality of assets, upgradation of computer skills and exploration of the possibilities of securitising non-performing assets.

Databases :: essays research papers

databases The Many Faces of Databases Large databases can contain hundreds of interrelated files. Fortunately a database management system can shield users from the complex inner workings of the system, providing them with only the information and commands they need to get their jobs done. In fact, a well-designed database puts on different faces for different classes of users. Downsizing and Decentralizing The earliest file management programs could only do batch processing, which required users to accumulate transactions and feed them into computers in large batches. These batch systems weren't able to provide the kind of immediate feedback we expect today. Today disk drives, inexpensive memory, and sophisticated software have allowed interactive processing to replace batch processing for most applications. Users can now interact with data through terminals, viewing and changing values in real time. Batch processing is still used for printing periodic bills, invoices, and reports and for mak ing backup copies of data files. But for applications that demand immediacy, such as airline reservations, banking transactions, and the like, interactive, multiuser database systems have taken over. Until recently most databases were housed in mainframe computers. But for a growing number of organizations, the traditional centralized database on a mainframe system is no longer the norm. Some companies use a client/server approach: Database software in client desktop computers works with files stored in central server databases on mainframes, minicomputers, or desktop computers. Other companies use distributed databases that use data strewn out across networks on several different computers. From the user's point of view, the differences between these approaches may not be apparent. Tomorrow's Databases? Many computer scientists believe that the relational data model may be supplanted in the next decade by an object-oriented data model, and that most future databases will be object- oriented databases rather than relational databases. Instead of storing records in tables and hierarchies, object-oriented databases store software objects that contain procedures (or instructions) along with data. Object-oriented databases often are used in conjunction with object-oriented programming languages. Tomorrow's databases will be able to respond intelligently to commands and queries issued in natural human language. Rules of Thumb: Dealing with Databases A few common-sense rules when working with file managers or relational database management systems are: o Choose the right tool for the job. o Think about how you'll get the information out before you put it in. o Start with a plan, and be prepared to change it.

Develop MPI Essay

First, in today’s global economy, many companies are vying for a presence in the global markets. There are several ways to gain entry into a foreign market but many questions must be answered first to make sure there is a return on investment or an exit strategy. In the Foley Company case, Joanne has to determine what are her Company strategies advantages and disadvantages of entering Brazilian market for soybeans harvesters: First, she has to determine whether the Company is considering a standalone entry or entry through alliances. This could be a pivotal point in their decision because on one hand the lack of experience with foreign manufacturing operations could prove to be costly in a standalone entry for example. But as Mr. Osborne point it out this is also a â€Å"too good to lose† market, so an equity-base method of entry through alliances seemed to be a none-starter for Foley Company. But eventually, Ms. Poe has other options to consider for entry strategies: Contract Manufacturing, Licensing, Franchising or Exporting. Contract Manufacturing Contract manufacturing has a flexibility element to it as an entry method as it can be used as an added value to other method of entry. This is a major advantage. Ms. Poe could recommend this option in conjunction with franchising for example. Contract Manufacturing would also give the Foley Company a new look at the market in Brazil because the company has not seen this aspect of business in Brazil. Here, the company could focus on R&D and other improvement to its machinery to gain competitive advantage. The advantages of this method of entry could be: low capital required, low risk, manageable exit strategy, easy to structure and direct the process. The disadvantages of this method could be: the Company could lose some control due to lack of international experience, difficult to account for the cultural and differences in quality of work and standards, locally accepted practices can be hard to gauge when selecting vendors of supplies of parts etc. can be a problem for a new entran t in the market especially when there is potential for major capital investment. Licensing Licensing method of entry for companies could be reinsuring for the Foley Company because the Company would be able to legally protect its assets  while in the process conducting market establishing its name in Brazil. But this is more to prepare the â€Å"field† by licensing its rights and expertize to local companies conduct to business on its behalf. The important elements here are protection by the local regulations. The advantages here could be: Less hurdles to enter in case of import complexities in Brazil, fast entry into the market, no capital upfront required to establish a presence. But the disadvantages could be: Decrease in sales (not fully engage yet), culture differences and interpretations, and more importantly, the licensee could collaborate with competitors or become competitors themselves which would complicate future deals in Brazil. Franchising By recommending franchising a method of entry, Ms. Poe could emphasize the fact in this case rapid expansion, where a franchise would maintain a business relationship with Foley Company which would grant it the right to distribute its soybeans harvesters using Foley’s brand in exchange for a fee. The creation of a network of owner operated dealers would increase its market share and expanded territories. Less advertising programs and costs, market penetration at high rate, brand equity. The disadvantage of this method of entry could be the cost of engaging locals by Foley Company and potential lack of connection between the company goals in US and it Brazilian counterpart might cause frictions because the local might not be fully vested into the â€Å"bigger picture†. My recommendation would be: Wholly Owned Subsidiaries: Like many Companies, The Foley Company could establish itself fully in Brazil. This would give the company ownership through wholly owned subsidiaries. This method would allow Foley Company to gain control over manufacturing operations and any profits centers completely without sharing with any potential partners. The drawback to this method of entry would be the high initial investment. There can’t be guarantees here because of other intangible like politics, social, economical facts can complicate matters sometimes. But in the long-run, this method of entry which can be done through Acquisition or Greenfield investment (building entirely new facility), would yield many advantages for the company, for example brand equity, increase its competitiveness in the market. With the right  synergies, the economic benefits, in my opinion would outweigh the costs while expanding the market. References http://www.coursesmart.com/SR/7071808/0077496191/331?__hdv=6.8 https://blackboard.neu.edu/webapps/portal/frameset.jsp?url=%2Fwebapps%2Fblackboard%2Fexecute%2Flauncher%3Ftype%3DCourse%26id%3D_2239043_1%26url%3D Buckley, P.J., and Casson, M.C. 1998. Analyzing Foreign Market Entry Strategies: Extending the Internationalization Approach. Journal of International Business Studies: 539-561.

Microeconomics Versus Macroeconomics

Microeconomics and macroeconomics are two of the largest subdivisions of the study of economics wherein micro- refers to the observation of small economic units like the effects of government regulations on individual markets and consumer decision making and macro- refers to the big picture version of economics like how interest rates are determines and why some countries economies grow faster than others. According to comedian P.J. O’Rourke, â€Å"microeconomics concerns things that economists are specifically wrong about, while macroeconomics concerns things economists are wrong about generally. Or to be more technical, microeconomics is about the money you don’t have, and macroeconomics is about money the government is out of.† Although this humorous observation pokes fun at economists, the description is accurate. However, a closer observation of both fields of economic discourse will provide a better understanding of the basics of economic theory and study. Microeconomics: Individual Markets Those who have studied Latin know that the prefix â€Å"micro-â€Å" means â€Å"small,† so it shouldn’t be surprising that microeconomics is the study of small economic units. The field of microeconomics is concerned with things like consumer decision making and utility maximizationfirm production and profit maximizationindividual market equilibriumeffects of government regulation on individual marketsexternalities and other market side effects Put another way, microeconomics concerns itself with the behavior of individual markets, such as the markets for oranges, the market for cable television, or the market for skilled workers as opposed to the overall markets for produce, electronics, or the entire workforce. Microeconomics is essential for local governance, business and personal financing, specific stock investment research, and individual market predictions for venture capitalistic endeavors. Macroeconomics: The Big Picture Macroeconomics, on the other hand, can be thought of as the â€Å"big picture† version of economics. Rather than analyzing individual markets, macroeconomics focuses on aggregate production and consumption in an economy, the overall statistics that macroeconomists miss. Some topics that macroeconomists study include effects of general taxes such as income and sales taxes on output and pricescauses of economic upswings and downturnseffects of monetary and fiscal policy on economic healtheffects of and process for determining  interest ratescauses for some economies growing faster than other economies To study economics at this level, researchers must be able to combine different goods and services produced in a way that reflects their relative contributions to aggregate output. This is generally done using the concept of the  gross domestic product  (GDP), and goods and services get weighted by their market prices. The Relationship Between Microeconomics and Macroeconomics There is an obvious relationship between microeconomics and macroeconomics in that aggregate production and consumption levels are the result of choices made by individual households and firms, and some macroeconomic models explicitly make this connection by incorporating microfoundations. Most of the economic topics covered on television and in newspapers are of the macroeconomic variety, but it’s important to remember that economics is about more than just trying to figure out when the economy is going to improve and what the Fed is doing with interest rates, its also about observing local economies and specific markets for goods and services. Although many economists specialize in one field or the other, no matter which study one pursues, the other will have to be utilized in order to understand the implications of certain trends and conditions on both the micro and macro economic levels.