A bencher or Master of the Bench is a senior member of an Inn of Court in England and Wales or the Inns of Court in Northern Ireland , or the Honorable Society of King's Inns in Ireland . Benchers hold office for life once elected. A bencher can be elected while still a barrister (usually, but not always, King's Counsel in the UK or Senior Counsel in Ireland), in recognition of the contribution that the barrister has made to the life of the Inn or to the law. Others become benchers as a matter of course when appointed as a High Court judge . The Inn may elect non-members as honorary benchers – for example, distinguished judges and lawyers from other countries, eminent non-lawyers or (in the English Inns) members of the British Royal Family , who become known as "Royal Benchers" once elected.
38-456: One member of each Inn is the Treasurer , a position which is held for one year only. While succession to the post of Treasurer was once dependent purely on seniority (or auncienty ), this is no longer the case. The Treasurer is now elected. Two Readers are also elected each year. Historically, the most junior student barristers were only permitted to watch moot court trials and stood within
76-479: A British heritage, such as the Law Society of Upper Canada . Many volunteer organizations, particularly not-for-profit organizations such as charities and theaters , appoint treasurers who are responsible for conservation of the treasury, whether this be through pricing of a product, organizing sponsorship , or arranging fundraising events. The treasurer would also be part of the group which would oversee how
114-466: A cash-flow crisis when economic shocks resulted in excessive mark-to-market losses and margin calls . The fund suffered from a combination of funding and asset liquidity issues. The asset liquidity issue arose from LTCM's failure to account for liquidity becoming more valuable, as it did following the crisis. Since much of its balance sheet was exposed to liquidity risk premium, its short positions would increase in price relative to its long positions. This
152-537: A certain limit. In addition, countries could be expected to hold sufficient liquid reserves to ensure that they could avoid new borrowing for one year with a certain ex ante probability, such as 95 percent of the time. The FDIC discuss liquidity risk management and write "Contingency funding plans should incorporate events that could rapidly affect an institution’s liquidity, including a sudden inability to securitize assets, tightening of collateral requirements or other restrictive terms associated with secured borrowings, or
190-504: A day-to-day basis assuming that an important counterparty defaults. Analyses such as these cannot easily take into account contingent cash flows, such as cash flows from derivatives or mortgage-backed securities. If an organization's cash flows are largely contingent, liquidity risk may be assessed using some form of scenario analysis. A general approach using scenario analysis might entail the following high-level steps: Because balance sheets differ so significantly from one organization to
228-437: A firm. The excess value of the firm's liquid assets over its volatile liabilities. A company with a negative liquidity gap should focus on their cash balances and possible unexpected changes in their values. As a static measure of liquidity risk it gives no indication of how the gap would change with an increase in the firm's marginal funding cost. Culp denotes the change of net of assets over funded liabilities that occurs when
266-467: A given day. If the counterparty that owes it a payment defaults, the firm will have to raise cash from other sources to make its payment. Should it be unable to do so, it too will default. Here, liquidity risk is compounding credit risk . A position can be hedged against market risk but still entail liquidity risk. This is true in the above credit risk example—the two payments are offsetting, so they entail credit risk but not market risk. Another example
304-461: A measure called liquidity at risk . A country's liquidity position under a range of possible outcomes for relevant financial variables (exchange rates, commodity prices, credit spreads, etc.) is considered. It might be possible to express a standard in terms of the probabilities of different outcomes. For example, an acceptable debt structure could have an average maturity—averaged over estimated distributions for relevant financial variables—in excess of
342-407: A period of time, i.e., resilience is the capacity to recover. Liquidity-adjusted VAR incorporates exogenous liquidity risk into Value at Risk . It can be defined at VAR + ELC (Exogenous Liquidity Cost). The ELC is the worst expected half-spread at a particular confidence level. Another adjustment, introduced in the 1970s with a regulatory precursor to today's VAR measures, is to consider VAR over
380-421: A reasonable level of detail that provides a clear audit trail for all transactions. Liquidity risk Liquidity risk is a financial risk that for a certain period of time a given financial asset , security or commodity cannot be traded quickly enough in the market without impacting the market price. Market liquidity – An asset cannot be sold due to lack of liquidity in the market – essentially
418-451: A sub-set of market risk. This can be accounted for by: Funding liquidity – Risk that liabilities: Liquidity risk arises from situations in which a party interested in trading an asset cannot do it because nobody in the market wants to trade for that asset. Liquidity risk becomes particularly important to parties who are about to hold or currently hold an asset, since it affects their ability to trade. Manifestation of liquidity risk
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#1732848656991456-427: Is financial risk due to uncertain liquidity . An institution might lose liquidity if its credit rating falls, it experiences sudden unexpected cash outflows, or some other event causes counterparties to avoid trading with or lending to the institution. A firm is also exposed to liquidity risk if markets on which it depends are subject to loss of liquidity. Market and funding liquidity risks compound each other as it
494-491: Is difficult or impossible to isolate liquidity risk. In all but the most simple of circumstances, comprehensive metrics of liquidity risk do not exist. Certain techniques of asset liability management can be applied to assessing liquidity risk. A simple test for liquidity risk is to look at future net cash flows on a day-by-day basis. Any day that has a sizeable negative net cash flow is of concern. Such an analysis can be supplemented with stress testing . Look at net cash flows on
532-422: Is difficult to sell when other investors face funding problems and it is difficult to get funding when the collateral is hard to sell. Liquidity risk also tends to compound other risks. If a trading organization has a position in an illiquid asset, its limited ability to liquidate that position at short notice will compound its market risk. Suppose a firm has offsetting cash flows with two different counterparties on
570-405: Is only accurate for small changes in funding spreads. The bid–ask spread is used by market participants as an asset liquidity measure. To compare different products the ratio of the spread to the product's bid price can be used. The smaller the ratio the more liquid the asset is. This spread is composed of operational, administrative, and processing costs as well as the compensation required for
608-493: Is the 1993 Metallgesellschaft debacle. Futures contracts were used to hedge an over-the-counter finance (OTC) obligation. It is debatable whether the hedge was effective from a market risk standpoint, but it was the liquidity crisis caused by staggering margin calls on the futures that forced Metallgesellschaft to unwind the positions. Accordingly, liquidity risk has to be managed in addition to market, credit and other risks. Because of its tendency to compound other risks, it
646-438: Is very different from a drop of price to zero. In case of a drop of an asset's price to zero, the market is saying that the asset is worthless. However, if one party cannot find another party interested in trading the asset, this can potentially be only a problem of the market participants with finding each other. This is why liquidity risk is usually found to be higher in emerging markets or low-volume markets. Liquidity risk
684-531: The Prime Minister and Deputy Prime Minister . Each Australian state and self-governing territory also has its own treasurer . From 1867 to 1993, Ontario's Minister of Finance was called the Treasurer of Ontario. Originally the word referred to the person in charge of the treasure of a noble ; however, it has now moved into wider use. In England during the 17th century, a position of Lord High Treasurer
722-503: The bar of the moot courtroom. More qualified barristers (known in England as "outer" or "utter" barristers) were permitted to join the argument and stood outside the bar. The most senior barristers were permitted to sit on the bench at moots. This third class of barristers became known as "Benchers" or "Masters of the Bench". The practices and regulations vary from Inn to Inn, but the benchers are
760-447: The liquidity premium on the bank's marginal funding cost rises by a small amount as the liquidity risk elasticity. For banks this would be measured as a spread over libor, for nonfinancials the LRE would be measured as a spread over commercial paper rates. Problems with the use of liquidity risk elasticity are that it assumes parallel changes in funding spread across all maturities and that it
798-850: The Inn, and by disbarring them. Disciplinary functions are now shared with the Council of the Inns of Court, the Bar Standards Board and its Complaints Committee (formerly known as the Professional Conduct and Complaints Committee). The governing structure of King's Inns dates from the sixteenth century and are composed of "Benchers". Originally, the benchers were composed of the Lord Chancellor, judges and senior barristers. Today, benchers include elected Bar Benchers, Judicial Benchers (includes all judges of
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#1732848656991836-625: The Superior Courts) and Honorary Benchers and they have the power to conferring the degree of Barrister-at-Law, suspending or disbarring barristers and dealing with disciplinary matters. The terms bencher and treasurer are in use by the legal profession in Canada . A bencher in the Canadian context is a member of the board of directors of a provincial law society. Most benchers are lawyers, but in some provinces there are also lay benchers who represent
874-485: The chances that the resources will be there when needed." Bhaduri, Meissner and Youn discuss five derivatives created specifically for hedging liquidity risk.: Amaranth Advisors lost roughly $ 6bn in the natural gas futures market in September 2006. Amaranth had taken a concentrated, leveraged, and undiversified position in its natural gas strategy. Amaranth's positions were staggeringly large, representing around 10% of
912-463: The corporation on matters relating to corporate finance . They could also have oversight of other areas, such as the purchase of insurance . In the Inns of Court , the professional associations for barristers in England and Wales , the bencher or master of the bench who heads the inn for that year holds the title 'master treasurer'. This title is similarly used by other legal associations sharing
950-622: The country's economy , finance and revenue . The treasurer is generally the head of the treasury, although, in some countries (such as the United Kingdom or the United States) the treasury reports to a Secretary of the Treasury or Chancellor of the Exchequer . In Australia , the Treasurer is a senior minister and usually the second or third most important member of the government after
988-416: The global market in natural gas futures. Chincarini notes that firms need to manage liquidity risk explicitly. The inability to sell a futures contract at or near the latest quoted price is related to one's concentration in the security. In Amaranth's case, the concentration was far too high and there were no natural counterparties when they needed to unwind the positions. Chincarini (2006) argues that part of
1026-410: The liquidity cost as the difference of the execution price and the initial execution price. Immediacy refers to the time needed to successfully trade a certain amount of an asset at a prescribed cost. Hachmeister identifies the fourth dimension of liquidity as the speed with which prices return to former levels after a large transaction. Unlike the other measures, resilience can only be determined over
1064-444: The loss Amaranth incurred was due to asset illiquidity. Regression analysis on the 3 week return on natural gas future contracts from August 31, 2006 to September 21, 2006 against the excess open interest suggested that contracts whose open interest was much higher on August 31, 2006 than the historical normalized value, experienced larger negative returns. Northern Rock suffered from funding liquidity risk in September 2007 following
1102-556: The loss of a large depositor or counterparty." Greenspan's liquidity at risk concept is an example of scenario based liquidity risk management. If several liquidity providers are on call then if any of those providers increases its costs of supplying liquidity, the impact of this is reduced. The American Academy of Actuaries wrote "While a company is in good financial shape, it may wish to establish durable, ever-green (i.e., always available) liquidity lines of credit. The credit issuer should have an appropriately high credit rating to increase
1140-459: The money is spent, either directly dictating expenditure or authorizing it as required. It is their responsibility to ensure that the organization has enough money to carry out their stated aims and objectives, and that they do not overspend, or under spend. They also report to the board meetings or the general membership the financial status of the organization to ensure checks and balances. Accurate records and supporting documentation must be kept to
1178-440: The next, there is little standardization in how such analyses are implemented. Regulators are primarily concerned about systemic implications of liquidity risk. Risk-averse investors naturally require higher expected return as compensation for liquidity risk. The liquidity-adjusted CAPM pricing model therefore states that, the higher an asset's market-liquidity risk, the higher its required return. A common method for estimating
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1216-407: The period of time needed to liquidate the portfolio. VAR can be calculated over this time period. The BIS mentions "... a number of institutions are exploring the use of liquidity adjusted-VAR, in which the holding periods in the risk assessment are adjusted by the length of time required to unwind positions." Alan Greenspan (1999) discusses management of foreign exchange reserves and suggested
1254-403: The possibility of trading with a more informed trader. Hachmeister refers to market depth as the amount of an asset that can be bought and sold at various bid–ask spreads. Slippage is related to the concept of market depth. Knight and Satchell mention a flow trader needs to consider the effect of executing a large order on the market and to adjust the bid–ask spread accordingly. They calculate
1292-400: The public interest. In some provinces the head of the board is known as the treasurer . Paralegals are also elected as benchers, in those provinces where law societies govern their profession. Treasurer A treasurer is a person responsible for the financial operations of a government, business, or other organization. The treasury of a country is the department responsible for
1330-477: The subprime crisis. The firm suffered from liquidity issues despite being solvent at the time, because maturing loans and deposits could not be renewed in the short-term money markets. In response, the FSA now places greater supervisory focus on liquidity risk especially with regard to "high-impact retail firms". Long-Term Capital Management (LTCM) was bailed out by a consortium of 14 banks in 1998 after being caught in
1368-470: The ultimate governing body of the relevant Inn. The benchers govern the finances of the Inn, and they alone have the authority to admit students, to call students to the bar , and to elect other benchers. Today, the benchers of the four English Inns have common standards agreed with the Bar Council . They have the formal power to discipline members of their Inn by suspending or expelling them from membership of
1406-418: The upper bound for a security illiquidity discount is by using a Lookback option, where the premia is equal to the difference between the maximum value of a security during a restricted trading period and its value at the end of the period. When the method is extended for corporate debt it is shown that liquidity risk increases with a bond credit risk. Culp defines the liquidity gap as the net liquid assets of
1444-776: Was used on several occasions as the third great officer of the Crown . Now the title First Lord of the Treasury is the official title of the British Prime Minister . In corporations, the Treasurer is the head of the corporate treasury department. They are typically responsible for: liquidity risk management; cash management ; issuing debt , and capital structure more generally (including share issuance and repurchase ); managing intercompany transactions denominated in foreign currencies, interest rate risk hedging , and currency analytics ; securitizations ; oversight of pension investment management . They also typically advise
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