Common Forms of Credit Derivatives

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Credit Derivatives

Based in the New York-New Jersey region, Rao Chalasani has held directorships with Merrill Lynch and Bank of America-Merrill Lynch. Before assuming these roles, Rao Chalasani served as vice president of global derivatives technology with Deutsche Bank, where he focused primarily on credit derivatives and IR derivatives.

A financial instrument involving the transfer of credit risk without changing ownership of the underlying entity, credit derivatives come in many different forms. Credit default swaps (CDS), which rank among the most common credit derivatives, allow a buyer to receive compensation from the seller in the event of a default. The value of a CDS depends on a number of factors, including the credit quality of both the writer and the underlying entity.

Total return swaps are similar to credit default swaps, except they also incorporate the economic exposure of the underlying asset. Credit spread options feature variable payoffs that depend on fluctuations in the credit spread, while asset swaps exchange a bond’s coupon for LIBOR cash flows and a spread.

Elements of Successful Corporate Strategy Implementation

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Corporate Strategy Implementation

Rao Chalasani, Livingston, New Jersey, resident, has served as the chief technology officer/risk strategist at Merrill Lynch, New York. Borrowing from his diverse background in technology and finance, Rao Chalasani has implemented innovative enterprise risk management strategies to foster company growth.

In the competitive financial services market, developing and implementing unique corporate strategies is essential to remaining relevant. While strategies are effectively developed in boardrooms, they often fail at the implementation stage for various reasons, one being staff reluctance or poor reception. This creates a gap between where the company is and where the company would like to go.

To help close this gap, corporate executives can use three tools at the strategy implementation phase. The first is clarifying strategy. If people don’t understand it, they won’t connect with it. Clarify the strategy so people can rally behind it.

The second is communication. Powerfully communicate strategy to all levels of the organization. Use numerous mediums such as internal blogs, message boards, podcasts, and even luncheons.

Finally, cascade the strategy. This means shifting from ‘what to do’ to ‘how to do it.’ Work the strategy into the practical components of peoples’ jobs. Managers will also help translate elements of strategy into peoples’ daily lives.