entity · derived

Trigger design

26 claims across 6 works, 2011–2017.

Derived node: assembled mechanically from the claims carrying trigger-design. A roster, not an adjudicated definition.

Every claim under this term

• 1908473-003 2011 failure: If conversion of contingent capital securities is triggered too early, before a real financial need for an equity injection exists, the expected financial impact of that injection may dissipate.
• 1908473-004 2011 failure: If conversion from debt to equity is triggered too late, the institution may already be in the resolution stage, and conversion at that point may not supply enough equity to produce the intended finan
• 1908473-005 2011 design: Because policymakers may adopt a suboptimal single trigger design, and because contingent capital has uses at several points in a firm's life cycle, contingent capital securities should be built with
• 1908473-006 2011 design: The second trigger, which increases voting rights before resolution, should fire on evidence that conversion into equity was unsuccessful, that conversion came too early or too late, or that the firm'
• 1908473-008 2011 design: The first trigger should be based on a threshold in market value rather than accounting measures, because a market value trigger avoids total reliance on accounting methods that are open to manipulati
• 1908473-009 2011 design: The volume of contingent capital issuance should be large enough that conversion produces sufficient dilution, and the trigger timeframe should be roughly ninety days.
• 1908473-023 2011 failure: A dual trigger that relies on a financial institution index gains from its use of market prices but is vulnerable to index manipulation and to bondholders attempting to force the institution into bank
• 1908473-028 2011 design: The second trigger should be an objective, automatic, institution specific trigger, with improvement measured through a combination of debt to equity ratio improvement and credit default swap spread n
• 1998455-011 2012 condition: Trigger designs can be ranked by the certainty they give market participants: institution specific triggers presumably grant the most certainty, while regulatory trigger designs provide lower levels o
• 1998455-012 2012 failure: Converting contingent capital securities prematurely, while the institution can still operate without an equity injection, dissipates the benefit: the injection is no longer available at the later mom
• 1998455-013 2012 failure: Converting contingent capital securities too late makes the capital injection superfluous, because by that stage the institution may face unresolvable difficulties that a capital injection can only ma
• 2061166-008 2012 failure: The authors identify a drafting defect in the proposed CRD IV Regulation: the distinction drawn by financial institution in Article 51(a) is ambiguous and the cross reference to the institution referr
• 2061166-027 2012 design: Efficient calibration of the triggering event is the central design problem for contingent capital, and the optimal design of a trigger that converts debt into equity remains unclear.
• 2061166-030 2012 mechanism: The authors posit an inverse relationship between trigger uncertainty and market development: as the uncertainty generated by trigger designs increases, issuance volume of contingent capital securitie
• 2061166-033 2012 failure: Dual trigger proposals draw their central strength from reliance on market prices, but the index leg is a major disadvantage because it can create incentives to manipulate the index or to force an ent
• 2061166-034 2012 design: A second, sequential trigger placed before reorganization or resolution cushions the risk that policy makers misstructure the first trigger, absorbing the negative effects of inadequate or untimely co
• 2097160-013 2012 definitional: The early trigger converts only the executives' portion of debt into equity, ahead of investors' contingent convertible bonds and while the entity is still sound on a micro-prudential basis, which is
• 2097160-014 2012 failure: Regulatory triggers generate the highest level of uncertainty and can produce ad hoc regulatory decisions and adverse market responses, so they are not the best option for contingent convertible bonds
• 2097160-016 2012 failure: Market-based trigger measures are vulnerable to market manipulation and bank runs, while accounting-based measures are updated too infrequently to respond adequately in a financial crisis.
• 2097160-017 2012 design: Institution-specific automatic triggers are the preferred basis for early trigger designs because they are flexible and independent of regulatory discretion.
• 2097160-030 2012 failure: If executives influence the drafting of their own trigger, opportunism within the bounds of fiduciary duty will produce suboptimal early triggers and increase the potential for abuse, because executiv
• 2097160-038 2012 condition: Trigger designs that work well in institutions with the traditional mix of debt-holders and shareholders may be suboptimal once executives themselves hold contingent convertible bonds.
• 2097160-039 2012 design: Who owns the contingent convertible bonds affects the efficiency, effectiveness, and corporate governance results of a trigger design, so ownership characteristics belong in the design analysis.
• 2273857-060 2013 failure: Contingent capital triggers have significant design limitations: accounting based triggers may not respond adequately in financial crises because they are updated too infrequently, while market based
• 2957645-021 2017 condition: Appropriate use of contingent capital triggers can further lower the default risk of the contingent capital securities themselves, on top of the moral hazard reduction that comes from internalizing ba
• 2957645-031 2017 failure: Most of the design features of contingent capital securities and their triggering events remain underdeveloped, yet despite these shortcomings such securities could still help regulators anticipate re

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