failure family

trigger design failure

22 claims across 8 works.

• premature-trigger-dissipation: If conversion of contingent capital securities is triggered too early, before a real financial need for an equity injection exists, the expected finan
• late-trigger-insufficiency: 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
• index-trigger-manipulation: 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 bondhol
• voting-rights-premium-cost: A substantial voting rights increase at the second trigger could raise the cost of contingent capital securities, with issuers demanding premiums that
• strategic-maneuvering-distortion: Strategic maneuvering by creditors before a bankruptcy filing or during plan negotiations could distort the incentive structure the sequential trigger
• Expanded supervisory powers deter voluntary petitions: Because the amendments to the German Banking Act sharply increase the supervisor's intervention powers, the prospect that any systemically important b
• Premature conversion dissipates the capital injection: A trigger that fires too early wastes the equity injection: conversion occurs without a real need for capital or additional voting shareholders, and t
• Late conversion cannot recapitalize a firm already in resolution: A trigger that fires too late is equally useless: by then the financial institution may already be in the resolution stage, and conversion at that poi
• Index trigger invites manipulation and forced bankruptcy: Dual trigger proposals draw their central strength from reliance on market prices, but the index leg is a major disadvantage because it can create inc
• Regulatory discretion trigger uncertainty: Regulatory triggers generate the highest level of uncertainty and can produce ad hoc regulatory decisions and adverse market responses, so they are no
• No self-monitoring under regulatory triggers: Regulatory triggers insufficiently incentivize executives to lower risk, because executives would not have to self-monitor and adjust their own risk-t
• Trigger metric manipulation and staleness: Market-based trigger measures are vulnerable to market manipulation and bank runs, while accounting-based measures are updated too infrequently to res
• Trigger manipulation for cheap stock: Executives paid in contingent convertible bonds have an opportunistic reason to manipulate the triggering event, because conversion at a depressed pri
• Management capture of trigger design: If executives influence the drafting of their own trigger, opportunism within the bounds of fiduciary duty will produce suboptimal early triggers and
• Ownership blind trigger design: Trigger designs that work well in institutions with the traditional mix of debt-holders and shareholders may be suboptimal once executives themselves
• premature-conversion: Converting contingent capital securities prematurely, while the institution can still operate without an equity injection, dissipates the benefit: the
• late-conversion: Converting contingent capital securities too late makes the capital injection superfluous, because by that stage the institution may face unresolvable
• private-ordering-welfare-shortfall: The social welfare maximization potential of contingent capital securities is lower if their design features are left entirely to private ordering, be
• CoCo trigger design failure: Contingent capital triggers have significant design limitations: accounting based triggers may not respond adequately in financial crises because they
• Underdeveloped CCS design features and triggers: Most of the design features of contingent capital securities and their triggering events remain underdeveloped, yet despite these shortcomings such se
• transparency-enabled-peg-attack: Transparency is not an unqualified good for monetary policy: a currency only partially backed by reserves can be arbitraged by a Soros-style shorting
• Indefinite Suspension Destroys Deferral: What breaks the compliance incentive is the possibility that a suspension never ends, not uncertainty about how long it lasts; a mean-preserving sprea