Annual Conference 2011
Financial Regulation in a Global Market:
Moving Beyond the State
Sponsored by:
Shell International B.V.
Session One - Panel Two
Financial Services Law: Supervisory Structure – Does it Matter?
Chair:
Clive Briault, Risk and Regulation Consulting Ltd
Speakers:
Professor Kern Alexander, University of Zurich
Patrick Starkman, AMF, France
Nick Weinreb, NYSE Euronext
Jane Welch, British Institute of International and Comparative Law
Sponsored by:
Shell International B.V.
Supervisory Structure: Does it Matter?
Jane Welch
www.biicl.org
www.biicl.org
Supervision of Financial Institutions and
Markets
Financial institutions
• Credit institutions (banks, building societies and credit
unions)
• Insurance undertakings (Life, Non-life and Friendly
Societies)
• Investment firms (Securities and Derivatives
broker/dealers, asset managers
• Mortgage lenders and brokers
• Collective investment schemes and managers
• Operators of multilateral trading facilities
www.biicl.org
Supervision of Financial Markets
• Recognised investment exchanges
• Recognised clearing houses
www.biicl.org
What do we mean by Financial
Regulation?
• Macro-prudential regulation – regulation of stability and
resilience of financial system
• Micro-prudential regulation – firm-specific regulation of
safety and soundness
• Regulation of firms’ conduct of business
• Regulation of markets (including Listing Rules)
• Regulation to combat financial crime and market abuse
www.biicl.org
Present Supervisory Structure
• Bank of England - statutory responsibility for financial
stability
• Financial Services Authority( FSA)-statutory
responsibility for prudential supervision and conduct of
business regulation of all authorised financial
institutions
• FSA also responsible for exchanges , clearing houses ,
official listing and financial crime
www.biicl.org
www.biicl.org
www.biicl.org
Regulatory Processes
•Authorisation and Permission
•Removal of Permission and Authorisation
•Approved Persons
•Approval of Controllers
•Passporting
•Rule-Making and waiver of rules
•Supervision of Financial Groups
•Insolvency
www.biicl.org
Session One - Panel Two
Financial Services Law: Supervisory Structure – Does it Matter?
Chair:
Clive Briault, Risk and Regulation Consulting Ltd
Speakers:
Professor Kern Alexander, University of Zurich
Patrick Starkman, AMF, France
Nick Weinreb, NYSE Euronext
Jane Welch, British Institute of International and Comparative Law
Sponsored by:
Shell International B.V.
The new architecture of the EU regulation
Patrick Starkman
Service des affaires internationales
Direction de la régulation et des
affaires internationales (DRAI)
June 2011
The new EU framework for the regulation of the financial markets
The European Parliament and the Council adopted legal texts setting up a
reform of the EU framework for regulation/supervision of the financial
system, aimed at eliminating deficiencies that were exposed during
the financial crisis.
It adopted regulations establishing a European Systemic Risk Board
(ESRB), which will provide macro-prudential oversight of the financial
system, and three new supervisory authorities at the micro-financial
level:
 European Banking Authority (EBA);
 European Insurance and Occupational Pensions Authority (EIOPA);
 European Securities and Markets Authority (ESMA).
The ESRB and the EIOPA will be sited in Frankfurt, the EBA in London
and the ESMA in Paris.
 The new system is operational since 1 January 2011.
P. Starkman
EU regulation network
Stakeholders
ESMA
NSA
Stakeholders
NSA
NSA
NSA
EIOPA
Joint
Committee
Board
of
Appeal
ESRB
NSA
NSA
EBA
NSA
Stakeholders
NSA
NSA
NSA = National Supervisory Authority
P. Starkman
European system of financial supervisors (ESFS)
European Systemic Risk Board (ESRB)
•Governors of the
ECBs
•ECB President and
Vice-President
•National regulators
+
EU
Commission
+
+ 3 ASC + 1 ATC*
Chairs of the
EU Authorities
(EBA, EIOPA &
ESMA)
recommendations + early risk warnings
EBA
National banking
supervisors
P. Starkman
Non-voting:
+
One representative of the
competent national
supervisor(s) per Member
State + EFC President
Micro-prudential Information/developments
EIOPA
National insurance
and pensions
supervisors
*the Chair and the two Vice-Chairs of the Advisory Scientific Committee + the Chair of the Advisory Technical Committee.
ESMA
National securities
markets supervisors
Relations between ESRB- ESAs and NSAs
National Supervisory
Authorities to act or
explain
ESRB to provide:
Analysis,
recommendation and
warning
P. Starkman
ESAs (ESMA, EBA,
EIOPA) to provide
information on firms
and markets
The European Securities and Markets Authority (ESMA)
 Replaces CESR
 EU legal personality
 Own budget : 60% provided by NSAs + 40%
provided by EU
 More expertise = more staff
P. Starkman
ESMA objectives
 Harmonise EU rules by setting-up a
common “EU rulebook”
 Decide on the action to be taken by
NSAs necessary to comply with EU
laws
 Resolve disagreements between NSAs
 Reinforce coordination between NSAs
in emergency situation
P. Starkman
Main powers of ESMA
 Draft binding technical standards
 Ensure consistent application of EU
laws by issuing binding decisions
 Binding mediation
 Binding decisions in emergency
situations
 Possibility to stop dangerous practices
by issuing binding decisions
P. Starkman
UE rulebook:
Parliament-Council directives and regulations + Regulatory Technical
Standards + Implementing Technical Standards + Guidelines (if no rules)
Binding Technical Standards
to ensure uniform application of EU law
•
ESMA develops draft standards
(in areas specified in EU law)
adoption (possibility to amend) by Commission
P. Starkman
Impact of the new framework:
ESMA / NSAs
Implementation of EU rules “EU single rulebook” :
1) Parliament-Council laws + regulatory technical standards + implementing technical
standards = less room for manoeuvre in the implementation of EU laws by NSAs
2) less EU soft law (guidelines & recommandations + “Comply or explain”) more EU hard law
3) “peer reviews” => ESMA binding decision if “Breach of Union Law” by NSA (cf. waivers
MiFID)
Supervision:
1) Individual firm supervision remaining at the national level but:
- In day-to-day supervision: more coordination needed between NSAs or binding mediation
- More coordination in emergency situations (avoiding isolated action or non-action)
- If NSA does not comply: Individual decision by ESMA addressed to financial market
participant (including the cessation of any practice)
2) “Pan-european entities by nature” directly supervised by ESMA:
- Credit rating agencies
- Trade repositories (EMIR currently discussed by EU Institutions)
(+ cf. EU laws currently discussed by European institutions)
P. Starkman
Functioning
Board of Supervisors (BoS)
Key decision making body
Independly appointed full time Chairperson + Heads of NSAs + Observers
Majority voting or Lisbonne Treaty voting for « regulation » and budget
Management Board (MB)
Ensure that the ESMA is run effectively and perform the task assigned to it
ESMA Chair + 6 elected Heads of NSAs
Staff (Secretariat) de l’ESMA
Executes decisions taken by BoS and MB
From 45 staff in 2010 to approx. 130 staff in 2013
P. Starkman
THANK YOU for your attention
P. Starkman
Session One - Panel Two
Financial Services Law: Supervisory Structure – Does it Matter?
Chair:
Clive Briault, Risk and Regulation Consulting Ltd
Speakers:
Professor Kern Alexander, University of Zurich
Patrick Starkman, AMF, France
Nick Weinreb, NYSE Euronext
Jane Welch, British Institute of International and Comparative Law
Sponsored by:
Shell International B.V.
Financial Regulation in a Global Market:
Moving Beyond The State
Supervisory Structure: Does It Matter?
BIICL’ Annual Conference, 10 June 2011
Professor Kern Alexander, Member of the European
Parliament’s Expert Panel on Financial Services, and Chair
for Law and Finance, University of Zurich, and Senior
Research Fellow, Centre for Financial Analysis and Policy,
University of Cambridge
Lessons from the crisis
• Institutions and market structures
– Power of financial contagion in integrated global financial
markets
• Policy analysis
– Market-based financial regulatory models do not
adequately monitor and control systemic risks
• Policy implementation
– Outdated regulation can exacerbate externalities
– Failure in UK, US and other G10 supervisors to give
sufficient attention to safety and soundness issues
26
The Effectiveness of UK-style ‘light-touch’
Principles-based Regulation?
• ‘The United Kingdom’s experiment in a strategy of
light touch regulation to attract business to London.
away from New York and Frankfurt ended tragically.
That should be a cautionary note for other countries
deciding whether to try to take advantage of the rise
in standards in the United States’
Timothy Geithner, US Secretary of the Treasury, 6 June 2011
27
US regulatory and supervisory practices were
suspect as well
• In 2003, then-Vice Chairman of the Federal Reserve Roger W.
Ferguson praised
the truly impressive improvement in methods of risk
measurement and management and the growing adoption of
these technologies by mostly large banks and other financial
intermediaries.’
(The Future of Financial Services - Revisited, 8 Oct 2003)
• Alan Greenspan believed in ‘self-regulation.’
It is critically important to recognize that no market is ever
truly unregulated, . . The self-interest of market participants
generates private market regulation. Thus, the real question is
not whether a market should be regulated. Rather, the real
question is whether government intervention strengthens or
weakens private regulation.’
‘Government Regulation and Derivative Contracts’ (Feb 1997) 28
US & EU Institutional regulatory settings
In Europe
In the US
 Federal Deposit Insurance Corporation
 European Central Bank
Banking Stability Committee
WGMA
WGBD
 Level 3 Committees :
CEBS (Committee of European Banking Supervisors)
Banks
 Federal Reserve
 Office of the Comptroller of the Currency
CEIOPS (Committee of European Insurance and Occupational Pensions Supervisors)
CESR (Committee of european Securities Regulators
 27 EU National Central Banks
Thrift
 Office of Thrift Supervision
Insurance
 States
Securities
 SEC
and/or EU National Supervisors
and/or banks, insurance, securities
 Bank of International Settlement
 Basel Committee - BCBS (Basel Committee of Banking Supervision)
 CGFS (Committee of Global Financial System)
 CPSS (Committee on Payment and Settlement Systems)
Worldwide
FSB
 On vulnerabilities assessment
 On supervision and regulatory corporation
 On standards implementation
IMF
Joint Forum
29
Supervisory Structure – the US experience
• Multiple regulators justified as creating ‚checks and balances‘
to keep agencies ‚from becoming arbitrary or inflexible‘.
• The current structure provides banks with a method . . . of
shifting their regulator, an effective test that provides a limit
on the arbitrary position or excessively rigid posture of any
one regulator. The pressure of a potential loss of institutions
has inhibited excessive regulation and acted as a
countervailing force to the bias of a regulatory agency to
overregulate. - Alan Greenspan (1994)
• Some US regulators (OTS and OCC) were funded by industry
assessments from institutions they regulated. As a result,
the larger the number of institutions that chose these
regulators, the greater their budget
US ‘Fed Lite’ Programme (1999)
• Light-touch regulation and supervision of Financial Holding
Companies
• Intent was to eliminate excessive or duplicative regulation
across a FHC’s subsidiaries and across financial sectors
• However, Fed Lite ‘made it difficult for any single regulator to
reliably see whole picture of activities and risks of large,
complex banking institutions.’ Ben Bernanke, evidence before
the FCIC
• Complex regulatory and institutional structure made it
difficult for anyone regulator, including the Fed, to identify
excessive risks and unsound practices building up in non-bank
subsidiaries of financial holding companies, such as Citigroup
and Wachovia.
•
•
•
•
US has a fragmented structure for financial regulation and supervision
There was an absence of a governing body to oversee the various agencies
Vulnerability to gaps and oversight failures
Dodd-Frank creates ‘Financial Stability Oversight Council’ (the Council) to
oversee financial institutions
• The Council: chaired by Treasury Secretary. Voting members consist of
heads of Treasury, Federal Reserve, OCC (Comptroller), SEC, CFTC
(futures), FDIC (Deposit Insurance), Federal Housing Finance Admin,
National Credit Union Association, & Bureau of Consumer Financial
Protection, and an independent member with insurance expertise
appointed by president. Non-voting members: Office of Financial
Research, Director of Federal Insurance Office, a state insurance
commissioner and state securities commissioner
• Purpose: identify and respond to risks to US financial stability arising from
large interconnected financial institutions and outside financial sector
• Collect information, direct financial research, monitor regulatory
proposals, facilitate info sharing among federal and state agencies
32
Dodd-Frank Act - Major changes in agency
oversight (Title III)
• Fed will regulate thrift holding companies & subsidiaries.
Continue to regulate state member banks
• OCC will regulate national banks and federal thrifts of all sizes
• FDIC will regulate state thrifts of all sizes
• OTS eliminated and functions shifted to Fed, OCC or FDIC
• SEC require registration of investment advisers who manage
over $100 million of hedge funds
• Create Office of National Insurance (in Treasury)
• Create Office of Credit Rating agencies
• Bureau of Consumer Financial Protection (in Fed)
Financial Stability Oversight Council
•
•
•
15 members – Membership – FRB, FDIC, Treasury, SEC, OCC, CFTC, & FHFA
Identify gaps in regulation and provide a forum for discussion of cross cutting
issues
Coordinate macro-prudential systemic views of other regulators
– Identify institutions’ practices and markets that create potential systemic risks
– Synthesize perspectives of various functional regulators
•
Federal Reserve Board – main systemic risk regulator of financial institutions
(Financial Holding Companies) with excess of $50 billion assets.
– Authority to recommend firms that will be subject to Tier 1 FHC supervision
– Systemic regulator (FRB) required to consult with the council in setting prudential
standards for Tier 1 FHCs.
•
Issues:
– Agencies serve as check and balance to systemic regulator?
– How agencies discharge responsibilities in globalised financial markets and
adequately coordinate with other national/EU authorities?
Global reform agenda –
macro-prudential supervision
• Global consensus on need for more effective, better
coordinated macro- and micro-prudential regulation and
supervision
• Oversight of systemic risk has to be globally co-ordinated
• Systemic risk oversight bodies: international, regional,
national
–
–
–
–
–
Global: Financial Stability Board (FSB)
EU: European Systemic Risk Board (ESRB)
UK: Financial Policy Committee of Bank of England
USA: Federal Stability Oversight Council
Switzerland: systemic risk oversight committee (FINMA and Swiss
National Bank)
– France: Council on Financial Regulation and Systemic Risk
35
G20 and Financial Stability Board Initiatives
 The G20 Washington Action Plan and the London & Pittsburgh
Summit Statements on strengthening the financial system
 FSF’s April 2008 and 2009 Reports
 FSB principles for cross-border cooperation on crisis
management
 G-20/FSB protocol to establish colleges for all major crossborder financial institution
 Basel Committee membership increased to 20 (Australia,
Brazil, China, India, Korea, Mexico and Russia)
 Macro prudential to complement micro prudential
regulation
36
The Financial Stability Board: in brief
•
•
•
FSB (global systemic risk)
FSB – G20 mandate to promote global financial stability
Members: developed countries and large developing countries
–
national financial authorities (central banks, regulatory and supervisory authorities and
ministries of finance) international financial institutions
– standard-setting bodies
– committees of central bank experts
•
FSB mandate includes
– Assessing vulnerabilities, and identifying and overseeing action needed to address them;
– Collaborating with the IMF to conduct early warning exercises
•
•
•
FSB soft institutional structure and no binding powers
Flexibility/speed evident in response to crisis in 2009
Impact?
–
–
–
–
–
–
•
Obligations on members
FSB members produce almost 90% of world GDP: leading by example
Peer reviews
Implementation & follow up
Transparency
“Naming and shaming”
Accountability and legitimacy concerns?
37
European System of Financial Supervision
European Systemic Risk Board (ESRB)
[Chair elected by ESRB Board]
Macro-prudential
supervision
Members of
ECB/ESCB
General Council
(with alternatives
where necessary
+
Chairs of
EBA, EIOPA
& ESMA
Information on micro-prudential
development
European
Commission
+
Early risk warning
European Supervisory Authorities (ESAs)
Micro-prudential
supervision
European Banking
Authority
(EBA)
European
Insurance
Occupational
Pension Authority
(EIOPA)
European
Securities &
Markets Authority
(ESMA)
National
Banking
Supervisors
National
Insurance
Supervisors
National
Securities
Supervisors
What role for international law?
• Financial globalisation requires international standards/rules
- how voluntary?
• What international legal relevance?
• The governance gap in international norm setting and the
challenge for efficient international financial regulation – the
dominance of the G10/G20?
• What supervisory structure for global governance
• International norms must be effective, accountable and
legitimate
K. Alexander et al., Global Governance of Financial Systems (OUP, 2006)
39
European Commission ‘Augur’ project
What global financial regulation will look like in 2025?
•
G20/FSB/IMF regime – build on existing international regime –
‘muddling through’
• Regional groupings of states – EU, NAFTA, Mercosur, Asian
groupings
• A return to the primacy of nation states
• Further consolidation of the existing international regime through
the creation of a World Financial Organisation
What institutional structure of international financial
regulation/supervision?
40
Session One - Panel Two
Financial Services Law: Supervisory Structure – Does it Matter?
Chair:
Clive Briault, Risk and Regulation Consulting Ltd
Speakers:
Professor Kern Alexander, University of Zurich
Patrick Starkman, AMF, France
Nick Weinreb, NYSE Euronext
Jane Welch, British Institute of International and Comparative Law
Sponsored by:
Shell International B.V.
Session Two - Panel One
EU Law: Combating Cross-Border Financial Crime in the EU
Chair:
Ros Wright CB, QC, Fraud Advisory Panel
Speakers:
David Clark, City of London Police
Stephen Gentle, Kingsley Napley LLP
Glyn Powell, Serious Fraud Office
Carlo van Heuckelom, Europol
Sponsored by:
Shell International B.V.
Europol AML
Disposition
Carlo van Heuckelom
Head of Unit O3 - Criminal Finances
and Technology
Number of disclosed SAR’s in the EU
Side by side comparison - number of STRs in 2007 and 2008
390000
375000
360000
345000
330000
315000
300000
285000
270000
255000
240000
225000
210000
195000
180000
165000
150000
135000
120000
105000
90000
75000
60000
45000
30000
15000
0
AT
BE
BG
CY
CZ
DK
EE
FI
FR
DE
GR
HU
IE
IT
LV
LT
LU
MT
2007 1085 12830 431
204 2048 1349 5272 17658 12481 9080 1179 10456 11145 11724 39877 115
646
2008 1059 15554 591
258 2320 1553 13861 22752 14465 7349
10091 14505 14602 36418 203 1008
NL
PL
PT
RO
SK
SI
ES
SE
63 214040 25653 724 2574 1943
192
2783 6040 208000 2858
69 388842 13586 568 2338 2274
248
2380 13048 240000 2327
2007
44
UK
HR
2008
Number of disclosed SAR’s in the EU
Number of STRs disclosed
900000
822269
800000
700000
600000
567146
602450
500000
400000
300000
200000
100000
0
2006
45
2007
2008
Conversion rate
Number of STRs investigated
100000
87471
90000
76642
80000
70000
63225
60000
50000
40000
30000
20000
10000
0
2006
46
2007
2008
Conversion rate
Conversion rate (%) in 2006 and 2007
100
90
80
70
60
50
40
30
20
10
2006
0
AT BE BG CY CZ DK EE FI FR DE GR HU IE
AT
47
BE
BG
CY
CZ
DK
EE
FI
FR
DE
2006
9,1
72,7
100
3,9
100
2007
9
77,9
100
4,9
100
GR
HU
13,7
7,8
3,4
100
2,8
7,5
14,4
3,2
100
7
IE
IT LV LT LU MT NL PL PT RO SK SI ES SE UK HR
IT
LV
LT
LU
MT
0
11
0,3
30,7 19,9
6,5
8,6
0,6
38
NL
21,3
PL
PT
RO
SK
SI
ES
SE
UK
HR
0,4
46,5
11,5 35,5
22,4
10,6
3
0,7
52,2
25,4 41,8
35,9
17,3
4,1
“Financial intelligence led policing”
STR’s disclosed
STR’s Submitted for
investigation
2006
2007
2006
2007
565.798
601.319
54.829
67.917
Potential entries in AWF SUSTRANS after
transferral to prosecutorial bodies
48
Session Two - Panel One
EU Law: Combating Cross-Border Financial Crime in the EU
Chair:
Ros Wright CB, QC, Fraud Advisory Panel
Speakers:
David Clark, City of London Police
Stephen Gentle, Kingsley Napley LLP
Glyn Powell, Serious Fraud Office
Carlo van Heuckelom, Europol
Sponsored by:
Shell International B.V.
DCI David Clark
Economic Crime Directorate
City of London Police
International co-operation
•
•
Police to Police Liasion:This is one of the best sources of assistance to law enforcement
•
•
•
EGMONT Group:Set up in 1995 is effectively a number of national Financial units
which assist in analysing and disseminating financial information
•
•
•
CARIN: ( Camden Assets Recovery Inter Agency Network)
A network of Law enforcement and judicary - experts
in the field of asset tracing, freezing, seizure and Confiscation
•
•
•
Eurojust:
European Union body est in 2002 to assist member states in
investigation and prosecution of Serious cross border organised crime
•
•
Crime (International Co-Operation ) Act 2003
Governs the way evidence is obtained from overseas
UK – Hungarian Case
•
Launder of $1 Million USD from UK to Hungary
•
Bank account first compromised in UK - Defendant arrested and sentenced in UK
•
CONFISCATION Proceedings halted in UK as Defendant did not have control of Asset / funds (
which had been transferred to a Company in Hungary)
•
UK RESTRAINT Proceedings Proceeds of Crime Act 2002 are unsuitable as no asset under
control of individual (Restraint is for a person and not the asset)
•
Letters from UK Judge requesting repatriation of monies held NO LAWFUL standing outside the
UK
•
CIVIL RECOVERY Proceedings under Proceeds of Crime Act 2002 are ineffective as the funds
belonged to a victim ( UK Bank)
•
CIVIL ACTION by the Bank only solution as UK LE powers ineffective.
Op Athabasca – Money Laundering
•
International football match-fixing case, UK brokerage being utilised between Organised crime
group based in central Europe and Far east illegal betting sindicate.
•
3 ILOR’s 2009-2010 sent to COLP Money Laundering Team by German Police who had
jurisdiction of the case
•
Two search warrants executed 2009 & 2011 and substantial computer evidence recovered.
•
Also discovered links to Finland on analysis of the evidence.
Op Athabasca - Frustrations
•
Time delays of UKCA processing the request for allocation
•
Legal issues with 1st warrant led to undue delays to authorise 3rd ILOR
•
Delays in visit to Finland to retrieve time critical intelligence due to need for ILOR.
•
Time taken to organise a JIT meeting.
Analytical Work File - EuroPol
•
European response to Payment card and ATM fraud, based at the Haag. Expert
meetings every six months of representatives from all member states.
•
AWF maintained intelligence database, into which member states feed their
intelligence and which is then analysed and disseminated to member states.
•
Uk NFIB is the leading contributor of intelligence to the AWF pool of intelligence.
•
AWF Terminal also co-ordinate and supply analytical and operational support to
member states.
Potential Improvements to AWF
•
The system is occasionally bureaucratic, with intelligence flows
sometimes becoming delayed due to it having to be passed via
International Desks. This could be improved by a series of single points of
contact (SPOCs) for each country, with International desks being included
at the same time.
•
An international alert system of images may prove to be very beneficial.
Op DarkCross – Boileroom investigation
•
Spanish led pro-active intervention into ‘boiler room’ fraud in Palma, Majorca.
•
7 Adresses searched simultaneously with UK assistance on 24th May11 after Urgent request
from Spanish National Fraud squad. Police to Police basis utilised.
•
17 suspects arrested of which 15 were British Nationals.
•
Investigation of fraud and money laundering continues with Spanish retaining the jurisdiction.
•
All in custody in spain pending the trial.
Potential issues remaining
•
Eurojust – 29th June for JIT proposal.
•
Jurisdiction?
•
Intercept evidence?
•
Asset recovery – Victim First?
Giovanni Di Stefano
•
A 4-year investigation into allegations of fraud committed by Giovanni Di Stefano
•
He was suspected of falsely purporting to be a lawyer which enabled him to represent
individuals and receive financial remuneration.
•
For a number of years he resided in Rome and in order to bring a UK prosecution, a European
Arrest Warrant was applied for.
•
18 offences were agreed and this formed the basis of the EAW for submission to the Italian
authorites.
•
…..Until he was identified in Spain.
Giovanni Di Stefano - Cont’d
•
Once EAW was successfully granted, a diffusion notice was sent out. This notice “empowers”
overseas law enforcement to arrest and detain the subject.
•
This process was swift. The Spanish authorities acted upon the diffusion notice within 48 hours
of EAW being granted. Mr Di Stefano was located and detained.
•
Strict timescales were set which required a close working relationship with Spain.
•
Further hurdles were overcome to accommodate the medical issues of the suspect before he
was conveyed back to the UK 3 weeks later.
•
The case is now before the UK courts for prosecution.
Thank you for listening.
Session Two - Panel One
EU Law: Combating Cross-Border Financial Crime in the EU
Chair:
Ros Wright CB, QC, Fraud Advisory Panel
Speakers:
David Clark, City of London Police
Stephen Gentle, Kingsley Napley LLP
Glyn Powell, Serious Fraud Office
Carlo van Heuckelom, Europol
Sponsored by:
Shell International B.V.
Session Three - Panel One
Competition Law: Competition Policy, State Aid & Financial Institutions
Chair:
Dirk Hudig, FIPRA
Speakers:
Diane Coyle OBE, Enlightenment Economics and Former Advisor to the UK
Treasury
Christian Ahlborn, Linklaters LLP
Fod Barnes, Oxera
Sponsored by:
Shell International B.V.
If you only have a hammer…
The Role of Competition Policy before, during and after
the Financial Crisis
Christian Ahlborn
BIICL/Financial Regulation in a Global Market
Moving Beyond the State
10 June 2011
Overview
> Some preliminary points
> Competition policy and the Financial Crisis
> State aid policy and the Financial Crisis
> Competition policy after the Financial Crisis
> Conclusions
66
Some Preliminary Points
67
Some Preliminary Points (1)
> Conceptual clarifications
Competition policy
Consumer policy
> supply side issues
> demand side issues
> problems of market power
> problems of transparency / lack
of information
Regulation
> fundamental issues of market failure…
> …which require permanent supervision
68
Some Preliminary Points (2)
> The beauty of hindsight and the fallacy of inevitability:
> Pre 15 September 2008, the Great Recession was
a possibility
> Post 15 September 2008, the Great Recession is
seen as an inevitability
> Distortion of views and the fallacy of inevitability
> Moral hazard vs. mis-assessment of risk
> Government intervention regarding credit supply
> Reliance on wholesale funding
69
Competition Policy and the Financial Crisis
70
Key elements of the Financial Crisis
Part 1
Part 2
> Global financial
imbalances
> Increasingly risky
lending policy
> US monetary policy
> False assessment
and lack of
transparency of risks
> Abundance of cheap
money
> Collapse of US subprime asset markets
> Increased reliance
on wholesale
funding
Part 3
> Breakdown of interbank trust
> Dramatic reduction
in credit availability
> Collapse of wide
range of asset
markets
> Spreading exposure
to risky lending
practices to banks in
current account
surplus countries
71
Competition Policy as Contributor?
Part 1
> Global financial
imbalances
> US monetary policy
> Problems of
macroeconomic policy
> Asian countries learning
from previous financial
crises (just not the right
lessons)
> China’s exchange rate
policy
> US monetary policy
Part 2
Part 3
> Increasingly risky
lending policy
> Breakdown of interbank trust
> False assessment
and lack of
transparency of risks
> Dramatic reduction
in credit availability
> Dysfunctional
competition (we will
come back to Part 2)
> Bank run in the
shadow banking
sector
> Regulatory issues
72
Dysfunctional competition (1)
> …in the mortgage markets:
> complex products/inappropriate risk models
> inappropriate bonus systems
> lack of internal monitoring and supervision
> shift to “originate to distribute” model
> uninformed buyers (“Düsseldorf”)
> reliance on rating systems
> …in the market for credit ratings:
> credit rating agencies paid by financial institutions
> insufficient information
73
Dysfunctional competition (2)
> Key factors:
> lack of transparency
> asymmetric information
> distorted incentives
> ineffective governance
> Consequences:
> excessive supply of credit
> excessive entry
> Problems not normally addressed by competition policy:
> issues of market power
> insufficient supply of goods or services
74
State aid and the Financial Crisis
75
The Role of State Aid Control
> Contrary to common perception, state aid has not resulted in significant distortion of
competition
> moral hazard
> crowding out
> harm to competitors’ incentives to compete
> shifting an unfair share of the burden . . . to other Member States
> Positive impact in relation to testing of “viability”
> Negative impact in relation to “compensatory measures”
> behavioural remedies
> balance sheet reduction
> ‘fringe’ divestments
> ‘core’ divestments
> Lessons learnt
Competition Policy after the Financial Crisis
77
Role of Competition Policy after the Financial Crisis
> Strong signals from certain competition authorities to intervene in financial
markets:
> EU: CDS inquiry
> UK: OFT, ICB, TSC etc
> Justification for antitrust intervention
> Preventative measure against future crises (including moral hazard)
> Additional competition concerns as a result of the financial crisis?
> state aid
> increase in concentration
> Competition concerns pre-financial crisis
> consumer inertia
Competition Issues in the Financial Sector (1)
> Issue 1: Consumer Inertia
> Due to
> insufficient (helpful) information
> other switching costs
> Possible solutions
> better information
> reduction of switching costs (e.g. number portability)
> “nudging” of customers
> change of pricing model (free banking)
> Increased choice of supply does not solve the issue
Competition Issues in the Financial Sector (2)
> Issue 2: increased concentration
> Due to take-overs (e.g. LTSB/HBOS) and exits
> Absolute concentration levels not particularly high
> HHI: 1830 for PCA (up from 1290)
> largest player: LBG with 25% in PCA (post-divestment)
> far below normal merger control intervention
> Possible solutions
> break up
> increase in state aid divestments
> Potentially high costs with uncertain outcome
Competition Issues in the Financial Sector (3)
> Issue 3: Moral hazard (“too big to fail”)
> How many banks are not “too big” (or “too inter-connected”)?
> Possible solutions
> living wills
> “CoCos”
> improved state aid rules
> Beyond state aid rules, not clear that competition policy has a role
to play
Competition Policy and Prudential Regulation
> Competition policy not part of the tool kit to ensure stability of the financial
regulation
> Complex inter-relationship between competition policy and prudential
regulation
> Competition and stability not mutually exclusive
> Competition in financial markets is important . . .
> . . .but if prudential regulation gets it wrong, then competition makes
matters worse
> Law of unintended consequences: hospital pass for ICB
> Priorities are important
> Fix prudential regulation first
> Then deal with competition issues
Conclusions
83
Conclusion
> Just because we have a hammer, does not turn all problems into a
nail; in fact there are relatively few nails in the financial sector
> Dysfunctional competition in financial markets were a major factor in
the financial crisis…
> …but competition policy does not have the tools to deal with the
problems
> Focus should be on prudential regulation
> Competition policy may need to develop tools to deal with demand
side problems (in certain markets only)
> State aid policy needs to be improved
84
Session Three - Panel One
Competition Law: Competition Policy, State Aid & Financial Institutions
Chair:
Dirk Hudig, FIPRA
Speakers:
Diane Coyle OBE, Enlightenment Economics and Former Advisor to the UK
Treasury
Christian Ahlborn, Linklaters LLP
Fod Barnes, Oxera
Sponsored by:
Shell International B.V.
Session Four - Panel Two
International and Comparative Law Aspects of Financial Regulation
Chair:
Dr Duncan Fairgrieve, British Institute of International and Comparative Law
Speakers:
John Biggins, Centre for Regulation & Governance, UCD
Dr Iwa Salami, University of East London
Lorenzo Sasso, PhD Candidate, LSE & Nicolette Kost de Sèvres, UNSW & NYSE
Euronext
Sponsored by:
Shell International B.V.
John Biggins
Blanaid Clarke
Colin Scott
UCD Centre for Regulation & Governance
The Issue
 A transnational private regulatory regime has been





prevalent in OTC derivatives markets since the 1980’s
International Swaps and Derivatives Association (ISDA)
has issued boilerplate contracts enforceable in particular
courts (NY, London)
SWAPS Code, Master Agreements 1987, 1992 and 2002
Credit support annex, definitions etc
Question is whether this regime can be conceptualised
as a purely self contained private contract based regime?
Could there be normative and practical regulatory ‘blind
spots’, especially in light of recent reform proposals in
the US and EU?
Derivatives – What are they?
 Have probably been used since at least 2000 B.C.
 Are ‘bets’ on stock, commodities, weather etc
without physically owning the underlying
 Counterparties agree to pay or receive currency,
dependant on whether or not some extrinsic,
uncertain event occurs in future (Lynch 2011)
 Hedging theoretically beneficial in risk allocation
 Speculator with speculator trading more
problematic. Zero sum or negative sum game. On
average speculators will lose (Lewis 2010)
 May be considered analogous to traditional forms
of gambling (Stout 1993-2011, Lynch 2011, Hazen
2005)
 Exchange traded and ‘over the counter’ (OTC)
2000-2008 – What Happened?
 After years of uncertainty lobbying (e.g. G30) and the





‘Greenspan doctrine’ heralded CFMA 2000, exempted OTC
derivatives from regulation in the US while also rendered
court enforceable. Old common law rule superseded
UK FSMA 2000 mostly applicable general regulation (e.g.
insider trading, market abuse)
Although specific regulation for ‘non sophisticated
investors’ in OTC derivatives markets (risk warnings),
mostly carrying over from the FSA 1986. But caveat emptor
for ‘eligible counterparties’ (Awrey 2011)
Explosion in OTC derivatives transactions
A network of ‘anchors’ for global capitalism replacing the
Gold Standard? (Bryan & Rafferty 2006)
Although there were other ‘regulatory influences’ (Basle,
IAS etc). Most importantly ISDA product based regulation
OTC Derivatives Regulatory Space - Problems with Contracts
Market
Actors
contracts
Market
Actors
listing
& trading
rules
Derivatives
Exchanges
OTC Derivatives Regulatory Space – A Simple Standards Process?
ISDA
membership
master
agreements
consultation
Market
Actors
contracts
Market
Actors
listing
& trading
rules
Derivatives
Exchanges
OTC Derivatives Regulatory Space – Contracts Plus?
Model netting
legislation
(c. 40 March 2011)
ISDA
Ministers/
Legislature
opinions
Agencies
Legal
Profession
membership
consultation
Market
Actors
contracts
master
agreements
Opinions:
Netting and collateral
(c. 50)
Market
Actors
listing
& trading
rules
dispute
resolution
Derivatives
Exchanges
Courts
Netting and Opinions – So What?
 Payment netting permits efficient transaction management





between counterparties producing daily settlement figures
But most important category is ‘close out netting’,
permitting one single settlement figure on ‘termination
event’ or ‘event of default’
Close out netting can conflict with the spirit and substance
of bankruptcy laws
Now enjoys ‘safe harbour’ under Chapter 11 in US.
Controversial systemic risk arguments. Also UK and
elsewhere
Position was less clear in other jurisdictions and legal
traditions
Netting opinions also important, especially where netting
legislation does not exist. Similarly collateral opinions
ISDA – In the National State’s Embrace
 ISDA is not an SRO
 But is also not a self contained private ordering regime
similar to those described by Lisa Bernstein (1992, 2001)
and Robert Ellickson (1986) either
 Perhaps the posting of collateral from the outset may
obviate the requirement for interpersonal trust to maintain
relationships between contracting parties (Riles 2008)
 Most significant, ISDA does not systematically reject state
made law, it systematically embraces it in order to shore up
its otherwise private contract based regime, for example
through transposition of netting protection
 Governments transpose ISDA norms into national law but
without mentioning ISDA itself. A sign that ISDA
standards are very strong (Partnoy 2007)
Implications of the ISDA regime
 The ISDA regime appears efficient, at least for the dealers.




Members actively choose to use Master Agreement
From legitimacy standpoint could be seen as a form of
technocratic expertise which is frequently mirrored by the role of
independent experts public policy making (Cafaggi, Scott &
Senden 2011)
Or ‘negotiated governance’. In public/private policy making
‘public acceptability might derive from a variety of sources’.
Efficacy and ‘aggregate accountability’(Freeman 2000)
In Ireland, the netting law was debated in parliament anyway, at
least implicating democratic legitimacy (Schwartz 2002)
In fact the very legitimacy of the concept of the State,
understood through its monopoly in norms production, may
demand actively assimilating such private norms rather than
allowing them to operate as ‘autonomous law’ (Michaels 2003)
Implications of the ISDA Regime
 BUT it is not settled that close out netting exemptions are socially




optimal, benefits may be largely internalised to derivatives dealers
(Bergman et al. 2004).
May be potential for serious negative externalities through
increased systemic risk (Lubben 2010, 2009; Bliss & Kaufman 2005)
And in the case of purely speculative derivatives trading, whether
netted and collateralised or not, we have observed the fallout for net
social welfare in the wake of the GFC
So the State legally shoring up activities which are analogous to
straightforward gambling offers a legal respectability which may be
highly questionable in a normative sense
Therefore, the ability of powerful actors such as ISDA and their
members to have their norms enshrined, which may not align with
voter interests, may represent a manifestation of a ‘democratic
market failure’ (Benvenisti 1999)
OTC Derivatives Regulatory Space – Regulation Displacing Contracts?
model legislation
Ministers/
Legislature
ISDA
regulatory
rules
opinions
Legal
Profession
membership
consultation
Market
Actors
contracts
Agencies
master
agreements
Courts
opinions
Market
Actors
listing
& trading
rules
regulatory
oversight
dispute
resolution
Derivatives
Exchanges
Private Regulation – Forgotten But
Not Gone?
 In the wake of the Global Financial Crisis it was decided to







increase public oversight of OTC derivatives
US Wall Street Reform and Consumer Protection Act
EU Market Infrastructure Regulation/MiFID Review
Aim to push much pre-existing OTC derivatives trading on
to ‘designated contracts markets’ or swap execution
facilities, through CCP’s and to record trades through trade
repositories.
Mostly EU/US. Not a significant imperative in Australia
and Singapore. Canada on provincial basis (Quebec)
New relationships, old outcomes? (accountability,
governance)
ISDA at the forefront working with legislators
Implications? Adapting ‘private legal devices’? (Braithwaite
2011)
Session Four - Panel Two
International and Comparative Law Aspects of Financial Regulation
Chair:
Dr Duncan Fairgrieve, British Institute of International and Comparative Law
Speakers:
John Biggins, Centre for Regulation & Governance, UCD
Dr Iwa Salami, University of East London
Lorenzo Sasso, PhD Candidate, LSE & Nicolette Kost de Sèvres, UNSW & NYSE
Euronext
Sponsored by:
Shell International B.V.
Financial Regulation in Emerging
Economies in Africa – Taking a Leaf
from Financial Regulation in Advanced
Economies or not?
Dr Iwa Salami
UEL
BIICL Annual Conference
10 June 2011
Introduction
This presentation covers the following:
 Brief assessment of the integration of Africa in the global
financial market
 The effect of the recent financial crisis on African
Emerging Markets
 The case for a regional approach to regulation using the
New EU Financial Regulatory Framework
 Concluding remarks
The Integration of Africa in the Global Financial Market
Africa was previously absent from the international
financial market (excluding South Africa)





Weak financial regulatory regimes
Failure to implement international financial standards
Poor institutions and laws
Poor enforcement mechanisms
Weak economies /bad governance
Changes
 South Africa
Has been a great player in the international financial market for years
The JSE has about 90 percent of the combined market capitalization of the entire continent.
 Nigeria
In 2007 Nigeria became very active in the international financial market
 Ghana
Also became active in 2007
The best performing capital market in the world in 2008 per Bloomberg
 Kenya
Fairly nascent capital markets but increase in foreign portfolio investments in the stock market from foreign financial
institutions before the crisis
Reason for changes
 High rate of return relative to mature markets
 Opportunities for risk diversification
 Opportunities to partake in country prospects and seek out
undervaluation in specific sectors
 Increased growth prospects
 Growth trends are not synchronized with advanced
economies
The Effect of the Recent Financial Crisis
 Frenetic capital flights (South Africa and Nigeria)
 Falling equity markets and capital flow reversals (South
Africa and Nigeria)
 Scarce external financing for corporations and banks
(South Africa and Nigeria)
 Postpone planned borrowing from the international
financial market (Ghana and Kenya)
Weak Regulatory Frameworks worsened the Impact of
the Crisis
Common Challenges




Weak supervisory frameworks
Weak enforcement of banking and securities regulation
Poor corporate governance (banks and in companies)
Poor disclosure
Strengthened regulatory regime would boost investor
confidence and return into the market in the aftermath of
the crisis
The Case for a Regional Approach to Regulation using
EU Financial Regulatory Framework
Case for regional approach as countries have been
unable to implement international standards
All countries belong to a REC

South Africa (SADC)

Nigeria (ECOWAS – WAMZ)

Ghana (ECOWAS – WAMZ)

Kenya (EAC, COMESA)


African integration inspired by European integration
framework
Free Trade Agreement
Customs Union
Common markets
Monetary Union
Most African RECs adopt the EU Treaty Framework –
WAEMU, ECOWAS, COMESA, EAC, SADC
New EU Financial Regulatory Framework
European Systemic Risk Board (ESRB) (highest level)

ECB Governor chair
 European System of Financial Supervisors (ESFS)
(middle level) (comprise of the 3 ESAs)



European Banking Authority
European Insurance and Occupational Pensions Authority and
European Securities and Markets Authority
 National Supervisory Authorities (the lower level)

National Banking Supervisors,

National Insurance Supervisors and

National Securities Supervisors
(overseen by the European System of Financial Supervisors (ESFS))
EU financial regulatory framework requires:




Strong adherence to regional treaties and instruments
Effective coordination among national supervisors
Strong domestic financial regulatory authorities
Strong domestic financial regulation
Not likely that the framework would be adequate to
current stage of development in regulatory framework
Varied framework for financial regulation among RECs
 RECS with monetary Unions or MU agendas
WAEMU, CEMAC, ECOWAS-WAMZ
 RECs without ongoing Monetary Union agenda
EAC, SADC, COMESA
- No organised African-wide coordinated effort
- A 2010 AfDB report sets out stages for achieving financial
integration within RECs
Concluding remarks: Pragmatic approaches to regional
financial regulation in Africa

-
Strengthening the regional framework
The general REC legal and institutional framework
Framework for economic integration
Framework for financial integration
 Strengthening domestic framework
Strengthening domestic legal framework
Strengthening domestic financial regulation
-
Including enforcement
Corporate governance
Disclosure standards
For further study see
 African Development Bank, ‘Financial Sector Integration in Three Regions in Africa How
Regional Financial Integration Can Support Growth, Development, and Poverty
Reduction’ African Development Bank 2010

Salami, I. (2010) ‘The Financial Crisis and a Regional Regulatory Perspective for
Emerging economies in Africa’ Journal of International Banking Law and Regulation
Volume 25, Issue 3: 128 – 139.

Salami, I. (2008) ‘Devising a Governance Structure for the African Union’ African
Journal of International and Comparative Law, Volume 16, No 2: 262 -273.

Salami, I. (2008) ‘Banking Harmonisation in an African Context’, Journal of Banking
Regulation, Volume 9, No 3: 187–195.

Salami, I. (2008) ‘The Global Credit Crunch Impact on Emerging Economies’,
Butterworths Journal of International Banking and Financial Law, Volume 34, No 4:201 202.
Session Four - Panel Two
International and Comparative Law Aspects of Financial Regulation
Chair:
Dr Duncan Fairgrieve, British Institute of International and Comparative Law
Speakers:
John Biggins, Centre for Regulation & Governance, UCD
Dr Iwa Salami, University of East London
Lorenzo Sasso, PhD Candidate, LSE & Nicolette Kost de Sèvres, UNSW & NYSE
Euronext
Sponsored by:
Shell International B.V.
The new institutional Framework of European Financial
Markets: A real improvement or small political step
forward?
ESMA’s Legal powers
Nicolette KOST DE SEVRES and Lorenzo SASSO
Friday, June 10th 2011
British Institute of International and Comparative Law
116
I. THE NEW EUROPEAN SYSTEM OF FINANCIAL
SUPERVISORS – Context
How does a new financial supervisory structure fit in the
present context in Europe?
• Recent financial crisis and new challenges for the stability of the
global financial and economic systems : G20 recommendations to
assess Systemic Risk
• MiFID Regulation: one of the most important legal reforms applying
to Financial Markets of the EU. MiFID has a direct legal impact in
the creation of a fragmented market, and therefore creates a
competitive environment between Market participants
• Need for a centralized Credit Rating Agencies mechanism
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I. THE NEW EUROPEAN SYSTEM OF FINANCIAL
SUPERVISORS (…)
A. Steps that led to the creation of ESMA:
• October 2008: EC mandates the Larosière Group
• February 2009: Larosière Report is submitted to the EC. It is the
first and most important international integration of Financial
Markets in Europe
• September 2010: EC approves legislation creating a new European
System of Financial Supervision (“ESFS”)
• January 1, 2011: ESMA is established legally as an independent
EU Authority and becomes fully operational.
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a) Remodeling of the structure
-
From Committees to EU Authorities
CESR becomes ESMA, CEBS becomes EBA, CEIOPS becomes EIOPA
Role of the ESRB - note that ESBR has no legal personality
MICRO-PRUDENTIAL OVERSIGHT vs. MACRO-PRUDENTIAL RISK ASSESMENT: a
collaboration between the bodies : advice/warnings vs. information exchange
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b) Regulation establishing ESFS and ESMA
• REGULATION (EU) No 1092/2010 OF THE EUROPEAN PARLIAMENT
AND OF THE COUNCIL of 24 November 2010 on European Union
macro-prudential oversight of the financial system and
establishing a European Systemic Risk Board
• REGULATION (EU) No 1095/2010 OF THE EUROPEAN PARLIAMENT
AND THE COUNCIL of 24 November 2010 establishing a European
Supervisory Authority (European Securities and Markets
Authority), amending Decision No 716/2009/EC and repealing
Commission Decision 2009/77/EC
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c) From CESR to ESMA: roles and responsibilities
ESMA
CESR
-
-
Advisory body to the
EC
Coordinated activities
between national
securities regulators
General oversight of
the implementation of
European Legislation in
member states
-
-
-
EU Authority with Legal
personality
Accountable to the EP and
E council
All previous tasks/powers
of ESMA
Power to develop rules for
Europe’s securities
markets
Power to impose specific
restrictions on market
participants
Supervision of CRAs
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B. THE LEGAL POWERS AND
STRUCTURE OF ESMA
a) ESMA’s governance structure
Board of
Supervisors
• Responsible of ESMA’s
key decisions (a.43)
• Composed of the
heads of national
regulators,
Chairperson, EC rep,
ESBR rep, EBA and
EIOPA rep
Management
Board
The Board of
Appeal
• Ensures that ESMA
carries its mission
(a.47)
• Composed of
Chairperson and 6
members of Boardof
Supervisors
• Joint body of the ESAs
• Ensure the application
of Appel remedies
(a.60)
• Composed of 6
members/experts
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B. THE LEGAL POWERS AND STRUCTURE
OF ESMA (…)
b) Tasks and Powers
Establish common
regulatory and
supervisory standards
(art. 8)
• Draft Regulatory technical standards
• Issue guidelines and recommendations based on Art.1(2)
• Contribute to consistent application of legally binding Union acts
• Coordination role
Actions in emergency
situations (art.18)
• In cases which may affect the orderly functionning and integrity
of financial markets – power to faciliate and coordinate actions
and adopt individual decisions
• Identification and measurement of systemic risk in consultation
with ESBR
Settlement of
disagreements
between competent
authorities(art.19,20)
• In cross border situations
• Across sectors
• ESMA has a legallyu binding mediation role to resolve disputes
(art. 21 (4)).
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C. SUPERVISION OF CRAs
• Unique role of Credit Rating Agencies (« CRAs »)
• CRAs lack of liability
• New Regulation for CRAs:
REGULATION (EU) No 513/2011 OF THE EUROPEAN
PARLIAMENT AND OF THE COUNCIL of 11 May 2011 amending
Regulation (EC) No 1060/2009 on credit rating agencies
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C. SUPERVISION OF CRAs (…)
Registration and
supervision of
CRAs
• CRAs have to apply for registration with ESMA,
which will then decide on each of them.
• possibility of charging fees
• monitor that CRAs comply with Regulation.
• ESMA has supervisory powers, such as requesting
relevant information, hearing of persons, examining
records and conducting on-site inspections.
Day-to-day
supervision
Taking appropriate
supervisory
measures if breach
• ranging from the issuance of a public notice to the
withdrawal of the registration, depending on the
seriousness of the breach.
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C. SUPERVISION OF CRAs (…)
ESMA’s specific powers towards CRAs:
• Necessary powers to carry out an effective supervision over
CRAs
• Require CRAs and all persons involved in rating activities to
provide all necessary information
• Examine records, data, procedures (incl. telephone and data)
• ask for an oral explanation, interview or summon
• carry out on-site inspections at the premises of CRAs
• Impose a sanction if breach of the CRA Regulation (ranging
from temporary prohibition of issuing ratings, suspension of the
use of the credit ratings or withdrawal of registration)
• Request Commission to impose on a fine if CRA has
intentionally or negligently committed a breach of the Regulation.
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D. LEGAL, ECONOMIC AND POLITICAL IMPLICATIONS
a. Potential structural, legal and technological challenges
Regulation
(MiFID, EU Reg, ect.)
Assessing Market
Quality (Evidence based
policy making)
The need to adapt tools
and technology for the
new market structure
Market participants:
Regulators
Exchanges/MTFs
Financial Intermediaries
Asymmetry of technology between participants:
• Financial Intermediaries are technologically ahead of many Market
participants as Regulators until now only looked at their respective
markets.
• Regulators need to increase their supervisory tools in order to follow the
Market.
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D. LEGAL, ECONOMIC AND
POLITICAL IMPLICATIONS (…)
Criticisms , challenges and achievements
•
•
•
•
ESMA’s Powers
ESMA’s nomination process
Challenges of the new CRAs Regulation
ESBR’s issues of legal certainty and powers
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Thank you - Merci
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Session Four - Panel Two
International and Comparative Law Aspects of Financial Regulation
Chair:
Dr Duncan Fairgrieve, British Institute of International and Comparative Law
Speakers:
John Biggins, Centre for Regulation & Governance, UCD
Dr Iwa Salami, University of East London
Lorenzo Sasso, PhD Candidate, LSE & Nicolette Kost de Sèvres, UNSW & NYSE
Euronext
Sponsored by:
Shell International B.V.
Annual Conference 2011
Financial Regulation in a Global Market:
Moving Beyond the State
Sponsored by:
Shell International B.V.