Sunday, June 3, 2012

EU Financial Transaction Tax Casts an Extremely Wide Net

Author: David Schwartz J.D. CPA
On May 23, the European Parliament adopted a controversial financial transaction tax that would impose a 0.1% tax for shares and bonds and a 0.01% tax on derivatives. The language casts a very wide net and would require financial institutions located outside the EU to pay the tax if they traded securities originally issued within the EU, as well as taxing shares issued outside of the EU but subsequently traded by at least one institution established within the EU.
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Friday, June 1, 2012

U.S. to Regulate Foreign Swap Counterparties?

Author: David Schwartz J.D. CPA
The Chairman of the CFTC, Gary Gensler, testified before the Senate Committee on Banking, Housing and Urban Affairs on May 22 on the progress of his agency's regulatory reform of swaps.  Gensler's testimony included details on the CFTC's plans for implementing these reforms cross-border, including an upcoming concept release on the cross-border application of swaps market reforms. This release will consist of interpretive guidance on how the CFTC's swaps regulations apply to cross-border swap activities. It also will include an overview as to when overseas swaps market participants, including swap dealers, can comply with Dodd-Frank reforms through reliance on comparable and comprehensive foreign regulatory regimes (sometimes referred to as “substituted compliance”).
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Tuesday, May 29, 2012

ESMA Claims Lead in Regulating OTC Derivatives

Author: David Schwartz J.D. CPA
Verena Ross, Executive Director of the European Securities and Markets Authority, says that the EU will lead by example in the harmonization and convergence of regulation of OTC derivatives.  With the plan for the EU regulation of OTC derivatives, central counterparties, and trade repositories (EMIR) now having been agreed upon by the European Parliament and the Council, ESMA is due to deliver draft regulatory and implementing technical standards under EMIR in June. Ross believes that if the EU is able to harmonize regulation and integrate supervision in Europe, the same convergence is possible, and necessary, globally.
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Thursday, May 24, 2012

German Regulator at Odds with Global Peers on Shadow Banking Wraps

Author: David Schwartz J.D. CPA
In a recent interview, Dr. Elke König, the head of Germany's Federal Financial Supervisory Authority (BaFin), called for the swift regulation of shadow banking and derivatives. Critical of the FSB's data gathering approach to shadow banking, König said that regulators must push ahead with regulating shadow banking and derivatives straight away. According to König, ignoring or slow walking these reforms will guarantee unpleasant surprises in the near future.  Consequently, she sees it as her mission to rekindle progress in these areas.  
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Monday, May 21, 2012

EC Cites Three Key Questions for Shadow Banking Regs

Author: David Schwartz J.D. CPA
Shadow banking, i.e., credit intermediation outside the regular banking system, may represent the greatest challenge facing financial policy makers today.  Since the G20 Summits in Seoul in 2010 and Cannes in 2011, regulators have struggled to envision the changes needed to reign in shadow banking practices. At an April 27 conference in Brussels, which was dedicated solely to shadow banking, the European Commission released a Consultation Paper with three questions intended to guide future regulation.  

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