Tuesday, January 25, 2022

The Fed Weighs in on a 'Digital Dollar'

Vast Cross-border Implications for Central Bank Digital Currencies

Author: David Schwartz J.D. CPA

A discussion paper published on January 20th invites the public to explore with the U.S. Federal Reserve Board the creation of a digital version of the U.S. dollar. A Central Bank Digital Currency (CBDC) backed by the Federal Reserve would be designed, according to the Fed’s paper, to compete with cryptocurrencies like Bitcoin and Ethereum. Comments are due by May 20, 2022.

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Thursday, December 30, 2021

Digitized Finance Testing Approved by European Union

Buy-in Agreement clears the way for DLT Settlement Pilot

Author: David Schwartz J.D. CPA

The European Commission has reached agreement with legislators and financial trade groups on a digitized infrastructure to reshape the EU and, by extension, the global securities markets. The resolution affects all transactions involving EU securities, including securities loans, by (1) green-lighting the Distributed Ledger Pilot Regime, an effort to foster fintech innovation in the EU, and (2) delaying mandatory buy-ins, a highly contentious aspect of the ongoing sweeping reforms to the EU's securities settlement system. 

 

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Monday, November 15, 2021

New Trends in Data Ownership

How Data Trusts Can Transform Securities Finance.

Author: David Schwartz J.D. CPA

Certain challenges in securities finance can only be met with better data and newer data models. Market regulators now coping with investor demands for ESG-compliance will have to monitor the disclosures of regulated entities by combing through vast pools of stock loan and proxy voting data. Bank custodians and brokers, if tasked with validating the social propriety of their stock loans, will have to dive deep into customer profile data, deeper than either regulators or vendors can today access efficiently.

 

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Monday, November 8, 2021

Exposing the Rogue Traders

The Case for a Cross-Border Stock Loan Registry, Part II

Author: Ed Blount

Master Criminals don’t usually confess in public. If prosecutors’ charges are true, Sanjay Shah is the leading figure in the largest reported tax swindle in history. Yet, Mr. Shah, unbowed, pleading his case to reporters, has openly admitted to borrowing the assets of widows and orphans in one country to kick-start a pyramid scheme of dividend capture trades, so as to swindle widows and orphans in other countries. Mr. Shah’s attorneys argue that his trades were not illegal. Mr. Shah, according to the reporters, claims everything he did was legal, and then he appeals to the Law of the Jungle:

“If there’s a big sign on the street saying, ‘please help yourself’,
then me or somebody else would go and help themselves.”

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Number of views (1554)

Sunday, August 8, 2021

Germany Throws the Book at Tax Criminals

Cross-border Securities Loans Targeted by EU Tax Auditors

Author: David Schwartz J.D. CPA

German courts and regulators have put securities lenders on notice that cross-border withholding tax (WHT) reclaim "schemes" are now "crimes." Recent developments in Germany have cleared the way for sweeping tax audits and potential criminal prosecutions of borrowers and lenders reaching back 25 years. The so-called "cum-ex" trades have been a focus of European regulators, particularly in Germany and Denmark, whose treasuries have been hit hardest by these trades. Lenders are being advised that there is new potential for legal and criminal jeopardy attached to cum-ex securities lending transactions and that principals and their service providers should be ready for heightened scrutiny.

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Number of views (1778)
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