Saturday, October 8, 2022

Bringing Crypto Asset Activities Into the Regulatory Perimeter

Tech Innovation Meets Prudential Regulation

Author: David Schwartz J.D. CPA

A collection of the globe's most significant securities trade associations[1] joined forces to file a comprehensive response to the Basel Committee on Banking Supervision's (BCBS) second public consultation on the prudential treatment of banks' crypto-asset exposures. The September 30, 2022, letter voiced support for the design of the crypto-asset exposure framework proposed by  in its June 10, 2021, initial and follow-up June 30, 2022, consultations. However, the associations identified some elements of the proposal that they say "would  meaningfully  reduce banks' ability  to—and  in  some  cases  effectively  preclude banks  from—utilising the benefits of distributed ledger technology ("DLT") to perform certain  traditional  banking, financial  intermediation and  other  financial functions  more efficiently."

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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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Tuesday, October 20, 2020

Squaring ESG with Securities Lending

Compliance without Knowing the Borrower's Purpose - Is it Possible?

Author: David Schwartz J.D. CPA

Sustainable investing is becoming more important to investors when creating portfolios. As a result, institutions often follow policies with formal environmental, social, and governance (ESG) factors to guide their investments. They commit substantial resources to ESG research and produce comprehensive reports about their compliance.[1] But then the same institutions give away their proxy votes when they lend securities for fees to cover their bank charges. And the loans of those securities – and their proxies – go to borrowers with unknown intentions, and often with unknown identities.

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Wednesday, September 30, 2020

Alarm Raised on Stock Loans for "Withholding Tax Schemes”

Findings Point to a New Role for Emerging Fintech

Author: David Schwartz J.D. CPA

European commissioners are reviewing a study from their securities and market authority (ESMA) that includes a recommendation for new laws to combat unfair trading practices and an extended remit for National Competent Authorities (NCAs) to conduct snap audits of securities loans and transactors. Loans deemed to be suspicious would prompt an inquiry to determine penalties for unfair strategies and inappropriate beneficiaries. However, useful audit results may be doubtful based on our preliminary review that uncovered shortcomings in the proposed SFTR surveillance datasets, as well as possible flaws in the study’s basic methodology. 

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