Change Overview and Rationale - Center for the Study of Financial Market Evolution (CSFME)

UK’s Financial Reporting Council Issues New UK Corporate Governance Code

by David Schwartz J.D. CPA | Sunday, September 21, 2014 | All, Change Overview and Rationale, Lender Directed Voting

The Financial Reporting Council (FRC), UK’s independent regulator responsible for promoting high quality corporate governance and reporting to foster investment, has issued a revised UK Corporate Governance Code. The changes to the Code are designed to strengthen the focus of companies and investors on the longer term and the sustainability of value creation. One aspect of this refocusing is shareholder engagement. The revised code seeks to ensure better communication between boards and shareholders by improving disclosure and transparency on proxy voting issues.

Could Redemption Gates Actually Encourage Runs on Funds?

by David Schwartz J.D. CPA | Wednesday, August 27, 2014 | All, Change Overview and Rationale, Formal Regulatory Remedies

Under rules recently finalized by the SEC, all money market funds will be permitted, and under some circumstances required, to impose liquidity fees and gates against investor redemptions if the fund’s weekly liquid assets fall below specified thresholds. In their release, the SEC said the purpose of these new rules is to mitigate money market funds’ susceptibility to heavy redemptions and improve their ability to manage and thwart possible contagion from redemptions.

What’s in a Name? Would a Derivative by Any Other Name Smell As Sweet?

by David Schwartz J.D. CPA | Tuesday, August 19, 2014 | All, Change Overview and Rationale, Formal Regulatory Remedies

“The different approaches to the interpretation of MiFID I across Member States mean that there is no commonly-adopted application of the definition of derivative or derivative contract in the EU for some asset classes. Whilst this issue has in the past been noted as a concern since the implementation of MiFID, the practical consequences have come to the forefront with the implementation of the European Markets Infrastructure Regulation (EMIR).”

Senate Democrats Call for Executive Action to Stop Corporate Inversions

by David Schwartz J.D. CPA | Wednesday, August 13, 2014 | All, Change Overview and Rationale, Formal Regulatory Remedies

In a letter to President Obama, three Senate Democrats have urged the President to use executive action to end a growing trend in corporate inversions motivated by tax considerations. Senate Assistant Majority Leader Dick Durban (D-IL), Senate Assistant Majority Leader, and Senate Banking Committee members, Jack Reed (D-RI) and Elizabeth Warren (D-MA), called him to use necessary executive authority to end tax breaks for companies that enter into mergers that move their headquarters overseas to avoid paying U.S. taxes.

Does Mandatory Shareholder Voting Prevent Bad Acquisitions?

by David Schwartz J.D. CPA | Tuesday, July 22, 2014 | All, Change Overview and Rationale, Lender Directed Voting

In the United Kingdom, corporate acquisition deals larger than 25% in relative size are subject to a mandatory shareholder vote, while in most of continental Europe there is no vote, and in Delaware voting is largely discretionary. In a new paper by Marco Becht, Professor of Corporate Governance at the Université libre de Bruxelles; Andrea Polo of the Department of Economics and Business at the Universitat Pompeu Fabra and Barcelona GSE; and Stefano Rossi of the Department of Finance at Purdue University studies the effect shareholder engagement has on preserving shareholder value in these kinds of large-scale acquisition transactions. Their study concludes that mandatory voting makes boards more likely to refrain from overpaying or from proposing deals that are not in the interest of shareholders.

BIS Sees the Financial System at a Crossroads

by David Schwartz J.D. CPA | Sunday, June 29, 2014 | All, Change Overview and Rationale, Commentary

In their 84th Annual Report, the Bank for International Settlements examines the current state of global financial affairs and highlights some trends it sees emerging in the financial framework. While noting that the overall financial system has has gained some strength since the crisis, banks remain in a rebuilding phase, concentrating their business models towards traditional banking.

Fed Attention Turns to Wholesale Financing Activities

by David Schwartz J.D. CPA | Thursday, June 19, 2014 | All, Change Overview and Rationale, Formal Regulatory Remedies

In a November 22, 2013 address before the Americans for Financial Reform and Economic Policy Institute Conference, Federal Reserve Board Governor Daniel K. Tarullo outlined a potential regulatory initiative to limit short-term wholesale funding risks.

Blackrock Pushes Back on FSOC Concerns About Securities Lending

by David Schwartz J.D. CPA | Friday, June 06, 2014 | All, Change Overview and Rationale, Formal Regulatory Remedies

In a May 29, 2014 white paper, Blackrock responded strongly to the Financial Stability Oversight Council’s (FSOC) 2014 Annual Report which raised concerns about asset managers and securities lending. In particular, Blackrock’s paper takes issue with FSOC’s assertion that indemnity provided to lending clients by asset managers acting as securities lending agents created extra risk because asset managers do not face the same capital and liquidity requirements as their bank counterparts.

ICGN Proposes Revised Corporate Governance Principles

by David Schwartz J.D. CPA | Wednesday, May 28, 2014 | All, Change Overview and Rationale, Formal Regulatory Remedies, Lender Directed Voting

On March 28, 2014, the International Corporate Governance Network (ICGN), an investor-led organization of governance professionals interested in international corporate governance practices, published its a proposed draft revision to its Global Governance Principles.

FSOC’s 2014 Annual Report Addresses Some Securities Lending and Repo Risks

by David Schwartz J.D. CPA | Wednesday, May 21, 2014 | All, Change Overview and Rationale, Procedural Changes

The US Financial Stability Oversight Council has published its 2014 Annual Report which highlights, among other things, the activities of the Council, significant financial market and regulatory developments, an assessment of those developments on the stability of the financial system, and potential emerging threats to the financial stability of the United States.

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Change Overview and Rationale