Disclosure Regimes - Center for the Study of Financial Market Evolution (CSFME)

European Central Bank Introduces New Data Sets

by David Schwartz J.D. CPA | Wednesday, September 14, 2011 | All, Disclosure Regimes, Formal Regulatory Remedies, Procedural Changes

“Not least the frequently cited deficiencies of the Greek statistical system (with respect to both methodological and institutional aspects) have reminded us of the importance of reliable, accurate and timely statistics for the functioning and credibility of our whole system.” Market events over the past several years have made it quite clear that meaningful and transparent financial data are vital to effective monitoring of market participants as well as understanding the scale of the shadow banking activities and their interconnectedness with the traditional banking system. In a June address in Frankfort, Jürgen Stark, a member of the Executive Board of the European Central Bank (ECB), announced new statistical data sets intended to improve the existing balance sheet and interest rate reporting by “monetary financial institutions.” The ECB has introduced these new data sets as part of their effort develop relevant and real-time policies to assess systematic risks and keep apace of innovations and movements in the financial landscape.

UK Independent Commission on Banking Issues Recommendations

by David Schwartz J.D. CPA | Wednesday, September 14, 2011 | All, Change Overview and Rationale, Disclosure Regimes

Following the financial crisis, the UK established the Independent Commission on Banking (ICB) to examine options for the reform of the country’s banking industry. In June 2010, the ICB was asked to study a range of structural and non-structural reforms to the UK banking sector that would foster financial stability and competition. The ICB issued their final report on September 12. The ICB’s proposals, if ultimately implemented, will have consequences not only for UK banks but also for foreign banks conducting business in the UK, and for counterparties, creditors, and other market participants.

BOE’s Paul Fisher Examines Tail Risks and Contract Design

by David Schwartz J.D. CPA | Saturday, February 19, 2011 | All, Change Overview and Rationale, Disclosure Regimes

In a September 1, 2011 speechat Clare College in Cambridge, Paul Fisher, Executive Director for Markets of the Bank of England, outlined his thoughts on ways risk taking is executed and how contracts between parties assuming these risks can have “a profound impact on systematic stability beyond the normal consideration of formal regulations.”

Infrastructures must become more resilient

by David Schwartz J.D. CPA | Sunday, December 19, 2010 | All, Disclosure Regimes, Formal Regulatory Remedies

Organized exchanges and central counterparty structures are expected to lower the threat from opaque, concentrated trading networks.

Policy Intervention may be needed to Protect Investors

by David Schwartz J.D. CPA | Sunday, December 19, 2010 | All, Disclosure Regimes, Formal Regulatory Remedies

According to the Bank of England, “The lasting legacy of this crisis is too much debt held by too many sectors against too little capital.” A McKinsey study found that, since 2000, gross debt for the ten largest economies grew by US$40 trillion, or a rise of 60%. Bank leverage soared to as much as 50 times equity, as compared with a ratio of less than 10 at the start of the 20th Century. This is not sustainable, say financial regulators.

Better Hedge Fund Data can Help To Inform Legislative Actions

by David Schwartz J.D. CPA | Friday, November 19, 2010 | All, Disclosure Regimes, Procedural Changes

Legislators will be better equipped to enact appropriate reforms if their deliberations are based on meaningful data regarding hedge funds. IOSCO: IOSCO believes that regulators should seek to develop a comparable and consistent set of data to be collected from local hedge fund managers and advisers to monitor systemic risks and prevent gaps in regulatory reporting requirements. We recognise that the legislative process is ongoing in many jurisdictions and their outcomes could further influence the information needed to monitor systemic risk in the hedge fund sector, as well as who collects the data. Nonetheless, setting out these categories of information may help regulators in the assessment of systemic risk and help to inform the relevant legislative debates.

The Credit Crisis was an Epochal Event

by David Schwartz J.D. CPA | Tuesday, October 19, 2010 | All, Change Overview and Rationale, Disclosure Regimes

From July 2007 to March 2009, share prices for global banks fell by 75%. That erased US$5 trillion in shareholder equity. Considering all markets, McKinsey has estimated that the fall in global wealth was US$25 trillion. To put that in context, the lost wealth was nearly 45% of global GDP, or a half year’s wages for the entire working world. On that basis, says Bank of England’s Andrew Haldane, “asset price falls in the UK and US were as large as during the Great Depression.”

Regulators Will Engage Third-Parties When Appropriate

by David Schwartz J.D. CPA | Sunday, September 19, 2010 | All, Disclosure Regimes, Procedural Changes

Although much will be expected of regulators over the next several years, it is unlikely that their budgets will be enhanced commensurately. As a result, creative affiliations will be established with the private sector, to include in-house compliance professionals and external advisors.

Current thinking in regulatory reform

by David Schwartz J.D. CPA | Monday, June 28, 2010 | All, Change Overview and Rationale, Disclosure Regimes

Regulators have reported the conclusions of study groups looking into the causes of, and remedies for the Credit Crisis. A consensus of opinion exists as to causes, with a growing emphasis among larger central banks on the failings of liquidity risk management. All regulators believe new forms of infrastructure will be needed to prevent a recurrence of the conditions leading up to the Crisis. Larger central banks and securities regulators believe better monitoring within the existing infrastructure must be adopted as a global stopgap until the new infrastructures are created.

Risk Management Failed at Many Levels

by David Schwartz J.D. CPA | Friday, February 26, 2010 | All, Change Overview and Rationale, Disclosure Regimes

Regulators during the crisis were most concerned about the nearly unmanageable spike in systemic risk which, according to the IMF, FSB and BIS, is defined as “a risk of disruption to financial services that is caused by an impairment of all or parts of the financial system and has the potential to have serious negative consequences for the real economy.”

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