Institutional pressures on financial services firms: the role of information systems in regulatory compliance

The financial crisis of 2008 led to new international regulatory controls for the governance, risk and compliance of financial services firms. Information systems play a critical role here as political, functional and social pressures may lead to the deinstitutionalization of existing structures, processes and practices. This research examines how an investment management system is introduced by a leading IT vendor across eight client sites in the post-crisis era. Using institutional theory, it examines changes in working practices occurring at the environmental and organizational levels and the ways in which technological interventions are used to apply disciplinary effects in order to prevent inappropriate behaviors. The results extend the constructs of deinstitutionalization and identify empirical predictors for the deinstitutionalization of compliance and trading practices within financial organizations.

The role of rules-based compliance systems in the new EU regulatory landscape: perspectives of institutional change

Purpose The research objective of this study is to understand how institutional changes to the EU regulatory landscape may affect corresponding institutionalized operational practices within financial organizations. Design/methodology/approach The study adopts an Investment Management System as its case and investigates different implementations of this system within eight financial organizations, predominantly focused on investment banking and asset management activities within capital markets. At the systems vendor site, senior systems consultants and client relationship managers were interviewed. Within the financial organizations, compliance, risk and systems experts were interviewed. Findings The study empirically tests modes of institutional change. Displacement and Layering were found to be the most prevalent modes. However, the study highlights how the outcomes of Displacement and Drift may be similar in effect as both modes may cause compliance gaps. The research highlights how changes in regulations may create gaps in systems and processes which, in the short term, need to be plugged by manual processes. Practical implications Vendors abilities to manage institutional change caused by Drift, Displacement, Layering and Conversion and their ability to efficiently and quickly translate institutional variables into structured systems has the power to ease the pain and cost of compliance as well as reducing the risk of breeches by reducing the need for interim manual systems. Originality/value The study makes a contribution by applying recent theoretical concepts of institutional change to the topic of regulatory change uses this analysis to provide insight into the effects of this new environment

Workers with elderly dependants: employment law’s response to the latest care-giving conundrum

This paper considers how employment laws are being used in response to what we have termed ‘the eldercare/workplace conundrum’. It is well known that people are now living longer but health is still failing in a significant percentage of older people, meaning that many adults require care for longer, albeit to varying degrees and for varying amounts of time. Many of these individuals will receive care from relatives or close friends who are participating in the labour market: this is increasingly likely as adults are expected / wanting to remain in paid work for longer, often into their 60s and 70s. The requirements of elderly dependants can cause these workers huge difficulties and dilemmas as they attempt, across time, to accommodate the particular needs of the person for whom they wish to provide care, often a loved one, and meet the particular demands of their employment relationship. In this paper we consider why this is an area of social policy that warrants effective legal engagement and consider, drawing on various examples of legal responses in other countries that face similar conundrums, what might improve legal engagement in this area.

Parabens can enable hallmarks and characteristics of cancer in human breast epithelial cells: a review of the literature with reference to new exposure data and regulatory status

A framework for understanding the complexity of cancer development was established by Hanahan and Weinberg in their definition of the hallmarks of cancer. In this review, we consider the evidence that parabens can enable development in human breast epithelial cells of 4/6 of the basic hallmarks, 1/2 of the emerging hallmarks and 1/2 of the enabling characteristics. Hallmark 1: parabens have been measured as present in 99% of human breast tissue samples, possess oestrogenic activity and can stimulate sustained proliferation of human breast cancer cells at concentrations measurable in the breast. Hallmark 2: parabens can inhibit the suppression of breast cancer cell growth by hydroxytamoxifen, and through binding to the oestrogen-related receptor gamma (ERR) may prevent its deactivation by growth inhibitors. Hallmark 3: in the 10nM to 1M range, parabens give a dose-dependent evasion of apoptosis in high-risk donor breast epithelial cells. Hallmark 4: long-term exposure (>20weeks) to parabens leads to increased migratory and invasive activity in human breast cancer cells, properties which are linked to the metastatic process. Emerging hallmark: methylparaben has been shown in human breast epithelial cells to increase mTOR, a key regulator of energy metabolism. Enabling characteristic: parabens can cause DNA damage at high concentrations in the short term but more work is needed to investigate long-term low-doses of mixtures. The ability of parabens to enable multiple cancer hallmarks in human breast epithelial cells provides grounds for regulatory review of the implications of the presence of parabens in human breast tissue.

Managing governance, risk and compliance for post-crisis regulatory change: a model of IS capabilities for financial organizations

The 2008-2009 financial crisis and related organizational and economic failures have meant that financial organizations are faced with a ‘tsunami’ of new regulatory obligations. This environment provides new managerial challenges as organizations are forced to engage in complex and costly remediation projects with short deadlines. Drawing from a longitudinal study conducted with nine financial institutions over twelve years, this paper identifies nine IS capabilities which underpin activities for managing regulatory themed governance, risk and compliance efforts. The research shows that many firms are now focused on meeting the Regulators’ deadlines at the expense of developing a strategic, enterprise-wide connected approach to compliance. Consequently, executives are in danger of implementing siloed compliance solutions within business functions. By evaluating the maturity of their IS capabilities which underpin regulatory adherence, managers have an opportunity to develop robust operational architectures and so are better positioned to face the challenges derived from shifting regulatory landscapes.

Seafood safety and quality: an analysis of the supply chain in the Sultanate of Oman

The globalization of trade in fish has created many challenges for the developing world specifically with regard to food safety and quality. International organisations have established a good basis for standards in international trade. Whilst these requirements are frequently embraced by the major importers (such as Japan, the EU and the USA), they often impose additional safety requirements and regularly identify batches which fail to meet their strict standards. Creating an effective national seafood control system which meets both the internal national needs as well the requirements for the export market can be challenging. Many countries adopt a dual system where seafood products for the major export markets are subject to tight control whilst the majority of the products (whether for the local market or for more regional trade) are less tightly controlled. With regional liberalization also occurring, deciding on appropriate controls is complex. In the Sultanate of Oman, fisheries production is one of the countries' chief sources of economic revenue after oil production and is a major source of the national food supply. In this paper the structure of the fish supply chain has been analysed and highlighted the different routes operating for the different markets. Although much of the fish are consumed within Oman, there is a major export trade to the local regional markets. Much smaller quantities meet the more stringent standards imposed by the major importing countries and exports to these are limited. The paper has considered the development of the Omani fish control system including the key legislative documents and the administrative structures that have been developed. Establishing modern controls which satisfy the demands of the major importers is possible but places additional costs on businesses. Enhanced controls such as HACCP and other management standards are required but can be difficult to justify when alternative markets do not specify these. These enhanced controls do however provide additional consumer protection and can bring benefits to local consumers. The Omani government is attempting to upgrade the system of controls and has made tremendous progress toward the implementation of HACCP and introducing enhanced management systems into its industrial sector. The existence of strengthened legislative and government support, including subsidies, has encouraged some businesses to implement HACCP. The current control systems have been reviewed and a SWOT analysis approach used to identify key factors for their future development. The study shows that seafood products in the supply chain are often exposed to lengthy handling and distribution process before reaching the consumers, a typical issue faced by many developing countries. As seafood products are often perishable, they safety is compromised if not adequately controlled. The enforcement of current food safety laws in the Sultanate of Oman is shared across various government agencies. Consequently, there is a need to harmonize all regulatory requirements, enhancing the domestic food protection and to continue to work towards a fully risk-based approach in order to compete successfully in the global market.

Evolutionary rewiring of bacterial regulatory networks

Bacteria have evolved complex regulatory networks that enable integration of multiple intracellular and extracellular signals to coordinate responses to environmental changes. However, our knowledge of how regulatory systems function and evolve is still relatively limited. There is often extensive homology between components of different networks, due to past cycles of gene duplication, divergence, and horizontal gene transfer, raising the possibility of cross-talk or redundancy. Consequently, evolutionary resilience is built into gene networks – homology between regulators can potentially allow rapid rescue of lost regulatory function across distant regions of the genome. In our recent study [Taylor, et al. Science (2015), 347(6225)] we find that mutations that facilitate cross-talk between pathways can contribute to gene network evolution, but that such mutations come with severe pleiotropic costs. Arising from this work are a number of questions surrounding how this phenomenon occurs.

A Posteriori analysis of discontinuous Galerkin schemes for systems of hyperbolic conservation laws

In this work we construct reliable a posteriori estimates for some semi- (spatially) discrete discontinuous Galerkin schemes applied to nonlinear systems of hyperbolic conservation laws. We make use of appropriate reconstructions of the discrete solution together with the relative entropy stability framework, which leads to error control in the case of smooth solutions. The methodology we use is quite general and allows for a posteriori control of discontinuous Galerkin schemes with standard flux choices which appear in the approximation of conservation laws. In addition to the analysis, we conduct some numerical benchmarking to test the robustness of the resultant estimator.

On aposteriori error analysis of dG schemes approximating hyperbolic conservation laws

This contribution is concerned with aposteriori error analysis of discontinuous Galerkin (dG) schemes approximating hyperbolic conservation laws. In the scalar case the aposteriori analysis is based on the L1 contraction property and the doubling of variables technique. In the system case the appropriate stability framework is in L2, based on relative entropies. It is only applicable if one of the solutions, which are compared to each other, is Lipschitz. For dG schemes approximating hyperbolic conservation laws neither the entropy solution nor the numerical solution need to be Lipschitz. We explain how this obstacle can be overcome using a reconstruction approach which leads to an aposteriori error estimate.

Do laws influence the cost of real estate brokerage services? A state fixed effects approach

A FTC-DOJ study argues that state laws and regulations may inhibit the unbundling of real estate brokerage services in response to new technology. Our data show that 18 states have changed laws in ways that promote unbundling since 2000. We model brokerage costs as measured by number of agents in a state-level annual panel vector autoregressive framework, a novel way of analyzing wasteful competition. Our findings support a positive relationship between brokerage costs and lagged house price and transactions. We find that change in full-service brokers responds negatively (by well over two percentage points per year) to legal changes facilitating unbundling

Economic evidence in regulatory disputes: revisiting the court-regulatory agency relationship in the US and the UK

This article examines the issue of the appropriate scope of review of economic evidence enshrined in the discretionary assessments of utility regulators in the US and the UK. It advances a balance of institutional competencies approach to the question of the degree of deference owed to the regulatory agency’s economic assessments. In doing so, it revisits the doctrinal positions advanced in the US and UK for the substantive review of administrative discretion, so as to become attuned to the challenges posed by economic evidence. Drawing on insights from political science and economics, the suggested approach illuminates the institutional disadvantages of the courts that may warrant a high degree of deference. At the same time, however, it remains sensitive to the polycentric elements of regulatory disputes as well as to a number of institutional realties that may attenuate the weight of such comparative institutional disadvantages.

Legal and regulatory barriers to effective public-private partnership governance in Kazakhstan

Purpose – The purpose of this paper is to provide a critical assessment of legal and regulatory impediments to effective governance of public-private partnerships (PPPs) in Kazakhstan. Design/methodology/approach – The qualitative study develops propositions from the PPP literature and then tests them against findings from in-depth interviews. Interviewees have been selected by a purposeful sampling from PPP projects in Kazakhstan as well as from national and regional PPP centres. Findings – The identified barriers to effective PPP management include irregularities in the PPP legal framework, such as lack of legal definition of a PPP and controversy with the government guarantee’s legal status for its long-term payments to partnerships; bureaucratic tariff setting for partnership services; non-existent opportunity for private asset ownership; and excessive government regulation of PPP workers’ wage rates. Practical implications – The partners’ opposing perspectives on a number of PPP issues show that management needs to identify and carefully reconcile stakeholder values in a partnership in order to achieve more effective PPP governance. Practitioners, particularly those in the public agencies, have to be concerned with ways to reduce the government overregulation of the private operators, which is likely to result in greater PPP flexibility in management and, ultimately, higher efficiency in delivering the public services. Originality/value – By elucidating multiple examples of overregulation and PPPs’ inefficiency, the paper demonstrates that the government dominance in PPP management is conceptually inappropriate. Instead, the government should adopt the concept of co-production and manage its relations with the private sector partner in a collaborative fashion.