e-Government as a regulatory response to the financial crisis: the case of the UK

This paper seeks to discuss EU policies relating to securities markets, created in the wake of the financial crisis and how ICT and specifically e-Government can be utilised within this context. This study utilises the UK as a basis for our discussion. The recent financial crisis has caused a change of perspective in relation to government services and polices. The regulation of the financial sector has been heavily criticised and so is undergoing radical change in the UK and the rest of Europe. New regulatory bodies are being defined with more focus on taking a risk-based system-wide approach to regulating the financial sector. This approach aims to prevent financial institutions becoming too big to fail and thus require massive government bail outs. In addition, a new wave of EU regulation is in the wind to update risk management practices and to further protect investors. This paper discusses the reasons for the financial crisis and the UK’s past and future regulatory landscape. The current and future approach and strategies adopted by the UK’s financial regulators are reviewed as is the lifecycle of EU Directives. The regulatory responses to the crisis are discussed and upcoming regulatory hotspots identified. Discussion of these issues provides the context for our evaluation of the role e-Government and ICT in improving the regulatory system. We identify several processes, which are elementary for regulatory compliance and discuss how ICT is elementary in their implementation. The processes considered include those required for internal control and monitoring, risk management, record keeping and disclosure to regulatory bodies. We find these processes offer an excellent opportunity to adopt an e-Government approach to improve services to both regulated businesses and individual investors through the benefits derived from a more effective and efficient regulatory system.

”En aktiemarknad för alla” : Integritet och marknadsomsorg i (själv)regleringen av den svenska värdepappersmarknaden

”A stock market for all”. Integrity and concern for the market in the (self-)regulation of the Swedish securities market This article deals with the transformation process that led to the substantial growth of the securities markets, and also led to a situation where Sweden became one of the leading countries when it comes to ordinary people investing in shares and mutual funds. The article discusses how social control and regulation of the market changed as a result of this process. A sudden and strong unanimity for knowledge tests in order for a stockbroker to be allowed to conduct brokerage, advisory services and asset management was the significant change in this transformation process. Knowledge tests were first introduced on a voluntary basis by the industry itself, but is now a mandatory requirement by the State. This article argues that the unanimity for knowledge tests best can be understood by studying the broadening of the financial markets. The broadening meant that more groups in society – with very varying capabilities – had started to place their assets in the security markets. They were encouraged to do so since this was considered to be the solution to the growing number of socioeconomic problems. This article is mainly based on market statistics and document analysis supplemented by interviews.

Information disclosure and corporate governance in listed companies in China: from Yinguangxia to Enron

China's path to the development of a modern securities market has not been a smooth one. This article argues that efforts to impose Western securities market models on China have been fraught with difficulty. This is especially clear from the adoption of information disclosure principles and practices. While the integrity of disclosure practices is a fundamental element in maintaining investors' confidence in securities markets, disclosure practices need to be attuned to China '5 systemic features, especially in regard to its legal structure and rules. Market failures, such as the collapse of Enron in the United States, have led to a realisation that US disclosure models have their own difficulties and that these should not be uncritically used. This article reviews recent Chinese law andpractice (using the Yinguangxia false disclosure scandal as an example) in this area and calls for the adoption of a more critical approach towards the use of Western models with particular regard to China's own distinctive pathways of reform.

Market capitalization of Australian stock exchange (ASX) listed biotechnology companies

Comments on the market capitalization of Australian Stock Exchange listed biotechnology companies. Background on the Australian biotechnology stock market; Factors which determine the levels of risks; Points to consider when valuing Australian biotechnology companies.

Proteção aos investidores em xeque: estudos de casos do novo mercado

Esta dissertação investiga a efetividade das práticas de governança corporativa contidas no Regulamento do Novo Mercado (RNM), segmento especial de listagem da BM&FBOVESPA criado em 2000. Em tese, tais práticas deveriam assegurar a proteção efetiva dos direitos dos investidores de companhias desse segmento. Contudo, alguns casos ocorridos ao longo da primeira década do Novo Mercado lançaram dúvida sobre o respeito aos direitos dos acionistas de suas companhias. Entre eles, dois casos se destacam: Cosan, em 2007, e Tenda, em 2008. Especificamente, a presente pesquisa analisa qualitativamente e em profundidade ambos os casos a fim de verificar se as regras do RNM e as instituições responsáveis por sua aplicabilidade foram suficientes para proteger os investidores. Metodologicamente, utilizou-se a abordagem de estudo de caso de “crise corporativa” e “autopsia institucional” baseada em MILHAUPT e PISTOR (2008). Observou-se que o Novo Mercado foi resultado de um transplante jurídico e que a mera adoção de regras do segmento não foi suficiente para garantir a proteção efetiva aos investidores. Como resultado principal, concluiu-se que as operações societárias lideradas pelos controladores das companhias não só contrariaram regras do segmento (e princípios de governança que nortearam sua criação) como também podem ter infringido a regulação. Com isso, evidencia-se a falta de fiscalização do cumprimento das regras e de punição por parte da BM&FBOVESPA, bem como uma atitude insuficiente da CVM quando de potenciais infrações a dispositivos do ambiente regulatório brasileiro. Por outro lado, o Novo Mercado foi, no mínimo, indiretamente responsável pelo aprimoramento do arcabouço regulatório brasileiro na incorporação de novos instrumentos de proteção aos investidores. Os resultados deste trabalho podem auxiliar na elaboração de reformas na regulação e autorregulação a fim de facilitar a executoriedade das normas já existentes, a qual pode proporcionar maior credibilidade ao mercado de valores mobiliários e fomentar, em última instância, o desenvolvimento do mercado de capitais brasileiro. Trata-se de discussão fundamental, haja vista que a credibilidade do segmento mais exigente quanto às práticas de governança da Bolsa depende da proteção efetiva aos investidores, razão de criação do Novo Mercado.

Capital flows and their effect on the monetary base

Includes bibliography

The strategies pursued by Mexican firms in their efforts to become global players

Includes bibliography

Sanctions and public enforcement of insider trading laws in Europe

The recent financial crisis triggered an increasing demand for financial regulation to counteract the potential negative economic effects of the evermore complex operations and instruments available on financial markets. As a result, insider trading regulation counts amongst the relatively recent but particularly active regulation battles in Europe and overseas. Claims for more transparency and equitable securities markets proliferate, ranging from concerns about investor protection to global market stability. The internationalization of the world’s securities market has challenged traditional notions of regulation and enforcement. Considering that insider trading is currently forbidden all over Europe, this study follows a law and economics approach in identifying how this prohibition should be enforced. More precisely, the study investigates first whether criminal law is necessary under all circumstances to enforce insider trading; second, if it should be introduced at EU level. This study provides evidence of law and economics theoretical logic underlying the legal mechanisms that guide sanctioning and public enforcement of the insider trading prohibition by identifying optimal forms, natures and types of sanctions that effectively induce insider trading deterrence. The analysis further aims to reveal the economic rationality that drives the potential need for harmonization of criminal enforcement of insider trading laws within the European environment by proceeding to a comparative analysis of the current legislations of height selected Member States. This work also assesses the European Union’s most recent initiative through a critical analysis of the proposal for a Directive on criminal sanctions for Market Abuse. Based on the conclusions drawn from its close analysis, the study takes on the challenge of analyzing whether or not the actual European public enforcement of the laws prohibiting insider trading is coherent with the theoretical law and economics recommendations, and how these enforcement practices could be improved.

Changes in source of profits and business strategies? : some evidence from the Philippines' universal banks in the 2000s

In the 2000s, the Philippines' local banking sector have conducted very conservative lending behavior and at the same time, gradually but continuously improved their profitability in terms of ROE (return on equity). A set of analyses on the flow of funds and segment reports (information) of local universal banks, whose loans outstanding to the industrial sector have dominated more than three fourths of the total outstanding, shows that (1) they have actively manage assets overseas, (2) their profitability has come from investment activities in the securities markets, and (3) some universal banks have shifted their resources into the consumer/retail segment. Although further refinement in the dataset is needed for a more detailed analysis, diverse business strategies would be expected among the local universal banks in the near future.

Reviewing the EU's market abuse rules. ECMI Policy Brief No. 19, 27 February 2012

Updated May 2012 and reposted: In 2011, an EU legislative package on market abuse was proposed, which comprises two sets of documents: 1) a draft Regulation that will largely replace the existing Market Abuse Directive (MAD) and the level 2 measures; and a new Directive dealing with criminal sanctions. Market abuse rules are needed to ensure market integrity and investor confidence, and to allow companies to raise capital and contribute to economic growth, thereby increasing employment. This ECMI Policy Brief argues that rules on market abuse should be technically well designed, proportionate and crystal clear, but also subject to more efficient and harmonised supervision than before. The paper focuses particularly on the draft Regulation. The use of a regulation is welcome, as (in integrated financial markets) abuses should be regulated in a harmonised manner by member states, which has not always been the case, as the 2007 report from the European Securities Markets Expert (ESME) Group extensively demonstrated. At the same time, this paper criticises some of the provisions contained in the draft Regulation, notably the new notion of inside information not to abuse (Art. 6(e)) and the unchanged definition of inside information for listed companies to disclose, and it proposes new definitions. The extension of disclosure obligations to issuers whose shares are traded on demand only on ‘listing’ multilateral trading facilities is also widely criticised. Other comments deal with the proposed rules on managers’ transactions, insiders’ lists and accepted market practices.

Why the regulatory witch-hunt for ‘closet trackers’ is a dead-end. CEPS Commentary, 9 December 2014

ESMA, the European watchdog of securities markets, has announced its intention to take a closer look at so-called ‘closet trackers’, with a view to identify whether there is a potential need for a coordinated pan-European policy response to these particular funds, which are supposedly actively managed but in reality closely track their benchmarks. In this commentary, Jean Pierre Casey suggests that more work needs to be done to demonstrate that a market failure exists. He also cautions on some of the difficulties associated with a potential regulatory intervention. In his view, the perceived problem is best tackled through transparency and competition.

The Impact of the ECB’s Asset Purchase Programmes on Sovereign Bond Spreads in the Euro Area. Bruges European Economic Research Papers 35/2015

This paper estimates the immediate impact of the European Central Bank’s asset purchase programmes on sovereign bond spreads in the euro area between 2008 and 2015 using a country-by-country GARCH model. The baseline estimates are rigorously diagnosed for misspecification and subjected to a wide range of sensitivity tests. Among others, changes in the dependent variable, the independent variables and the number of (G)ARCH terms are tested. Moreover, the model is applied to subsamples and dynamic conditional correlations are analyzed to estimate the effects of the asset purchases on the contagion of spread movements. Generally, it is found that the asset purchase programmes triggered an reduction of sovereign bond spreads. More specifically, the Securities Markets Programme (SMP) had the most significant immediate effects on sovereign bond spreads across the euro area. The announcements related to the Outright Monetary Transactions (OMT) programme also yielded substantial spread compression in the periphery. In contrast to that, the most recent Public Sector Purchase Programme (PSPP) announced in January 2015 and implemented since March 2015 had no significant immediate effects on sovereign bond spreads, except for Irish spreads. Hence, immediate effects seem to be dependent upon the size of the programme, the extent to which it targets distressed sovereigns and the way in which it is communicated.

Financial liberalization and dynamics of firm-level financing and investment decisions in the Southeast Asian countries

This thesis examines the dynamics of firm-level financing and investment decisions for six Southeast Asian countries. The study provides empirical evidence on the impacts of changes in the firm-level financing decisions during the period of financial liberalization by considering the debt and equity financing decisions of a set of non-financial firms. The empirical results show that firms in Indonesia, Pakistan, and South Korea have relatively faster speed of adjustment than other Southeast Asian countries to attain optimal debt and equity ratios in response to banking sector and stock market liberalization. In addition, contrary to widely held belief that firms adjust their financial ratios to industry levels, the results indicate that industry factors do not significantly impact on the speed of capital structure adjustments. This study also shows that non-linear estimation methods are more appropriate than linear estimation methods for capturing changes in capital structure. The empirical results also show that international stock market integration of these countries has significantly reduced the equity risk premium as well as the firm-level cost of equity capital. Thus stock market liberalization is associated with a decrease in the cost of equity capital of the firms. Developments in the securities markets infrastructure have also reduced the cost of equity capital. However, with increased integration there is the possibility of capital outflows from the emerging markets, which might reverse the pattern of decrease in cost of capital in these markets.

Ética, Direito, Economia e Mercados de Valores Mobiliários (MVM)

Resumo: 1 - Ética, Direito, Economia e «mercados de valores mobiliários»: realidades concretas de um só mundo no qual interagem, de modo constante e complexo, uma série de factores económicos, sociais, políticos, culturais e mentais que não se podem separar de modo artificial; 1.1 – Intróito e primeiro andamento; 1.2 – Introdução e desenvolvimento; 1.3 – A chamada «protecção penal de valores» e/ou o «moralismo»; 2 – Ética nos mercados de valores mobiliários e capitalismo; 2.1 – Possíveis perigos do problema da ética económico-financeira; 2.2 – Os fundos éticos nos mercados de valores mobiliários; 2.3 – Códigos de conduta interna e/ou deontológica, transparência e/ou o papel dos investidores como instrumentos éticos nos mercados de valores mobiliários; 2.4 – Ética e mercados de valores mobiliários: mais alguns possíveis desenvolvimentos pré-conclusivos; 3 – Ética e mercados de valores mobiliários: o microcrédito como desenvolvimento conclusivo; 3.1 – Ética, Paz Social, Corrupção; 3.2 – Direito penal, ética e «Educação e/ou Formação no Ensino Superior»: conclusões § Abstract: § 1 - Ethics, Law, Economy and “securities” (markets): concrete realities of one only world in which they interact, in constant and complex way, a series of economic, social factors, politicians, cultural and mental who if cannot separate in artificial way; 1.1 – “First introduction” and first course; 1.2 - Introduction and development; 1.3 - The call “criminal protection of values” and/or the “morality”; 2 - Ethics in the “securities” (markets) and capitalism; 2.1 - Possible “risks” of the problem of the ethics economic-financier; 2.2 - The ethical “stock fund” in the “securities” (markets); 2.3 - Codes of internal and/or deontological behavior, transparency and/or the paper of the investors as ethical instruments in the “securities” (markets); 2.4 - Ethics and “securities” (markets): plus some possible p.-conclusive developments; 3 - Ethics and “securities” (markets): the microcredit as conclusive development; 3.1 - Ethics, Social Peace, Corruption; 3.2 - Criminal law, ethical and “Education and/or Formation in ‘University’ School”: conclusions

Synthetic portfolio for event studies: Estimating the effects of volatility call auctions

We propose a method denoted as synthetic portfolio for event studies in market microstructure that is particularly interesting to use with high frequency data and thinly traded markets. The method is based on Synthetic Control Method and provides a robust data driven method to build a counterfactual for evaluating the effects of the volatility call auctions. We find that SMC could be used if the loss function is defined as the difference between the returns of the asset and the returns of a synthetic portfolio. We apply SCM to test the performance of the volatility call auction as a circuit breaker in the context of an event study. We find that for Colombian Stock Market securities, the asynchronicity of intraday data reduces the analysis to a selected group of stocks, however it is possible to build a tracking portfolio. The realized volatility increases after the auction, indicating that the mechanism is not enhancing the price discovery process.