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

The financial crisis of 2007-2009 and the subsequent reaction of the G20 have created a new global regulatory landscape. Within the EU, change of regulatory institutions is ongoing. 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 and to understand the role of agency within this process. Our motivation is to provide insight into these changes from an operational management perspective, as well as to test Thelen and Mahoney?s (2010) modes of institutional change. Consequently, the study researched implementations of an Investment Management System with a rules-based compliance module within financial organizations. The research consulted compliance and risk managers, as well as systems experts. The study suggests that prescriptive regulations are likely to create isomorphic configurations of rules-based compliance systems, which consequently will enable the institutionalization of associated compliance practices. The study reveals the ability of some agents within financial organizations to control the impact of regulatory institutions, not directly, but through the systems and processes they adopt to meet requirements. Furthermore, the research highlights the boundaries and relationships between each mode of change as future avenues of research.

Implementation rules to bridge the theory/practice divide in market segmentation

Despite an extensive market segmentation literature, applied academic studies which bridge segmentation theory and practice remain a priority for researchers. The need for studies which examine the segmentation implementation barriers faced by organisations is particularly acute. We explore segmentation implementation through the eyes of a European utilities business, by following its progress through a major segmentation project. The study reveals the character and impact of implementation barriers occurring at different stages in the segmentation process. By classifying the barriers, we develop implementation "rules" for practitioners which are designed to minimise their occurrence and impact. We further contribute to the literature by developing a deeper understanding of the mechanisms through which these implementation rules can be applied.

Ecophysiological and bioclimatic foundations for a global plant functional classification

Question: What plant properties might define plant functional types (PFTs) for the analysis of global vegetation responses to climate change, and what aspects of the physical environment might be expected to predict the distributions of PFTs? Methods: We review principles to explain the distribution of key plant traits as a function of bioclimatic variables. We focus on those whole-plant and leaf traits that are commonly used to define biomes and PFTs in global maps and models. Results: Raunkiær's plant life forms (underlying most later classifications) describe different adaptive strategies for surviving low temperature or drought, while satisfying requirements for reproduction and growth. Simple conceptual models and published observations are used to quantify the adaptive significance of leaf size for temperature regulation, leaf consistency for maintaining transpiration under drought, and phenology for the optimization of annual carbon balance. A new compilation of experimental data supports the functional definition of tropical, warm-temperate, temperate and boreal phanerophytes based on mechanisms for withstanding low temperature extremes. Chilling requirements are less well quantified, but are a necessary adjunct to cold tolerance. Functional traits generally confer both advantages and restrictions; the existence of trade-offs contributes to the diversity of plants along bioclimatic gradients. Conclusions: Quantitative analysis of plant trait distributions against bioclimatic variables is becoming possible; this opens up new opportunities for PFT classification. A PFT classification based on bioclimatic responses will need to be enhanced by information on traits related to competition, successional dynamics and disturbance.

Sea surface temperature climate change initiative: alternative image classification algorithms for sea-ice affected oceans

We present a Bayesian image classification scheme for discriminating cloud, clear and sea-ice observations at high latitudes to improve identification of areas of clear-sky over ice-free ocean for SST retrieval. We validate the image classification against a manually classified dataset using Advanced Along Track Scanning Radiometer (AATSR) data. A three way classification scheme using a near-infrared textural feature improves classifier accuracy by 9.9 % over the nadir only version of the cloud clearing used in the ATSR Reprocessing for Climate (ARC) project in high latitude regions. The three way classification gives similar numbers of cloud and ice scenes misclassified as clear but significantly more clear-sky cases are correctly identified (89.9 % compared with 65 % for ARC). We also demonstrate the poetential of a Bayesian image classifier including information from the 0.6 micron channel to be used in sea-ice extent and ice surface temperature retrieval with 77.7 % of ice scenes correctly identified and an overall classifier accuracy of 96 %.

Computing Fresnel integrals via modified trapezium rules

In this paper we propose methods for computing Fresnel integrals based on truncated trapezium rule approximations to integrals on the real line, these trapezium rules modified to take into account poles of the integrand near the real axis. Our starting point is a method for computation of the error function of complex argument due to Matta and Reichel (J Math Phys 34:298–307, 1956) and Hunter and Regan (Math Comp 26:539–541, 1972). We construct approximations which we prove are exponentially convergent as a function of N , the number of quadrature points, obtaining explicit error bounds which show that accuracies of 10−15 uniformly on the real line are achieved with N=12 , this confirmed by computations. The approximations we obtain are attractive, additionally, in that they maintain small relative errors for small and large argument, are analytic on the real axis (echoing the analyticity of the Fresnel integrals), and are straightforward to implement.

Construction of neurofuzzy models for imbalanced data classification

We propose a new class of neurofuzzy construction algorithms with the aim of maximizing generalization capability specifically for imbalanced data classification problems based on leave-one-out (LOO) cross validation. The algorithms are in two stages, first an initial rule base is constructed based on estimating the Gaussian mixture model with analysis of variance decomposition from input data; the second stage carries out the joint weighted least squares parameter estimation and rule selection using orthogonal forward subspace selection (OFSS)procedure. We show how different LOO based rule selection criteria can be incorporated with OFSS, and advocate either maximizing the leave-one-out area under curve of the receiver operating characteristics, or maximizing the leave-one-out Fmeasure if the data sets exhibit imbalanced class distribution. Extensive comparative simulations illustrate the effectiveness of the proposed algorithms.

Integrated visual vocabulary in latent Dirichlet allocation-based scene classification for IKONOS image

Scene classification based on latent Dirichlet allocation (LDA) is a more general modeling method known as a bag of visual words, in which the construction of a visual vocabulary is a crucial quantization process to ensure success of the classification. A framework is developed using the following new aspects: Gaussian mixture clustering for the quantization process, the use of an integrated visual vocabulary (IVV), which is built as the union of all centroids obtained from the separate quantization process of each class, and the usage of some features, including edge orientation histogram, CIELab color moments, and gray-level co-occurrence matrix (GLCM). The experiments are conducted on IKONOS images with six semantic classes (tree, grassland, residential, commercial/industrial, road, and water). The results show that the use of an IVV increases the overall accuracy (OA) by 11 to 12% and 6% when it is implemented on the selected and all features, respectively. The selected features of CIELab color moments and GLCM provide a better OA than the implementation over CIELab color moment or GLCM as individuals. The latter increases the OA by only ∼2 to 3%. Moreover, the results show that the OA of LDA outperforms the OA of C4.5 and naive Bayes tree by ∼20%. © 2014 Society of Photo-Optical Instrumentation Engineers (SPIE) [DOI: 10.1117/1.JRS.8.083690]

When rules and principles are not enough: insiders’ views and narratives on the global financial crisis

Much has been written about Wall Street and the global financial crisis (GFC). From a fraudulent derivatives market to a contestable culture of banking bonuses, culpability has been examined within the frames of American praxis, namely that of American exceptionalism. This study begins with an exploratory analysis of non-US voices concerning the nature of the causes of the GFC. The analysis provides glimpses of the globalized extent of assumptions shared, but not debated within the globalization convergence of financial markets as the neo-liberal project. Practical and paradigmatic tensions are revealed in the capture of a London-based set of views articulated by senior financial executives of financial service organizations, the outcomes of which are not overly optimistic for any significant change in praxis within the immediate future.

Categorization and construction of rule based systems

Expert systems have been increasingly popular for commercial importance. A rule based system is a special type of an expert system, which consists of a set of ‘if-then‘ rules and can be applied as a decision support system in many areas such as healthcare, transportation and security. Rule based systems can be constructed based on both expert knowledge and data. This paper aims to introduce the theory of rule based systems especially on categorization and construction of such systems from a conceptual point of view. This paper also introduces rule based systems for classification tasks in detail.

Advanced feature selection methods in multinominal dementia classification from structural MRI data

Recent studies showed that features extracted from brain MRIs can well discriminate Alzheimer’s disease from Mild Cognitive Impairment. This study provides an algorithm that sequentially applies advanced feature selection methods for findings the best subset of features in terms of binary classification accuracy. The classifiers that provided the highest accuracies, have been then used for solving a multi-class problem by the one-versus-one strategy. Although several approaches based on Regions of Interest (ROIs) extraction exist, the prediction power of features has not yet investigated by comparing filter and wrapper techniques. The findings of this work suggest that (i) the IntraCranial Volume (ICV) normalization can lead to overfitting and worst the accuracy prediction of test set and (ii) the combined use of a Random Forest-based filter with a Support Vector Machines-based wrapper, improves accuracy of binary classification.

Novel single trial movement classification based on temporal dynamics of EEG

Various complex oscillatory processes are involved in the generation of the motor command. The temporal dynamics of these processes were studied for movement detection from single trial electroencephalogram (EEG). Autocorrelation analysis was performed on the EEG signals to find robust markers of movement detection. The evolution of the autocorrelation function was characterised via the relaxation time of the autocorrelation by exponential curve fitting. It was observed that the decay constant of the exponential curve increased during movement, indicating that the autocorrelation function decays slowly during motor execution. Significant differences were observed between movement and no moment tasks. Additionally, a linear discriminant analysis (LDA) classifier was used to identify movement trials with a peak accuracy of 74%.

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