International Finance Regulation E-Book

Georges Ugeux

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Serie: Wiley Finance Editions
• Sprache: Englisch

Seitenzahl: 328

Veröffentlichungsjahr: 2014

Beschreibung

As the global market expands, the need for international regulation becomes urgent Since World War II, financial crises have been the result of macroeconomic instability until the fatidic week end of September 15 2008, when Lehman Brothers filed for bankruptcy. The financial system had become the source of its own instability through a combination of greed, lousy underwriting, fake ratings and regulatory negligence. From that date, governments tried to put together a new regulatory framework that would avoid using taxpayer money for bailout of banks. In an uncoordinated effort, they produced a series of vertical regulations that are disconnected from one another. That will not be sufficient to stop finance from being instable and the need for international and horizontal regulation is urgent. This challenge is the focus of Georges Ugeux's book. International Finance Regulation: The Quest for Financial Stability focuses on the inspirations behind regulation, and examines the risks and consequences of fragmentation on a global scale. Author Georges Ugeux has four decades of experience in the legal and economic aspects of international business operations. He created and run the New York Stock Exchange'sinternational group in charge of developing the NYSE's reach to non-US companies, including relationships with regulators and governments. Ugeux teaches European Banking and Finance of the Columbia University School of Law. Ugeux is uniquely positioned to provide recommendations and suggestions from the perspective of a top global authority. In the book, he explores international regulation with topics such as: * Laws, regulations, and risks of overregulation * Transformation of the U.S. market and creation of the Eurozone * Development of a global framework and stability of the banking system * In-depth examination of Basel III, the Dodd-Frank Act, the European Banking Union, and the Volcker Rule The book also contains case studies from real-world scenarios like Lehman, CDS, Greece, the London Whale, and Libor to illustrate the concepts presented. Finance consistently operates within an increasingly global paradigm, and an overarching regulation scheme is becoming more and more necessary for sustainable growth. International Finance Regulation: The Quest for Financial Stability presents an argument for collaboration toward a comprehensive global regulation strategy.

Leseprobe

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International Finance Regulation

The Quest for Financial Stability

GEORGES UGEUX

Cover image: ©iStock.com/barbol88 Cover design: Wiley

Copyright © 2014 by Georges Ugeux. All rights reserved.

Published by John Wiley & Sons, Inc., Hoboken, New Jersey. Published simultaneously in Canada.

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Library of Congress Cataloging-in-Publication Data:

Ugeux, Georges.  International finance regulation : the quest for financial stability / Georges Ugeux.   pages cm. — (Wiley finance)  Includes bibliographical references and index.  ISBN 978-1-118-82959-2 (Hardcover) — ISBN 978-1-118-82962-2 (ePDF) — ISBN 978-1-118-82961-5 (ePub) 1. International finance. 2. International finance—Law and legislation. 3. Banks and banking. I. Title.  HG3881.U34 2014  332′.042—dc23

2014003248

To Moritz Erhardt—who died of a seizure after 72 hours without sleep in investment banking—as well as those whose personal, professional, and financial well-being has been destroyed by the selfishness of the leadership of the financial services industry.

With the hope that this book will contribute to make finance a better world.

CONTENTS

Preface

Is Finance in a Stage of Permanent Crisis?

Global Markets Are Interconnected

Regulating Finance in a World in Crisis

A Web of Institutional Complexity

Will Global Financial Regulation Become Lex America?

Applying Global Regulatory Convergence

Regulator and Regulated: The Infernal Couple

Finance Cannot Be Left Unregulated

Five Years after Lehman, Regulation Could Not Change the Culture

A Culture of Outlaws

I Will Never Give Up

Notes

CHAPTER 1 The Multiple Objectives of Financial Regulation

Stop (Ab)using Taxpayer Money

Protect Retail and Small Investors and Depositors

Ensure Transparency of Markets and Institutions

Implement a Truly Risk-Adjusted Remuneration System

Protect Deposits from Trading

Notes

CHAPTER 2 A Quarter Century of Banking Crises and the Evolution of Financial Institutions

Banking Crises Are Not Exactly a Recent Phenomenon

The Two Main Emerging-Market Crises

Subprime Crisis

Lehman Crisis

European Sovereign Debt Crisis

European Banking Crisis

LIBOR Manipulation

Will the Foreign Exchange Market Be Next?

Notes

CHAPTER 3 The Lessons of the Recent Financial Crises: The Explosion of Balance Sheets

Structural Overbanking of Europe

Lack of Transparency of the Derivative Markets

Emergence of the Credit Default Swap (CDS) Market

The Regulatory Landscape Is Not Global but Largely National

Notes

CHAPTER 4 Global Financial Regulation: The Institutional Complexities

Group of 20 (G20)

Financial Stability Board (FSB)

Bank for International Settlements (BIS) and the Basel Committee (BCBS)

International Monetary Fund (IMF)

International Organization of Securities Commissions (IOSCO)

International Accounting StandardS Board (IASB)

International Association of Insurance Supervisors (IAIS)

Notes

CHAPTER 5 Capital Adequacy, Liquidity, and Leverage Ratios: Sailing toward the Basel III Rules

Part I: Capital Adequacy

Part II: Liquidity

Part III: Leverage

Notes

CHAPTER 6 Assessing Likely Impacts of Regulation on the Real Economy

Notes

CHAPTER 7 Regulating the Derivatives Market

Origin of the Derivatives Market

Size of the Derivatives Markets

U.S. Regulation: Dodd-Frank Act

European Market Infrastructure Regulation (EMIR)

Transatlantic Divergences

Short Selling Is a Form of Derivative

JPMorgan Chase London Trading Losses

Notes

CHAPTER 8 The Structure of Banking: How Many Degrees of Separation?

Systemically Important Financial Institutions (SIFIs)

Universal Banking Model

Separation Models

United Kingdom

United States

European Union

Sw+itzerland

Volcker Rule and Proprietary Trading

Too Big to Fail (TBTF): Is Size the Problem?

Prohibit the Trading of Commodities by Banks

Notes

CHAPTER 9 Banking Resolution and Recovery

Moral Hazard

Can the Bail-In Concept Avoid Taxpayers’ Bailout?

Lessons from the Financial Crisis

Living Will, or How Banks Want to Be Treated if They Are Close to Collapsing

United States

The Citi Recovery Plan

Role of the Federal Deposit Insurance Corporation in the United States

United Kingdom

European Banking Resolution and Recovery Directive

Regulatory Technical Standards

Can Resolution Rules Be Effective?

An Impossible European Institutional Challenge

Who Will Decide to Put Companies Under Resolution Surveillance?

Notes

CHAPTER 10 Banking and Shadow Banking

Hedge Funds

United States

Europe

Other Types of Shadow Banking

Capital Markets and Securitization

Notes

CHAPTER 11 Rating Agencies and Auditors

Part I: The Rating Agencies

Part II: External Auditors

Part III: The Limits of Accountability

Notes

CHAPTER 12 Central Banks as Lenders of Last Resort Have a Conflict of Interest with Their Regulatory Role

Financial Stability

United States: Quantitative Easing

European Central Bank: The Long-Term Refinancing Operations (LTROs)

United Kingdom

Japan and Abenomics

Are Central Bank Balance Sheets Eternally Expandable? Have They Become Hedge Funds?

Is This Novation of Central Banks Legitimate or Legal?

Notes

CHAPTER 13 Financial Institution Governance (or Lack Thereof)

Risk Management

Dysfunctional Boards of Directors

Should the Chairperson Also Be the CEO?

Remuneration and Risks

Personal or Institutional Accountability

Notes

CHAPTER 14 Was It a Global Crisis? The Asian Perspective

Japan

China

India

Assessing the Asian Risk

Notes

CHAPTER 15 The Challenges of Global Regulation

Regulation, Policies, and Politics

Regulators and Sovereign Financing

European Central Bank Supervision: The E.U. Governance Challenges

The Risks of Regulatory Fragmentation

Bank Resolution: The Legal Nightmare

Basel III

Reemergence of Capital Markets

Restructuring Finance

Should Financial Communication Be Regulated?

Should Financial Media Respect a Code of Conduct?

Financial Education Is Key

Notes

CHAPTER 16 Regulation and Ethics

Management Integrity

Accountability

Transparency Is Key

A Principled Regulatory System Is Needed

Doing the Right Thing

Notes

Conclusion What Can We Expect?

A Few Books I Read and Found Helpful . . .

The Actors

The Classics

The Academics

The Reporters

The Ultimate Manual

About the Author

Index

End User License Agreement

List of Tables

Chapter 3

TABLE 3.1

TABLE 3.2

TABLE 3.3

Chapter 4

TABLE 4.1

Chapter 5

TABLE 5.1

TABLE 5.2

TABLE 5.3

Chapter 8

TABLE 8.1

Chapter 9

TABLE 9.1

TABLE 9.2

Guide

Cover

Table of Contents

Preface

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Preface

Let's face it: finance betrayed itself, its customers, and the public at large.1 This time, finance has become itself a source of instability. This situation creates a completely different approach to regulation. Financiers hate it but provoked this new wave by their own irresponsibility.

Can it be regulated in a way that will no longer make it destabilize the economy? Can it solve its own crises without requesting interventions that use taxpayers’ money? Can it regain a lost trust and reputation?

Antony Jenkins, chief executive officer of Barclays Plc, said it may take a decade to rebuild trust in the bank after a series of scandals from interest-rate manipulation to selling customers insurance they didn't need. “It is about what you do, not what you say,” Jenkins said on the BBC's radio program. “Until people start to perceive the change, Barclays will not begin rebuilding that trust.”