Sectors

Thesaurus : Doctrine

Complete reference: KOVAR, Jean-Philippe and LASERRE CAPDEVILLE, Jérôme, Droit de la régulation bancaire (Banking regulatory Law) , preface by Christian Noyer, RB Éditions, 333 p.

Read the coverback.

Read the table of contents.

Compliance and Regulation Law Glossary

The concept of 'agency', sometimes confused with the one of 'Regulator', designates a way of deconcentrating the State. Away from a Jacobin outlook, states have indeed gradually devolved their sovereign responsibilities to other institutions, which are often geographically distant from the state's political capital city. These agencies are a form of technical decentralization because they are in charge of operational tasks and specific expertise, e.g., as regards employment, environment or health issues. This model, which is very common in Scandinavian countries, is often associated with federal outlooks, like in the United States. It is still fairly remote to the French model that remains to this day built on the idea of a centralized state. So far, France has only developed a few agencies (e.g., France Trésor, tasked with managing France's government debt and cash positions, or the Regional Health Agencies).

In a different perspective, although the two notions are homonyms, the American financial theory developed the notion of 'agency' to describe the relationship between the corporate officer (the agent) and the shareholder (the principal), who empowers the first to act on his behalf to serve his interest. Information asymmetry and conflict of interest mark this relationship, which explains that this theory helped developing multiple safeguards, conveyed by the Financial Regulation.

Compliance and Regulation Law Glossary

Compliance and Regulation Law Glossary

Links : United Kingdom

http://www.fca.org.uk/
FCA Head Office
25 The North Colonnade, London E14 5HS, UK
Switchboard: 020 7066 1000

 

Thesaurus : Texts

Links : China

Links : Switzerland

http://www.finma.ch/f/pages/default.aspx

 FIMA is a Federal Authority.

It regulates not only financial markets and also insurance companies. 

It presents its mission in its website : 

"FINMA's mandate is to protect creditors, investors and policy holders and ensure the smooth functioning of the financial markets. Through consistent supervision and predictable regulation, we make an important contribution to safeguarding the stability and good reputation of the Swiss financial centre, and consequently to enhancing its competitiveness."

Compliance and Regulation Law Glossary

Rating agencies are private companies that assess the risk of defaulting payment by debtors. As such, the rating of a borrower affects the value of the debt security it issued and that is to circulate in the markets. That is why the activity of credit rating agencies is critical to the security of financial instruments and the functioning of financial markets, but also to the whole global credit system. For instance, an AAA rating guarantees security to investors. Rating agencies helps building trust in financial markets and in the banking system. Henceforth, since everyone relies on them as they save people's time from seeking on their own information on securities or on those who issue them on the marks, international rating agencies have become crucial operators.

'Rating' has also become a business, which is now concentrated within the hands of three undertakings (two American and one French). It has often been said that these three are conflicted. Some have indeed brought up the fact as they have provided the markets with unreliable information (especially about subprime and securitization) prevented them to self-discipline, which eventually participated in the global spread of risks and defaults.

The difficult history between the rating agencies, whether they are considered as mere businesses, crucial operators or as companies undertaking a public service, which eventually led to implement a specific Regulation in the immediate aftermath of the financial crisis, shows how the information is a public common. This justifies the intervention of the Financial Regulator, namely to better protect the consumer. Should we go further on? Some have mentioned the idea of ​​nationalizing the business and hand it over to Government institutions (or at least public ones). This is, however, no longer on the agenda, as many conflicts of interests may arise since rating agencies keep on rating the paradoxical debtors that States are.

Links : Europe

https://www.ecb.europa.eu/ecb/html/index.en.html

Switchboard: +49 69 1344 0
Public enquiries: +49 69 1344 1300 / info@ecb.europa.eu 
                                              ECB Contacts, here.

Thesaurus : Doctrine

Complete reference:  DECOCQ, Georges, GÉRARD, Yves and MOREL-MAROGER, Julienne, Droit bancaire (Banking Law), Collection "Master Banque", 2ième éd., RB édition, Paris 2014, 387 p.

Read the coverback.

Read the table of content.

Thesaurus : Doctrine

Complete reference: COURET, Alain and al, Droit financier  (Financial law,), Précis Dalloz, 2nd ed, Dalloz, Paris, 2012, 1270 p.

 

This book is written in French.

Read the coverback.

Read the table of contents.

 

 

Thesaurus : Doctrine

Released in 2011, this special issue focuses on "Supervision" in terms of systemic risk, while the last was on "Regulation" under the same theme.


In order to prevent the next crisis, the will appears to extend the supervision, including on "non-banks", such as insurance companies, and to strengthen it, particularly with regard to the means of control, surveillance and punishment powers of supervisory Authorities.

Complete reference: Revue d'Économie Financière, Le risque systémique - 2. Repenser la supervision, n° 101, mars 2011, Paris, 288 p.

_____

 

Read the summary.

Read th introduction.

Sept. 11, 2017

Breaking news

The nature of virtual currency remains uncertain. In any case, the object is very attractive, in particular because its nature, presented as "new", implies that its handling is not regulated.

This allows, in particular for individuals or start up, to issue "tokens" to offer them in exchange of funds, by the "initial coin offerings (ICOs)" technic, tokens acquired by investors, without being banking institutions, or borrowing money , nor issuing capital securities.

Operators demand that this behavior be recognized in its novelty and be recognized as being governed only by the contract and the general principles of loyalty, commitment and information, because what it is not prohibited is permitted while what is not regulated is freely organized by the parties who consent to it.

As media report, the Banking Regulator of China, has just decided otherwise. It has decided that the fundraising by individuals or companies by means of virtual currency will now be banned.

The question is whether other Regulatory Authorities could do the same.

Read below.

Nov. 16, 2016

Events : JR

Sept. 3, 2016

Breaking news

The Basel Committee on banking supervision issues regularly a monitoring report on the implementation of Basel III regulatory reforms.

In August 2016, the seventh issue was published by the Committee as to be taken into account for the upcoming G20 meeting: Implementation of Basel standards. A report to G20 Leaders on implementation of the Basel III regulatory reforms.

In this report, the Committee mesures how national systems gradually implement the prudential reforms they have informally elaborated in common. 

All the power derived from the Basel System stems indeed from the fact that it is concentrated; however, it still has to face a 'hard law' issue, as it is necessary to implement the reforms within the national systems in identical terms and in a constrained timeframe. 

The Committee indicates in its reports that some countries still face a number of issues regarding this implementation, whether these issues arise from the rules themselves or from the transposition period that the countries are given to implement them. Those same countries tend to justify themselves by saying that banks are to blame for these issues, since they report having trouble adjusting their information system as to satisfy the new requirements.

The Committee underlines the fact that this delay occurs in some countries whereas others are already compliant creates a situation of unfair 'jurisdiction' competition between them, which is all the more concerning since these national systems host international banks: "Delayed implementation may have implications for the level playing field, and puts unnecessary pressure on jurisdictions that have implemented the standards based on the agreed timelines. A concurrent implementation of global standards is all the more important, as many jurisdictions serve as hosts to internationally active banks.".

In order to improve an effective implementation of the whole system, the Committee proposed to implement instead a calculus method that would be less complex: "These proposals would constrain banks’ use of internal models and would reduce the complexity of the regulatory framework.".

____

A few general observations can be drawn from this very specific Basel III issue underlined in the aforementioned report:

  • soft law needs at some point to get concrete (which is closely monitored since the rules do need to be implemented), otherwise it is not law at all;   
  • it is through implementation that the weight and the contours of common rules are actually being felt;
  • this situation is a good reminder of the fact that competing jurisdictions are an actual thing and a issue to deal with;
  • what is an argument based of complexity, or even impossibility, of the technical implementation of a requirement worth? 

This last question is crucial. Those who impose the requirement may consider that the non-enforcement for technical reasons cannot be accepted!footnote-68. Here, however, maybe since it is not a formal requirement as this is all soft law, and since there is a good communication between the supervisor and the executing agent (who is, at the same time, the one that is subject to the requirement, the one who elaborated it and the one who proposes to review it as to make it less complex).

Cass. R. Sunstein's last book was entitled Simpler. French Conseil d’État  (French administrative supreme court) conducts thorough work on the quality of laws and on their simplicity, both qualities that probably go hand in hand. The Basel Committee steps in the same directions...

July 8, 2016

Thesaurus : Doctrine

June 24, 2016

Breaking news

The Autorité des Marchés Financiers (AMF- French Prudential Supervision Authority) set up a Scientific Advisory Board under the supervision of its president Gérard Rameix, who is also president of the AMF.

The Scientific Advisory Board chose ‘Financial education in the digital era’ as the theme of its annual conference, which was held on 20 June 2016 in partnership with Paris School of Economics.

The conference was opened by François Villeroy de Galhau, Governor of the Banque de France (France’s central bank). He stated that financial literacy “shall help everyone make informed decisions”. In this regard, financial literacy is a “factor for economic efficiency and social fairness”, which justifies involvement from public authorities- including, namely, the Banque de France. In partnership with both the Autorité de Contrôle Prudentiel et de Résolution (ACPR- French Prudential Supervision Authority) and the AMF, the Banque de France ought to be a “caring educator, but an attentive regulator”, as it is “imperative that financial literacy and Regulation should be taken forward jointly, as to allow for new technologies to develop, which would be understood by all and for the benefit of all”.

Three roundtables followed. The first roundtable aimed at assessing financial literacy trends and their impact on the financial behaviour of consumers and investors in Europe. The second session focused on the opportunities opened up by new technologies (upon which Fintechs, e.g., crowdfunding platforms, data aggregators and automated financial advice services are thriving) as regards financial behaviours. Lastly, the third panel discussion, which involved several French (AMF, Institut National de la Consommation- INC, French National Institute for Consumer Affairs) and European (European Commission) Regulators, draw conclusions from the first two roundtables and discussed on the issues that an increasingly digitalised financial education raises for Regulatory authorities.

Since this conference raises many crucial questions for Regulation, it is important to recall what has been said in the panel discussion on the role of Regulator with regards to financial education (I.) before sharing some thoughts on this matter of particular interest (II.). 

June 22, 2016

Thesaurus : Laws

June 21, 2016

Breaking news

On 17 June 2016 the prosecutor (Avocat général près la Cour d'appel)  presented its closing arguments (réquisitoire) before the judges of the Court of Appeal of Versailles, in the Kerviel case.
 
On the merits, the prosecution asked the condemnation of the trader for criminal offenses he has committed but asked that the bank, which is presented as a victim of its trader should be dismissed from all its claims against the author.

June 16, 2016

Breaking news

Professor Hervé Causse released a book of over 800 pages: Droit bancaire et financier (Banking and Financial Law).

Typically, there are "Banking Law" on one side and "Financial Law" on the other, each giving rise to separate books, Banking Law having long since detached from the Commercial Law and do having never really left Civil Law, Financial Law being more subject  recently of books.

Typically, there are the "Banking Law" on one side and the "Financial Law" on the other, each giving rise to separate books, banking, having long since detached from the Commercial Law and do having never really left the Civil Law, financial law being more subject  recently of books.


In the books of "Banking Law", we find the contracts, transactions (credit), mechanisms (like money), institutions (such as the National Central Bank) and sometimes specific repressive rules.
In the books of "financial law", first of all, we meet financial market, financial transactions (like all securities transactions or takeovers bids), the economy is much more present, the US Law being at home because of extraterritoriality as either model, repressive rules slipping everywhere, to the heart of what appears to be today a branch of law.

The important work of Hervé Causse goes further and corresponds to reality: it merges the Banking and Financial Law.

He does it because his work is based on the life of the sector, that is to say the professionals. In fact, professionals work in banks. Then he describes those who admit and control their activities, that is to say the authorities of supervision and regulation. He goes on to describe to the reader the instruments, financial prowess that the bankers invent.

Thus sucked by financial reality, what is left of the civil commitment of Banking Law? To take just one example, when the author discusses the concept of "banking service" from that of "financial service", he finds the uncertainty of this notions. The Banking Law is thus trying to forget the Civil Code, the “deposition” techniques being one example.

Thanks to the book of Hervé Causse, the reader understands that the rules now being written by those designing financial regulation, these rules must find their bones in the financial regulatory system.

June 15, 2016

Releases : I. Isolated Articles

June 14, 2016

Breaking news

On 9 June, the SEC made an announcement on its website.

  • The Regulator itself issued the amount of the award to a whistleblower for having providing it with information. Why is that? One would usually take a lower profile when awarding this much money ($17m) to an informer… Conversely, the Regulator immediately and publicly announced it in a press release, which pretty looked like a tender offer for further denunciations. It even included a link for everyone to access the whistleblower program—which is easily funded, since the awards are charged on the fines imposed on the convicted operators thanks to the information given.

 

  • The reason for this is that information from whistleblowers is not merely indicative, nor a second-best option; it is central to Regulation, since it leads the Regulator to get information people within the system (i.e., insiders) deliberately chooses to ‘blow’ (in fact, not only do informers blow the whistle—they often immediately provide the Regulator with substantial information).

 

  • The press release includes justifications for the Regulator’s behaviour, as the SEC openly considers that rewarding whistleblowers is the most efficient way for the Regulator to open or to resolve investigations. The Director of the SEC’s Division of Enforcement stated indeed that “company insiders are uniquely positioned to protect investors and blow the whistle on a company’s wrongdoing by providing key information to the SEC so we can investigate the full extent of the violations”.

 

  • This highlights the ambivalence of insiders. Accordingly, they need to be ‘inside’ the system to be ‘knowledgeable’ and, consequently, obtain privileged information. On the one hand, should they use this information for themselves, then they would face prosecution for market abuse; on the other hand, however, if they use it to stir up the Regulator and shift its attention towards the whistle they’re blowing, then they may earn just as much money, if not more, than if they had behaved in a way that would have led them to prison.

 

The stage is thus set for the "business of virtue" to thrive.

 

 

 

June 6, 2016

Thesaurus : Doctrine

Complete reference : Causse, H., Droit bancaire et financier, Foreword of Daniel Tricot, coll. "Droit privé & sciences criminelles",Maré & Martin, France, Paris, 2015, 839 p.

Read the coverback.

Read the introduction written by Daniel Tricot;

Read the table of content.

 

May 5, 2016

Thesaurus : Doctrine