The UK and Multi-level Financial Regulation

2020 ◽  
Author(s):  
Scott James ◽  
Lucia Quaglia
Keyword(s):  
Financial Regulation ◽  
Hedge Fund ◽  
Regulatory Reform ◽  
Political Support ◽  
International Standards ◽  
Bank Capital ◽  
The European Union ◽  
Financial Industry ◽  
The Future ◽  
The Uk

The book examines the role of the United Kingdom (UK) in shaping post-crisis financial regulatory reform, and assesses the implications of the UK’s withdrawal from the European Union (EU). It develops a domestic political economy approach to examine how the interaction of three domestic groups—elected officials, financial regulators, and the financial industry—shaped UK preferences, strategy, and influence in international and EU-level regulatory negotiations. The framework is applied to five case studies: bank capital and liquidity requirements; bank recovery and resolution rules; bank structural reforms; hedge fund regulation; and the regulation of over-the-counter derivatives. We conclude by reflecting on the future of UK financial regulation after Brexit. The book argues that UK regulators pursued more stringent regulation when they had strong political support to resist financial industry lobbying. UK regulators promoted international harmonization of rules when this protected the competitiveness of industry or enabled cross-border externalities to be managed more effectively, but were often more resistant to new EU rules when these threatened UK interests. Consequently, the UK was more successful at shaping international standards by leveraging its market power, regulatory capacity, and alliance-building (with the US). But it often met with greater political resistance at the EU level, forcing it to use legal challenges to block reform or secure exemptions. The book concludes that political and regulatory pressure was pivotal in defining the UK’s ‘hard’ Brexit position, and so the future UK–EU relationship in finance will most likely be based on a framework of regulatory equivalence.

In Search of Stability: Bank Capital and Liquidity Requirements

2020 ◽  
pp. 52-70
Author(s):  
Scott James ◽  
Lucia Quaglia
Keyword(s):  
Banking Regulation ◽  
Capital Requirements ◽  
Political Support ◽  
Basel Iii ◽  
Bank Capital ◽  
Financial Industry ◽  
Domestic Constraints ◽  
The Uk ◽  
Institutional Architecture ◽  
Crd Iv

Following the financial crisis, UK preferences shifted decisively in favour of trading up bank capital and liquidity requirements. To reassure voters, elected officials intervened in the regulatory process by strengthening the domestic institutional architecture for banking regulation. Financial regulators leveraged this political support to overcome resistance from the financial industry, but also pushed for international/EU harmonization of capital requirements to avoid damaging the UK’s competitiveness. Internationally, UK regulators therefore acted as pace-setters and exerted significant influence over the design of the Basel III Accord. However, at the EU level, the UK was forced to act as a foot-dragger by prolonging negotiations over the Capital Requirements Directive IV (CRD IV) in an attempt to resist Franco-German efforts to water down the rules. But UK negotiators were more successful in leveraging domestic constraints to oppose the Commission’s attempt to impose the ‘maximum’ harmonization of bank capital.

International Standards for Bank Capital Exposures to CCPs and Derivatives

2020 ◽  
pp. 126-151
Author(s):  
Lucia Quaglia
Keyword(s):  
Capital Requirements ◽  
International Standards ◽  
Basel Iii ◽  
Real Economy ◽  
Bank Capital ◽  
Financial Industry ◽  
Leverage Ratio ◽  
The Us ◽  
Credit Valuation Adjustment ◽  
The Uk

The elemental regime on bank capital for derivatives encompassed the credit valuation adjustment (CVA), the leverage ratio, and bank exposures to CCPs. Like for other parts of Basel III, the US and the UK were pace-setters internationally, promoting relatively precise, stringent, and consistent rules. The EU agreed on the need for higher capital requirements, but worried about negative implications for the provision of credit to the real economy. Networks of regulators were instrumental in furthering agreement amongst and within jurisdictions. They also fostered rules consistency through formal and informal coordination tools amongst international standard-setting bodies. The financial industry mobilized in order to reduce the precision and stringency of capital requirements, pointing out the need to consider capital reforms in conjunction with other post-crisis standards, notably, margins.

scholarly journals Rule maker or rule taker? Brexit, finance and UK regulatory autonomy

2020 ◽  
pp. 019251212096738
Author(s):  
Scott James ◽  
Lucia Quaglia
Keyword(s):  
Financial Services ◽  
Financial Stability ◽  
Financial Regulation ◽  
Market Access ◽  
Bureaucratic Politics ◽  
Added Value ◽  
High Status ◽  
The European Union ◽  
Financial Industry ◽  
The Uk

Given the integration of the City of London into the single market for financial services in the European Union (EU), theories of transnational governance would expect the United Kingdom (UK) to favour close regulatory alignment with the EU27 post-Brexit to maximise market access and financial stability. Surprisingly, however, the UK has consistently demanded regulatory flexibility in financial services and has accepted reduced market access. We argue that the explanation is twofold. First, UK preferences reflect the need to balance the competing demands of elected officials, the financial industry and financial regulators. Second, drawing on a bureaucratic politics perspective, we suggest that UK preferences have been strongly shaped by the importance to UK regulators of retaining autonomy over high-status policy competences. This article contributes to the broader literature on the politics of financial regulation by highlighting the added value of incorporating a bureaucratic politics perspective when explaining financial regulatory preferences.

The Politics of Regime Complexity in International Derivatives Regulation

2020 ◽  
Author(s):  
Lucia Quaglia
Keyword(s):  
Financial Regulation ◽  
International Political Economy ◽  
Standard Setting ◽  
Capital Requirements ◽  
Bank Capital ◽  
Financial Industry ◽  
International Standard ◽  
Central Counterparties ◽  
Venue Shopping ◽  
Private Actors

This book examines the post-crisis international derivatives regulation by bringing together the international relations literature on regime complexity and the international political economy literature on financial regulation. Specifically, it addresses three interconnected questions. What factors drove international standard-setting on derivatives post-crisis? Why did international regime complexity emerge? How was it managed and with what outcomes? Theoretically, this research innovatively combines a state-centric, a transgovernmental and a business-led explanations. Empirically, it examines all the main sets of standards (or elemental regimes) concerning derivatives, namely: trading, clearing, and reporting derivatives; resilience, recovery, and resolution of central counterparties; bank capital requirements for bank exposures to central counterparties and derivatives; margins for derivatives non-centrally cleared. Regime complexity in derivatives ensued from the multi-dimensionality and the interlinkages of the problems to tackle, especially because it was a new policy area without a focal international standard-setter. Overall, the international cooperation that took place in order to promote regulatory precision, stringency, and consistency in the regime complex on derivatives was remarkable, especially considering the large number of policy actors involved (states, private actors, regulators). The main jurisdictions played an important role in managing regime complexity, but their effectiveness was constrained by limited domestic coordination. Networks of regulators facilitated international standard-setting and contributed to managing regime complexity through formal and informal tools. The financial industry, at times, lobbied in favour of less precise and stringent rules, engaging in international ‘venue shopping’; other times, it promoted regulatory harmonization and consistency.

scholarly journals Brexit and Animal Protection: Legal and Political Context and a Framework to Assess Impacts on Animal Welfare

Animals ◽  
2018 ◽  
Vol 8 (11) ◽  
pp. 213 ◽  
Author(s):  
Steven McCulloch
Keyword(s):  
Animal Welfare ◽  
Agricultural Policy ◽  
Animal Health ◽  
Conservative Party ◽  
Political Support ◽  
The European Union ◽  
Substantial Impact ◽  
Animal Protection ◽  
Protection Policy ◽  
The Uk

The British people voted to leave the European Union (EU) in a 2016 referendum. The United Kingdom (UK) has been a member of the EU since the Maastricht Treaty was signed in 1993 and before that a member of the European Communities (EC) since 1973. EU animal health and welfare regulations and directives have had a major impact on UK animal protection policy. Similarly, the UK has had a substantial impact on EU animal protection. Brexit represents a substantial political upheaval for animal protection policy, with the potential to impact animal welfare in the UK, EU and internationally. Brexit’s impact on farmed animals will determine the overall impact of Brexit on animals. A major threat to animal welfare is from importing lower welfare products. A major opportunity is reform of UK agricultural policy to reward high welfare outside the Common Agricultural Policy (CAP). A soft Brexit, in which the UK remains in the single market and/or customs union, mitigates the threat of importing lower welfare products. A harder Brexit means threats to animal welfare are more likely to materialise. Whether threats and opportunities do materialise will depend on political considerations including decisions of key political actors. The Conservative Government delivering Brexit has a problematic relationship with animal protection. Furthermore, Brexit represents a shift to the political right, which is not associated with progressive animal protection. There is significant political support in the Conservative Party for a hard Brexit. Further research is required to investigate whether the various threats and opportunities are likely to materialise.

Taking the Lead: Bank Recovery and Resolution Rules

2020 ◽  
pp. 71-90
Author(s):  
Scott James ◽  
Lucia Quaglia
Keyword(s):  
Significant Influence ◽  
International Standards ◽  
Bank Failures ◽  
Bank Capital ◽  
Response Regulators ◽  
Financial Industry ◽  
First Mover Advantage ◽  
The Us ◽  
Alliance Building ◽  
First Mover

As in the case of bank capital, elected officials were quick to respond to voter concerns by substantially expanding regulators’ powers over bank recovery and resolution. In response, regulators developed stringent new rules on loss-absorbing capacity (LAC) and ‘living wills’ for banks. However, the financial industry on the whole did not seek to resist the changes. Nonetheless, UK regulators sought to act as pace-setters in this area at the international and EU levels to manage the cross-border externalities generated by bank failures. They were therefore able to exert significant influence in the formulation of new international standards on resolution and LAC, and over the EU’s new Bank Recovery and Resolution Directive. This was achieved by leveraging their substantial regulatory expertise, alliance-building (with the US), and ‘first-mover advantage’.

The EU during Brexit

2020 ◽  
pp. 9-34
Author(s):  
Federico Fabbrini
Keyword(s):  
European Union ◽  
The European Union ◽  
Military Cooperation ◽  
Member States ◽  
Decision To Leave ◽  
Policy Initiatives ◽  
Eu Membership ◽  
The Future ◽  
The Uk ◽  
The Eu

This chapter analyses the European Union during Brexit, explaining how the EU institutions and Member States reacted to the UK’s decision to leave the EU. It outlines how they went about this in the course of the withdrawal negotiations. The EU institutions and Member States managed to adopt a very united stance vis-à-vis a withdrawing state, establishing effective institutional mechanisms and succeeding in imposing their strategic preferences in the negotiations with the UK. Nevertheless, the EU was also absorbed during Brexit by internal preparations to face both the scenario of a ‘hard Brexit’—the UK leaving the EU with no deal—and of a ‘no Brexit’—with the UK subsequently delaying exit and extending its EU membership. Finally, during Brexit the EU increasingly started working as a union of 27 Member States—the EU27—which in this format opened a debate on the future of Europe and developed new policy initiatives, especially in the field of defence and military cooperation.

scholarly journals Regulatory power, post-crisis transatlantic disputes, and the network structure of the financial industry

2017 ◽  
Vol 19 (2) ◽  
pp. 241-266 ◽  
Author(s):  
Lucia Quaglia
Keyword(s):  
United States ◽  
European Union ◽  
Network Structure ◽  
Hedge Funds ◽  
Financial Regulation ◽  
The United States ◽  
The European Union ◽  
Financial Industry ◽  
Active Involvement ◽  
Bank Structure

AbstractThe international financial crisis was followed by waves of domestic regulatory reforms, first and foremost, in the United States and the European Union. Post-crisis financial regulation was sometimes different across jurisdictions. Moreover, the United States and the European Union sought in various ways to (re)assert their regulatory power not only vis-à-vis the market, but also with regard to other jurisdictions, which often resisted the projection of regulatory power beyond national borders. Consequently, a handful of important post-crisis transatlantic regulatory disputes emerged concerning E.U. rules on hedge funds, U.S. rules on bank structure and E.U. and U.S. rules on over-the-counter (OTC) derivatives. These disputes mainly involved the terms of access to each other's markets, the equivalence between domestic rules, and the extraterritorial effects of those rules. Some of these disputes were also intra-E.U. disagreements, whenever the preferences of the United Kingdom were different from those of Continental countries and similar to those of the United States. The network structure of the financial industry and the patterns of financial interdependence across the Atlantic amplified the extra territorial effects of domestic reforms, but at the same time triggered an active involvement of the transnational financial industry in the management and, eventually, the settlement of these disputes.

scholarly journals British-Slovak Foreign Trade Relations: Consequences of Brexit

2019 ◽  
pp. 341-353
Author(s):  
Marcel Kordos
Keyword(s):  
European Union ◽  
Foreign Trade ◽  
Policy Instruments ◽  
Current Status ◽  
The European Union ◽  
Economic Relations ◽  
Trade Relations ◽  
The Future ◽  
The Uk ◽  
The Impact

The possibility of the UK's withdrawal from the European Union has never been more realistic and up-to-date since joining the European Communities (EC) as it is today. The UK is facing a unique situation. At present, this depends solely on the capabilities of European and British government officials, who negotiate the terms of withdrawal and future cooperation between the two entities. The main goal of this paper is based on the British – Slovak trade relations development analysis to figure out their impact within the Brexit consequences on the future Slovak economy and its current status in international economic relations. The paper also provides a basic overview of Brexit process and its possible impact on the EU's further functioning. Basic data will be drawn from generally accepted institutions, evaluating the UK and Slovak trade and economic performance. To accomplish this goal, methods such as analysis and comparison to illustrate the UK-Slovak foreign trade development, synthesis and logical deduction to discuss the Brexit impact on Slovak economic environment in the future are to be used; data from scientific and professional publications, periodical and non-periodical press. The paper presents the results of an empirical analysis, which showed that because of the size of economic relations between Slovakia and the United Kingdom and the number of goods and services being exported to the UK, the «hard» Brexit will be very unfavourable for Slovak foreign trade due to the possible tariffs being imposed. The research empirically confirms and theoretically proves that it can cause a significant weakening and slowdown in the Slovak economy. Either way, the upcoming Brexit process, that is the withdrawal of Great Britain from the European Union, would have a major impact not only on British, European but also on the world economy. The impact of Brexit on Slovakia's economy will not only be in reducing the possible growth of the economy, but also in employment and price increases. Keywords: EU single market, Britain's withdrawal from the EU, foreign trade policy instruments analysis, international economics, Slovak economy slowdown prediction, Slovak foreign trade commodity structure analysis.

Public opinion attitudes towards the European Union and its future in the United Kingdom. Study based on the results of Eurobarometer surveys in the UK and Poland

2014 ◽  
pp. 116-131
Author(s):  
Beata Słupek
Keyword(s):  
European Union ◽  
The European Union ◽  
Main Research ◽  
The United Kingdom ◽  
The Future ◽  
The Subject ◽  
The Uk ◽  
The Relationship ◽  
British People ◽  
The Eu

The subject of this publication is the scepticism regarding the future of the European Union in the UK. The research is based on Eurobarometer surveys conducted over the period of five years. A purpose of the research is to show the relationship between the results of the Eurobarometer survey on the future of the EU, and the eurosceptic views in the UK. The main research questions is: is the UK sceptical about the future of the EU? Hypothesis of this publication is that the UK is sceptical about the future of the European Union. The reasons for such attitudes are not analysed here – the article is merely an attempt to present the societal attitudes. The research method employed is the comparative critical analysis of quantitative data. The conclusion is that Great Britain is not significantly eurosceptic. British people are, however, less enthusiastic about what is happening at present in the EU, and also are showing greater anxieties when it comes to the future of the EU.

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