“Racing” to the IBOR transition finish line

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
J. Paul Forrester ◽  
Mary Jo N. Miller
Keyword(s):  
Positive Development ◽  
Structured Finance ◽  
Finish Line ◽  
Content Type ◽  
Global Regulators ◽  
Market Participants ◽  
Operational Systems ◽  
Expert Analysis ◽  
Transition Event ◽  
Key Events

Purpose Summarize and review the key developments during 2021 relating to transition of the London InterBank Offered Rate (LIBOR) to alternative risk-free rates, in accordance with the guidance of global regulators and market participants. Design/methodology/approach Outlines and explains four key events to date during 2021 that are instrumental to the success of LIBOR transition, including the ISDA 2020 IBOR Protocol and Supplement, the 5 March 2021 announcements by ICE Benchmark Administration and the Financial Conduct Authority, the transition of interdealer swap conventions from LIBOR to SOFR, and the ARRC endorsement of the CME Group SOFR term rate. Findings The global adherence to the ISDA Protocol and Supplement, the successful launch of “SOFR First” and other “RFR First” swaps convention transitions, and the ARRC’s endorsement of CME’s SOFR term rate have given the market the clarity and tools that it needs to complete the transition away from LIBOR by the deadlines fixed by the 5 March 2021 benchmark transition event. Practical implications It now is clear that market participants globally have the resources to, and must, move to adopt alternative reference rates and related operational systems and other infrastructure to cease origination of new LIBOR-linked contracts after 31 December 2021. The ARRC’s endorsement of the SOFR term rate for business loans and related derivatives and securitizations is a critical positive development for the structured finance market. Originality/value Expert analysis and guidance from experienced finance lawyers.

Understanding regulatory trends: digital assets & anti-Money laundering

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Katherine Kirkptrick ◽  
Aaron Stevens ◽  
Jacob Gerber ◽  
Margaret Nettesheim ◽  
Sebastian Bellm
Keyword(s):  
Money Laundering ◽  
Content Type ◽  
Global Regulators ◽  
Market Participants ◽  
Regulatory Frameworks ◽  
Investment Opportunities ◽  
Digital Asset ◽  
Practical Implications ◽  
Regulatory Landscape ◽  
Digital Assets

Purpose To evaluate the global anti-money laundering regulation of digital assets and cryptocurrencies. Design/methodology/approach This article provides an analysis of macro trends in digital asset money laundering regulation and explores the regulatory frameworks in some of the leading international crypto markets. Findings As the popularity and public adoption of digital assets have grown, global regulators have turned their attention to the risks of anti-money laundering. Monitoring the evolving international regulatory landscape is essential for organizations looking to successfully take advantage of digital asset-related investment opportunities. Practical implications Market participants should understand all applicable laws and procedures before they decide to enter the digital asset market. These considerations can become even more complex as businesses interact with multiple international regulators. Originality/value This article is designed to help investors understand the global anti-money laundering regulatory landscape regarding digital assets, particularly for those institutions interested in diversifying with crypto-related investment opportunities.

FINRA’s disciplinary actions in 2017: increased restitution ordered with minimal changes in number of cases

2018 ◽  
Vol 19 (2) ◽  
pp. 19-23
Author(s):  
Brian Rubin ◽  
Adam Pollet
Keyword(s):  
Money Laundering ◽  
Design Methodology ◽  
Disciplinary Actions ◽  
Financial Industry ◽  
Electronic Communications ◽  
Content Type ◽  
The Past ◽  
Expert Analysis ◽  
Research Analysts ◽  
Practical Implications

Purpose The purpose of this paper is to analyze the Financial Industry Regulatory Authority’s (FINRA) 2017 disciplinary actions, the issues that resulted in the most significant fines and restitution and the emerging enforcement trends from 2017 and beyond. Design/methodology/approach The approach of this paper discusses the disciplinary actions in 2017 and prior years, details the top 2017 enforcement issues measured by total fines assessed, including anti-money laundering, trade reporting, electronic communications, books and records, research analysts and research reports, and explains current enforcement trends, including restitution, suitability cases and technological issues. Findings In 2017, restitution more than doubled from the prior year, resulting in the fourth highest total sanctions (fines combined with restitution and disgorgement) assessed by FINRA over the past 10 years. Practical implications Firms and their representatives should heed the trends in both the substantial restitution FINRA is ordering and the related enforcement issues in the cases FINRA has brought. Originality/value This paper provides expert analysis and guidance from experienced securities enforcement lawyers.

COVID-19 considerations for SEC cybersecurity guidance, disclosure, enforcement, and parallel proceedings: navigating the new normal

2020 ◽  
Vol 21 (2/3) ◽  
pp. 111-126
Author(s):  
Aldo M. Leiva ◽  
Michel E. Clark
Keyword(s):  
Securities And Exchange Commission ◽  
Effective Vaccine ◽  
Resource Reallocation ◽  
Securities Litigation ◽  
Public Companies ◽  
Content Type ◽  
Business Operations ◽  
Expert Analysis ◽  
Securities Industry ◽  
Remote Operations

Purpose To examine the COVID-19 pandemic’s effects on regulated entities within the context of cybersecurity, US Securities and Exchange Commission (SEC) compliance, and parallel proceedings. Design/methodology/approach Describes the SEC’s ability to conduct its operations within the telework environment, its commitment and ability to monitor the securities market, its enhanced monitoring of the adverse effects of SEC-regulated companies from COVID-19, its guidance to public companies of disclosure obligations related to cybersecurity risks and incidents, the SEC Office of Compliance and Examinations’s (OCIE’s) focus on broker-dealers’ and investment advisories’ cybersecurity preparedness, the role and activities of the SEC Division of Enforcement’s Cyber Unit, and parallel proceedings on cyberbreaches and incidents by different agencies, branches of government or private litigants. Findings SEC-regulated entities face many challenges in trying to maintain their ongoing business operations and infrastructure due to severe financial pressures, the threat of infection to employees and customers, and cybersecurity risks posed by remote operations from hackers and fraudsters. The SEC has reemphasized that its long-standing focus on cybersecurity and resiliency within the securities industry will continue, including ongoing vigilance over companies’ efforts to identify, assess, and address the inherent, heightened cybersecurity risks of teleworking and the resource reallocation that business need to sustain their operations until a safe and effective vaccine is developed for COVID-19. Originality/value Expert analysis and guidance from experienced lawyers with expertise in securities, litigation, government enforcement, information technology, data protection, privacy and cybersecurity.

The value relevance of capital expenditures and the business cycle

2018 ◽  
Vol 35 (3) ◽  
pp. 386-406 ◽  
Author(s):  
Sungsoo Kim ◽  
Brandon byunghwan Lee
Keyword(s):  
Business Cycles ◽  
Stock Returns ◽  
Value Relevance ◽  
Financial Data ◽  
Capital Expenditures ◽  
Capital Investments ◽  
Content Type ◽  
Market Participants ◽  
Business Conditions

Purpose This paper aims to clarify the relationship between corporate capital investments and business cycles. Specifically, a major purpose of this paper is to investigate whether there are inherent differences in corporate investment patterns and whether the stock market exhibits different reactions to the value relevance of capital expenditures across different business conditions. Design/methodology/approach The authors use pooled ordinary least square regressions with archival stock price data and financial data from CRSP and Compustat. The authors regress buy and hold returns on the main test variables and control variables that are identified to be related to the investment literature. Findings This paper provides empirical evidence that US firms’ capital expenditures are more value relevant to capital market participants during expansionary business cycles and, conversely, less value relevant during contractionary business cycles. This evidence validates previous literature that has found the information content of capital expenditures to be uncertain and cyclical in nature. Research limitations/implications The main limitation of this paper, as with other work dealing with stock returns and archived financial data, is that the authors try to match stock returns with contemporaneous financial data in an association study context. The precise mapping in this methodology is always challenging and has been questioned in the literature. Practical implications This paper has various implications for capital market participants. Capital expenditures are good news for investors, but they will make a better investment when firms make capital investments during an expansionary period. Creditors deciding whether to extend credit to firms would benefit from more accurate information on the viability of long-term investment. The results also suggest to creditors that an excessive number of loans during the contractionary period may be suboptimal because firms’ returns on capital investment are smaller in that period than in the expansionary period. Social implications Given the valuation of implications of long-term capital investments across different business conditions, this paper sheds light on asset allocations for mutual funds, institutional investors who are entrusted with investors’ investments including retirement funds. Originality/value This paper fulfils an identified need to study how capital investments are valued differently across different business conditions.

Do participants in the bond market care about corporate social responsibility? Evidence from China

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Jun Hu ◽  
Wenbin Long ◽  
Yu Wang ◽  
Linzi Zhou
Keyword(s):  
Corporate Social Responsibility ◽  
Social Responsibility ◽  
Bond Market ◽  
Economic Consequences ◽  
Corporate Bond ◽  
Bond Pricing ◽  
Content Type ◽  
Market Participants ◽  
Risk Environments ◽  
Corporate Social

PurposeUsing a sample of listed Chinese companies that issued bonds from 2010 to 2019, the authors empirically test the link between CSR and corporate bond pricing, and the mechanism and channels behind this link.Design/methodology/approachThis study systematically examines whether and how corporate social responsibility (CSR) affects the corporate bond market in China.FindingsFirms with better CSR have higher corporate bond credit ratings and lower corporate bond yield spreads. These associations remain stable in robustness checks, including checks that use regional typhoon disaster as an instrumental variable. The effects of CSR are more significant for firms with a worse information environment and for those operating in high-risk environments. Better CSR is associated with less earnings management, fewer financial restatements and less analyst forecast divergence. In addition, the effects of CSR are more pronounced after the 2013 market-oriented reform and when issuers are non-state-owned enterprises.Practical implicationsBecause market participants can incorporate firms' CSR into their decision-making, establishing an effective channel for communicating CSR between issuers and market participants will enhance the effects of CSR.Social implicationsResearchers need to attend to the mechanisms behind the link between CSR and corporate bond pricing, and to the characteristics of strong environmental contingency in emerging markets, specifically the periods and scenarios in which the effects of CSR change.Originality/valueThis study provides systemic evidence that CSR benefits corporate bond pricing through both informational and reputational channels and that the effects of CSR vary by time and firm. These findings enrich the literatures on both the economic consequences of CSR and the determinants of corporate bond pricing, and provide a plausible explanation for mixed findings on the effects of CSR in previous studies.

Competency-oriented education for sustainable development

2018 ◽  
Vol 19 (7) ◽  
pp. 1299-1316 ◽  
Author(s):  
Mandy Singer-Brodowski ◽  
Katrin Grossmann ◽  
Stephan Bartke ◽  
Sandra Huning ◽  
Theresa Weinsziehr ◽  
...  
Keyword(s):  
Sustainable Development ◽  
Education For Sustainable Development ◽  
Learning Goals ◽  
Comparative Case Study ◽  
Positive Development ◽  
Energy Poverty ◽  
Content Type ◽  
Study Approach ◽  
General Didactics ◽  
Key Competencies

Purpose Energy poverty can be seen as a relatively new, but typical sustainability problem in which various dimensions (ecology, society and economy) are interlinked and in part conflict with each other. Moreover, the variety of involved stakeholders (planners, tenants, housing companies, private landlords, energy consultants, etc.) represents conflicting aims for solving this problem. This paper aims to present a systematic linkage between higher education for sustainable development (HESD) and education about energy poverty yet. Design/methodology/approach A qualitative comparative case study approach with a similar didactic approach is used. Findings Based on the literature about HESD and an overall model in general didactics, ten criteria were identified and used for an overall reflection about similar courses dealing with the topic of energy poverty. The criteria covered the learning goals, the didactical approaches and the institutional support in the forms of organisation in the courses. Research limitations/implications There was no competency measurement of the students in the described courses. Practical implications There was no evaluation of the development of students’ key competencies for sustainability. However, the reflections of students and teachers revealed a positive development regarding the students’ learning process, especially because they worked on a real-world sustainability problem: energy poverty. Originality/value This contribution describes how university courses on energy poverty were designed and implemented at five German universities. Against the background of general criteria for HESD, it reflects on the experiences that the use of this concept evoked. Through a comparison of the five courses against these criteria, the paper outlines strengths and weaknesses of the approach and closes with recommendations and requirements for designing further courses.

SEC adopts regulation systems compliance and integrity

2015 ◽  
Vol 16 (3) ◽  
pp. 4-14 ◽  
Author(s):  
James Burns ◽  
Georgia Bullitt ◽  
Howard Kramer ◽  
Jack Habert ◽  
James Doench
Keyword(s):  
Cyber Security ◽  
Financial Services ◽  
Periodic Review ◽  
Content Type ◽  
Security Issues ◽  
Market Participants ◽  
Investment Companies ◽  
Policies And Procedures ◽  
Investment Advisers

Purpose – To explain the requirements of Regulation Systems Compliance and Integrity (“Regulation SCI”) and the new responsibilities of organizations defined as “SCI entities.” Design/methodology/approach – Explains the purpose of Regulation SCI, the responsibilities of SCI entities, systems covered by the rules (“SCI systems”), and specific obligations of SCI entities, including the establishment and periodic review of policies and procedures, compliance with the Exchange Act, designation of “responsible SCI personnel,” appropriate corrective action in response to “SCI events,” notification of systems changes, annual “SCI reviews,” business continuity and disaster recovery testing, and recordkeeping and filing. Discusses future implications for SCI Entities and other market participants. Findings – Regulation SCI launches a broad and extensive overlay of rules and guidance to address systems capacity and integrity issues that have increasingly affected the securities markets. The adoption of this regulation suggests that there will continue to be increased scrutiny by the SEC, FINRA and other regulators of the automated systems and related policies and procedures of all market participants. Practical implications – SCI entities will need to devote considerable attention and resources not just to prevent incidents where possible, but also to establish systems for ensuring thorough compliance and well-documented and reasonable follow-up actions where necessary. All market professionals – including broker-dealers, investment advisers, pension funds and investment companies – should study the new regulation and consider adopting appropriate policies and procedures to address operating as well as cyber security issues with respect to their own critical operating technology. Originality/value – Practical guidance from experienced financial services lawyers.

CFTC overhauls customer protection requirements

2014 ◽  
Vol 15 (1) ◽  
pp. 25-32 ◽  
Author(s):  
Robert M. Brown
Keyword(s):  
Design Methodology ◽  
Commodity Futures ◽  
Regulatory Regime ◽  
Futures Trading ◽  
Content Type ◽  
Regulatory Response ◽  
Market Participants ◽  
Policies And Procedures ◽  
Practical Implications

Purpose – The purpose of the paper is to summarize the Commodity Futures Trading Commission's (CFTC) recent overhaul of its customer protection rules, which regulate how futures commission merchants (FCMs) and derivatives clearing organizations (DCOs) handle customer funds. Design/methodology/approach – The paper summarizes the most significant aspects of the CFTC's October 30, 2013 customer protection rulemaking, explains FCM and DCO obligations under the new regulatory regime, and sets forth a compliance timeline. Findings – The CFTC's recent overhaul of its customer protection rules impose significant new requirements on FCMs and DCOs in their handling of customer funds. Practical implications – All FCMs and DCOs that handle customer funds should review these new rules and begin putting into place policies and procedures to ensure their compliance as each new requirement comes into effect. Originality/value – The CFTC's overhaul of its customer protection regime is new and significant. FCMs and DCOs need to understand their new obligations under the rules. As these new rules are the CFTC's regulatory response to the events that led to the insolvencies of MF Global and Peregrine Financial Group, these developments also should be of interest to futures and swaps market participants generally.

Assessing sovereign risk: the case of rich countries

2014 ◽  
Vol 6 (3) ◽  
pp. 212-225 ◽  
Author(s):  
Norbert Gaillard
Keyword(s):  
Sovereign Debt ◽  
Credit Rating ◽  
Debt Crisis ◽  
Sovereign Debt Crisis ◽  
Bond Yields ◽  
Content Type ◽  
The Great Recession ◽  
Market Participants ◽  
Investment Grade ◽  
Rich Countries

Purpose – This paper aims to shed new light on the inability of credit rating agencies (CRAs) to forecast the recent defaults and so-called quasi-defaults of rich countries. It also describes how Moody’s sovereign rating methodology has been modified – and could be further improved – to solve this problem. Design/methodology/approach – After converting bond yields into yield-implied ratings, accuracy ratios are computed to compare the respective performances of CRAs and market participants. Then Iceland’s and Greece’s ratings at the beginning of the Great Recession are estimated while accounting for the parameters included in the new methodology implemented by Moody’s in 2013. Findings – Market participants outperformed Moody’s and Standard & Poor’s in terms of anticipating the sovereign debt crisis that hit several European countries starting in 2008. However, the new methodology implemented by Moody’s should lead to more conservative and accurate sovereign ratings. Originality/value – The chronic inability of CRAs to anticipate public debt crises in rich countries is dangerous because the countries affected – which are generally rated in the investment-grade category – are substantially downgraded, amplifying the sovereign debt crisis. This study is the first to demonstrate that Moody’s has learned from its recent failures. In addition, it recommends ways to detect serious threats to the creditworthiness of high-income countries.

scholarly journals Transcriptional Profiling Analysis of the Global Regulator NorG, a GntR-Like Protein of Staphylococcus aureus

2011 ◽  
Vol 193 (22) ◽  
pp. 6207-6214 ◽  
Author(s):  
Q. C. Truong-Bolduc ◽  
P. M. Dunman ◽  
T. Eidem ◽  
D. C. Hooper
Keyword(s):  
Staphylococcus Aureus ◽  
Target Genes ◽  
Efflux Pump ◽  
Transcriptional Profiling ◽  
Fold Increase ◽  
Regulatory Function ◽  
Drug Transporter ◽  
Content Type ◽  
Global Regulators ◽  
Inorganic Ion

The GntR-like protein NorG has been shown to affectStaphylococcus aureusgenes involved in resistance to quinolones and β-lactams, such as those encoding the NorB and AbcA transporters. To identify the target genes regulated by NorG, we carried out transcriptional-profiling assays usingS. aureusRN6390 and its isogenicnorG::catmutant. Our data showed that NorG positively affected the transcription of global regulatorsmgrA,arlS, andsarZ. The three putative drug efflux pump genes most positively affected by NorG were the NorB efflux pump (5.1-fold), the MmpL-like protein SACOL2566 (5.2-fold), and the BcrA-like drug transporter SACOL2525 (5.7-fold) genes. TheS. aureuspredicted MmpL protein showed 53% homology with the MmpL lipid transporter ofMycobacterium tuberculosis, and the putative SACOL2525 protein showed 87% homology with the bacitracin drug transporter BcrA ofStaphylococcus hominis. Two pump genes most negatively affected by NorG were the NorC (4-fold) and AbcA (6-fold) genes. Other categories of genes, such as those participating in amino acid, inorganic ion, or nucleotide transporters and metabolism, were also affected by NorG. Real-time reverse transcription (RT)-PCR assays formgrA,arlS,sarZ,norB,norC,abcA,mmpL, andbcrA-like were carried out to verify microarray data and showed the same level of up- or downregulation by NorG. ThenorGmutant showed a 2-fold increase in resistance to norfloxacin and rhodamine, both substrates of the NorC transporter, which is consistent with the resistance phenotype conferred by overexpression ofnorCon a plasmid. These data indicate that NorG has broad regulatory function inS. aureus.

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