EU markets standards deadlines may be over-ambitious

2015 ◽  
Keyword(s):  
Financial Markets ◽  
Market Manipulation ◽  
Fixed Income ◽  
Technical Standards ◽  
Content Type ◽  
Market Abuse ◽  
Regulatory Standards ◽  
Regulation Of Financial Markets ◽  
Dark Pools ◽  
Eu Financial Markets

Subject Proposed new regulatory standards for EU financial markets. Significance The European Securities and Markets Authority (ESMA) has published comprehensive new proposed technical standards, covering trading, market abuse and securities settlement. The standards aim to increase the transparency, safety and resilience of European financial markets, as well as enhance investor protection. They comprise some of the most important post-crisis regulation of financial markets. Impacts The new standards will tighten regulation of high-frequency trading and 'dark pools'. They will also cover trading in commodities, fixed income, futures and derivatives. Regulators hope that greater transparency will reduce market manipulation and enhance price discovery, promoting more efficient markets.

EU's MiFID II still challenging despite delay

2016 ◽  
Keyword(s):  
Financial Markets ◽  
The United States ◽  
Market Reform ◽  
Technical Standards ◽  
Content Type ◽  
Recent Developments ◽  
The Postponement ◽  
Eu Financial Markets ◽  
The Eu ◽  
Financial Markets Regulation

Subject Recent developments in EU financial markets regulation. Significance EU authorities have conceded that the January 2017 deadline for implementing the revised Markets in Financial Instruments Directive (MiFID II) must be pushed back, probably for a year. The postponement underlines a gap within the EU between tough rhetoric on financial market reform and the institutional ability to translate it into practice. However, EU regulators have made clear that the MiFID II delay will not spill over to slow other reforms -- for example, by moving to resolve a long-running dispute with the United States over derivatives clearing. Impacts Firms' compliance challenges will be formidable and are as yet undefined. The scope of these challenges will depend on formal adoption of the final texts of pending technical standards. The MiFID II delay vindicates concerns expressed by ESMA, and will buttress its authority.

Cryptoliquidity: the blockchain and monetary stability

2019 ◽  
Vol 9 (2) ◽  
pp. 227-252 ◽  
Author(s):  
James Lee Caton
Keyword(s):  
Financial Markets ◽  
Aggregate Demand ◽  
Macroeconomic Fluctuations ◽  
Demand For Money ◽  
Policy Regime ◽  
Content Type ◽  
Blockchain Technology ◽  
Regulation Of Financial Markets ◽  
Money Creation ◽  
Money Holding

Purpose The development of blockchain and cryptocurrency may alleviate the economic strain associated with recession. Economic recessions tend to be aggregate-demand driven, meaning that they are caused by fluctuations in the supply of or demand for money. Holding monetary policy as solution assumes that stability must arise from outside of the economic system. Under a policy regime that allows innovations in blockchain to develop, blockchain technology may promote a money supply that is responsive to changes in demand to hold money. The purpose of this paper is to suggest that cryptocurrencies present an opportunity to profitably implement rules that promote macroeconomic stability. In particular, cryptocurrency that is asset-backed may provide a means for cheaply attaining liquidity during a crisis. Design/methodology/approach The role of cryptocurrency in promoting macroeconomic equilibrium is approached through the lens of monetary theory. Moves away from macroeconomic equilibrium necessitate either a change in the average price of money or a change in the quantity of money, or a change in portfolio demand for money. Cryptocurrency promotes an increase, however this requires the alignment of policy regulating the use of cryptocurrency, reduction in taxes placed on the use of cryptocurrency and cryptocurrency protocol. Findings Cryptocurrency is unlikely to become legal tender, but it may alleviate macroeconomic fluctuations as a near money that provides liquidity and whose supply is sensitive to changes in demand to hold money and money-like substitutes. This role might be inhibited if policy stifles the development of cryptocurrencies and blockchain technology. Research limitations/implications New financial innovations like cryptocurrencies can be analyzed applying the equation of exchange in light of the mechanics of money creation under conditions of disequilibrium. Monetary disequilibrium may be promoted by policy that causes bottlenecks in financial markets. Originality/value Theory of monetary disequilibrium has broad implications for the development and regulation of financial markets. This theory has not been applied to the development of cryptocurrency markets.

scholarly journals A Historical Overview of the Regulation of Market Abuse in South Africa

2017 ◽  
Vol 17 (3) ◽  
pp. 971
Author(s):  
Howard Chitimira
Keyword(s):  
South Africa ◽  
Financial Markets ◽  
South African ◽  
Insider Trading ◽  
Stock Exchanges ◽  
Market Manipulation ◽  
Historical Overview ◽  
The South ◽  
Market Abuse ◽  
Overview Analysis

In an early attempt to combat market abuse in the South African financial markets, legislation such as the Companies Act, the Financial Markets Control Act and the Stock Exchanges Control Act were enacted. However, these Acts failed to effectively curb market abuse activities that were allegedly rife in the financial markets. Consequently, the Insider Trading Act was enacted and came into effect on 17 January 1999. While the introduction of the Insider Trading Act brought some confidence in the financial markets, market abuse activities were still not extinguished. The provisions of the Insider Trading Act were to some extent inadequate and ineffectively implemented. Eventually, the Securities Services Act was enacted to repeal all the flawed provisions of the Insider Trading Act. Notwithstanding these efforts on the part of the legislature, more may still need to be done to increase the number of convictions and settlements in cases involving market abuse in South Africa. It is against this background that a historical overview analysis of the regulation of market abuse is carried out in this article to expose the flaws that were previously embedded in the South African market abuse laws prior to 2004. This is done to raise awareness of the situation on the part of the relevant stakeholders, as they consider whether such flaws were adequately resolved or subsequently re-introduced under the Securities Services Act and the Financial Markets Act. To this end, the article firstly discusses the historical development and regulation of market manipulation prior to 2004. Secondly, the regulation and enforcement of insider trading legislation prior to 2004 are examined. Moreover, where possible, certain flaws of the previous market abuse laws that were re-incorporated into the current South African market abuse legislation are isolated and recommendations are made in that regard.

Too little, too late? Role of credit rating agencies in the Amtek AUTO default

2017 ◽  
Vol 7 (4) ◽  
pp. 1-22
Author(s):  
Shagun Thukral ◽  
Sunder Korivi ◽  
Dipasha Sharma ◽  
Dipali Krishnakumar
Keyword(s):  
Financial Markets ◽  
Credit Rating ◽  
Credit Rating Agencies ◽  
Fixed Income ◽  
Red Flags ◽  
Content Type ◽  
Rating Agencies ◽  
Markets And Institutions ◽  
Analysis Process ◽  
Credit Analysis

Subject area Fixed Income markets, Financial Markets and Institutions. Study level/applicability This case can be used in a postgraduate finance course such as an MBA and executive program for courses such as Fixed Income Markets and Financial Markets and Institutions. Case overview In late August 2015, the sudden downgrade and eventual default of Amtek AUTO Ltd (Amtek) on its debentures upset mutual fund investors and regulators. Questions were raised about the credit rating agencies and their lack of timely action as well as about the independent credit analysis followed by fund houses to protect the interests of investors. One such investor, Suresh Nair, decided to gather all possible available information on Amtek to determine whether it was sheer negligence on the part of all parties involved or if Amtek was in fact in a situation of sudden distress. The case seeks to highlight the credit analysis process, while looking out for red flags to identify potential default or financial stress in a company. Expected learning outcomes To understand the credit analysis process through a fundamental analysis process. To analyze and interpret the financial position of the company through various financial ratios. Identifying “red flags” while evaluating a potential credit that pose as “risks” to credit assessment. Understanding the role and relevance of credit rating agencies in the bond market. Supplementary materials Teaching Notes are available for educators only. Please contact your library to gain login details or email [email protected] to request teaching notes. Subject code CSS 1: Accounting and Finance

Heterogeneous investors and deterioration of market integrity: an analysis of market manipulation cases

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Syed Qasim Shah ◽  
Izlin Ismail ◽  
Aidial Rizal bin Shahrin
Keyword(s):  
Emerging Markets ◽  
Financial Markets ◽  
Institutional Investors ◽  
Individual Investors ◽  
Market Manipulation ◽  
Content Type ◽  
Developed Markets ◽  
Individual Ownership ◽  
The Empirical Analysis

Purpose The purpose of this study is to empirically test the role of heterogeneous investor’s, i.e. institutional investors, individuals and insiders in deteriorating market integrity. Design/methodology/approach The research is conducted by examining the participants of 244 market manipulation cases of East Asian emerging and developed financial markets for the period of 2001–2016. The empirical analysis is conducted using panel logistic regression. Findings The results show that firms with higher institutional ownership are most likely to be manipulated in both markets. Insiders are potential manipulators in developed markets and deteriorate market integrity. In contrast, individual investors behave differently in both markets. In developed markets, firms with high individual ownership are less likely to be manipulated while in emerging markets, firms with individual ownership are more prone to manipulation because of substantial participation by individual investors which invites manipulative practices. Additionally, the authors found that firms with a higher proportion of passive institutional investors are less likely to be manipulated in emerging markets. Originality/value This study contributes to the existing literature by identifying the potential manipulators in the financial markets who deteriorate market integrity with the additional focus of subdivision of institutional investors as active institutional investors and passive institutional investor. The findings are helpful for regulators in designing policies to ensure market integrity and to enforce the role of institutional investors and insiders.

scholarly journals OVERVIEW OF THE MARKET ABUSE REGULATION UNDER THE FINANCIAL MARKETS ACT 19 OF 2012

Obiter ◽  
2014 ◽  
Vol 35 (2) ◽  
Author(s):  
Howard Chitimira
Keyword(s):  
South Africa ◽  
Comparative Analysis ◽  
Financial Markets ◽  
Insider Trading ◽  
Market Manipulation ◽  
Market Abuse ◽  
Overview Analysis

This paper analyses the regulation of market abuse under the Financial Markets Act 19 of 2012 in order to investigate the adequacy of such regulation as regards to the combating of market-abuse practices in South Africa. To this end, the paper provides an overview analysis of the market abuse (insider trading and market manipulation) offences as well as the penalties and other anti-market abuse-enforcement approaches that are employed under the Financial Markets Act 19 of 2012 in a bid to provide a revamped and adequate anti-market abuse regulatory and -enforcement framework in South Africa. Moreover, where possible, the paper also provides a comparative analysis of these offences, penalties and other anti-market abuse-enforcement approaches and those that were provided under the Securities Services Act 36 of 2004. This is done to examine whether the anti-market abuse regulatory and -enforcement framework that was re-introduced under the Financial Markets Act 19 of 2012 has now adequately resolved the flaws and gaps that were associated with a similar framework under the former Act.

The European market abuse regulation: MAR ado about everything

2016 ◽  
Vol 17 (2) ◽  
pp. 1-9
Author(s):  
Jake Green ◽  
Emily Torrens
Keyword(s):  
Market Manipulation ◽  
The European Union ◽  
Content Type ◽  
Detailed Consideration ◽  
Record Keeping ◽  
Market Abuse ◽  
Market Participants ◽  
Insider Dealing ◽  
Run Up ◽  
Geographical Scope

Purpose To provide a practical look at the European Union Market Abuse Regulation (Regulation EU No. 596/2014) (“MAR”) and some of its uncertainties, particularly the issue of its wide reaching jurisdictional scope. Design/methodology/approach The article takes a three pillar approach covering the following: a brief discursive overview of MAR, consideration of some of its uncertainties and key areas of controversy, and a detailed consideration of the jurisdictional scope of MAR. Findings Many questions and considerations about MAR remain, particularly those regarding how the investment recommendations requirements will be met in practice, most notably in respect of sales notes. Further, additional extensive record keeping obligations and prescriptive market soundings procedures are now expected of firms in order to show the legitimacy of their activities. In addition, the geographical scope of MAR is wide and all encompassing. Whilst its market manipulation, improper disclosure and insider dealing provisions must undoubtedly be adhered to worldwide, it remains to be seen how far the conduct requirements included in MAR will be implemented by non EU firms. Originality/value Consolidation and detailed consideration of the most common questions being asked in the market by market participants and issuers on The Market Abuse Regulation in the run up to its implementation. Practical guidance from experienced financial regulatory lawyers.

UK financial markets review is prelude to global push

2015 ◽  
Keyword(s):  
Financial Markets ◽  
Fixed Income ◽  
Senior Managers ◽  
Content Type ◽  
Voluntary Standards ◽  
Market Participants ◽  
Forward Looking

Significance The year-long official review was intended to restore trust in the wholesale fixed income, currency and commodities (FICC) markets. The FEMR embraces a more forward-looking approach to identifying and mitigating risks, as UK regulators recognise that laws, standards and norms covering FICC markets lag behind market innovation. UK regulators are seeking to internationalise their approach through global regulatory efforts. Impacts The coverage of the new Senior Managers' Regime would nearly double, to over 130,000 individuals. Firms would be encouraged to strengthen whistleblower procedures to uncover misconduct. If FICC market participants fail to agree and follow sufficiently stringent voluntary standards, tougher regulation may result. UK regulators' internationalisation efforts may founder on their US counterparts' lack of appetite for further ambitious regulatory moves. Rather than tougher regulation, the Republican-controlled Congress is mulling regulatory rollback.

scholarly journals Comparing the Law Related to Market Manipulation in Islamic Law and US Law

2019 ◽  
Vol 16 (1) ◽  
pp. 80
Author(s):  
Saad A. Aljloud
Keyword(s):  
Financial Markets ◽  
Large Scale ◽  
Islamic Law ◽  
Market Manipulation ◽  
Islamic Perspective ◽  
Muslim Countries ◽  
Regulation Of Financial Markets ◽  
The Us ◽  
The Law ◽  
The Way

The financial markets have been beset by large-scale market manipulations since its beginning. This article focuses on comparing the laws of market manipulation of the US and Islamic law and how Muslim countries get benefits from US regulation of financial markets. This will investigate market manipulation from US law and Islamic perspective. This article will present a comprehensive step review of the Islamic law regarding market manipulation. Also this article begins with a snapshot of financial markets in US law and the meaning of manipulation. Understanding more about the way the jurisprudence was designed to adapt to the existing laws and institutions of the Islamic Shariah will help place some of the unique features in Islamic law of financial markets. We will discuss the Islamic doctrine ḥisbah (حسبة‎) which means ‘accountability’ or a duty to ‘enjoin good and forbid wrong’ and how it benefits Islamic financial markets. Finally we will discuss whether principles of market manipulation, supplemented in Islamic law, have attained their purpose.

Legal questions on financial market abuse

2015 ◽  
Vol 22 (1) ◽  
pp. 28-36
Author(s):  
Alessandra Pera
Keyword(s):  
Financial Markets ◽  
Financial Market ◽  
National Court ◽  
Global Dimension ◽  
Economic Effects ◽  
Content Type ◽  
Eu Member States ◽  
Market Abuse ◽  
Lex Mercatoria ◽  
The Impact

Purpose – The purpose of this study is to underline the impact that globalization of financial markets has on national punishment policies. The US financial crisis has strongly affected consumers’ lives, but the focus of this research is on the national provisions against the illegal and unfair behaviour of economic actors, with special regard to a phenomenon that took place abroad, but whose effects came to light in many different countries. Design/methodology/approach – Different methodological approaches, both deductive and inductive, are combined in the present paper, together with comparative and philosophical insights on national Court decisions and scholar writings. Findings – As European Union (EU) member States experts are discussing about a lex mercatoria for the financial markets to govern the EU integration process, this study highlights some questions concerning mainly three aspects: the level of censorship; forms and nature of responsibility; punitive models and their micro- and macro-economic effects. Originality/value – The study offers insights into the possible answers in terms of criminal and private law remedies to fight financial market abuse in a global dimension, through the use of general principles of contractual and tort law, which are common among EU member State, as culpa in eligendo, culpa in vigilando, duty of information, duty of care, ecc […] .

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