Market Data, the SEC and Stock Exchanges: Reopening Pandora’s Box?

Every security traded in public markets represents several data points that can be valuable to future trades (not to mention compliance). The Regulation National Market System (or “Reg NMS”) grants exchanges, licensed as self-regulatory organizations (“SROs”), the responsibility to disseminate market data consolidated from their platforms. Exchange data is vital to matching orders, especially in today’s electronic and automated markets.[1]

Like most “platform” companies, exchanges seek to monetize the data generated by their trading platforms. This market data has obvious value: Virtually instantaneous access to granular information on previous trades translates into clear competitive advantages for market participants. Exchanges … Read more

How to Achieve Equivalence of Financial Regulation in the EU and UK Post-Brexit

As the March 29, 2019 deadline approaches, the United Kingdom prepares its withdrawal from the European Union amidst political turbulence that would suit a television drama.[1] Center stage is what to do about the financial services industry. For the UK as well as the European continent, it makes the most sense to keep Europe’s financial sector integrated with the UK and to be pragmatic in interpreting the EU Treaty on the Single Market freedoms.

UK Financial Services

The UK openly seeks an arrangement acceptable to the EU. The latest UK White Paper proposes to stay in the EU’s Single … Read more

Culture and Conduct: Beyond Regulation and Compliance

“Culture, more than rule books, determines how an organization behaves.” – Warren Buffet[1]

In recent years, there have been ongoing occurrences of serious professional misbehavior, ethical lapses and compliance failures at financial institutions. It was the crisis that exposed systematic mentality errors in finance.[2]

The hope was that post-crisis regulatory reforms would tackle the typical mindset of short-term oriented self-enrichment in finance, considered as one of the origins of the financial crisis. Now, almost ten years after the crash in 2007, the lack of fundamental change raises the question whether there is an endemic issue within the financial … Read more

Could Solvency II Threaten the Financial Stability of European Insurance?

The European insurance sector has approximately 6.8 trillion euros of assets under management. It is the largest European institutional investor, a fundamental element of financial stability and provides support for the global economy. Additionally, the European insurance sector is a significant source of jobs, providing employment for more than one million people. The chart below illustrates the share of GDP represented by insurance premiums, generally defined as penetration ratios.[1]

Solvency II, Figure 1
What is Solvency II?

The Solvency II Directive[2] is a set of regulatory requirements for the European insurance industry. Adopted in 2009, the Directive was slated to take effect … Read more

Should Lex Americana be universal? FATCA turns foreign banks into tax informants

Over the last decades, a number of initiatives taken by various US administrations on both sides of the aisle have raised concerns about the actual legality of the extraterritoriality attached to laws imposed by the United States of America on other jurisdictions around the world, often using “persuasion” rather than legal due process.

In my first course on International Private Law at the Catholic University of Louvain, we were taught that tax laws could not extend beyond the borders of the taxation authorities. The territoriality of tax laws is confirmed by the literature.   The double taxation treaties confirm this principle … Read more

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Editor's Tweet: George Ugeux discuss whether the Lex Americana should be universal? How FATCA turns foreign banks into tax informants

Cyprus: what happened to the sanctity of insured deposits?

In the turmoil created by the decision of the Cyprus Government to impose a 6.75% levy on deposits up to 100,000 euros and 9% above, it might be useful to look at the legal aspects of this decision. The issue of a guarantee scheme for deposits is not new, and even Cyprus established such a scheme in 2000. This posts walks through the relevant European and Cypriot regulation.  I argue that there is no precedent for Cyprus’ levy and that it creates a serious risk of contagion.

European regulation

On July 12, 2010, the European Commission adopted a legislative proposal … Read more

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Editor's Tweet: Georges Ugeux, Chairman and CEO, Galileo Global Advisors, discusses Cyprus: what happened to the sanctity of insured deposits.

The ICE Acquisition of NYSE Is a Failure for Europe

In 2011, the Deutsche Boerse Group launched an offer on the New York Stock Exchange. Everybody expected that the U.S. authorities would object to this foreign acquisition of the most iconic Stock Exchange in the United States, and arguably in the world. Not only did it not happen, but very quickly the U.S. Department of Justice, quite naturally, concluded that there was no antitrust issue. Incidentally, NASDAQ made a desperate attempt to purchase the NYSE for $11.8 billion and the merger of the two largest cash equity exchanges of the United States was stiffly rejected by the U.S. authorities. Even … Read more

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Editor's Tweet: Georges Ugeux, CEO of Galileo Global Advisors, opines on the ICE acquisition of NYSE