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ODEC 6010 - Financ.Regul.in the Brexit context–a joint perspec:corpor.gov. of banks&securities markets oversight

Type d'enseignement : Seminar

Semester : Autumn 2017-2018

Number of hours : 24

Language of tuition : English

Pre-requisite

Students should have a good understanding of corporate law and a basic knowledge of capital markets law.

Course Description

The course provides an overview, combining both legal and pragmatic elements, of the European regulation of financial markets and on brexit. The first parts (six sessions) focuses on bank corporate governance. We will discuss • Introductory session: Why banks are different than non-regulated industries, aiming at understanding the “tripartite principal-agent problem” banking poses. Introduction to CRD IV, overview on the European framework as far as liability is concerned, groundwork for the case studies which follow. • Qualifications for running a bank and how to organize a bank's board, discussing “fit and proper tests” in place for board members, focusing on questions such as “groupthink”, independence and risk management, 1st case study: work out a hiring process. • Banker's remuneration, trying to understand how pay might impact performance, 2nd case study: work out a remuneration scheme. • Liability of bank management, considering the business judgment rule and questions of compliance, whistleblowing and internal investigations, 3rd case study: work on a liability case. • Banks and disclosure to the market, reviewing ad hoc disclosure and the Market Abuse Regulation: 5th case study: work out a procedure on how to delay disclosure. • Brexit: 6th case study: work out how to prepare. Taking the securities markets regulator's perspective, the second part of the course will focus on pragmatic aspects of financial regulation (how is it made? how is it applied? what are the key issues at stake on the international reform agenda? etc.). The last 6 sessions will be organized thematically: • Introduction to financial markets and to securities markets regulation – Explore the role of financial markets, present the key financial players and explain how supervisory models are designed (from a comparative perspective). • The EU legislative process – how to make the difference as regulators? – Explore the EU legislative process and understand the role of the different players involved. • Architecture of financial markets oversight in the Brexit context – Explain the role of international standards, the concepts of convergence and regulatory arbitrage and work on the European integrated model of financial supervision. • How to regulate cross-border activities? Case study on Brexit (4h session) – Work around the concepts of extraterritoriality, deference and equivalence and the regulatory tools that could be used by regulators to regulate cross-border activities. • Shadow banking – key features and case study – Understanding the complex notion of “shadow banking” and how regulation can minimize the shadow banking risks posed to financial stability.

Teachers

  • D'HOIR, Jennifer (Head of Unit for International Affairs à l'Autorité des Marchés Financiers, AMF)
  • LANGENBUCHER, Katja C. (Professeur à la Goethe Universitat)

Pedagogical format

The class is divided into 2 sets of 6 sessions, both sets combining lecture and class exercises.

Course validation

The course will be graded on the basis of (1) a presentation by each student (details of which will be discussed on the first day of class) and (2) the redaction of a 2-page briefing note on a topic related to international financial regulation.

Workload

Various readings (mostly short articles and speeches) are required for the class as well as active and constructive participation during the class.

Required reading

  • Sessions 1-6:Directive 2013/36/EU, Becht/Bolton/Roell, Oxford Review of Economic Policy, 27 (2011)437
  • Zingales, Journal of Finance 70 (2015)1327
  • Baum/Hale/Morfit/Larcker/Tayan, Stanford Closer Look Series, April 25, 2017; Gibbs, Past, Present, and Future Compensation Research: Economist Perspectives
  • FSB, stocktake of efforts to strengthen governance frameworks to mitigate misconduct risks, May 2017
  • John Armour, Brexit and Financial Services

Additional required reading

  • Continuation of Required readings : Sessions 6-12 :Speech by Mark Carney - What a Difference a Decade Makes – April 2017
  • Article by Candido Garcia Molyneux, “European Union Legislative Process at Issue” in the National Law Review – Dec. 2014
  • ESMA Founding Regulation (095/2011)
  • EU COM consultation ESA review – March 2017
  • IOSCO, Final report on cross-border regulation – Sept. 2015
  • European Council (Art. 50) guidelines for Brexit negotiations – April 2017
  • ESMA Opinion - General principles to support supervisory convergence in the context of the United Kingdom withdrawing from the European Union – May 2017