Our report begins by providing an overview of the costs and benefits of cloud technology for financial companies; we find that cloud technology can offer significant benefits to financial companies. We then describe the current regulatory frameworks that apply to financial institutions’ use of third-party technology providers, including cloud service providers, in various jurisdictions. Next, we describe key provisions of DORA that apply to cloud and other technology service providers and how such provisions are similar to or diverge from the current frameworks described in the previous section. We conclude by recommending that the EU revise DORA in certain key respects to better align with the approach in other jurisdictions as DORA’s divergences from other jurisdictions’ regulation of cloud and other third-party technology services may unnecessarily discourage the adoption of such services by financial companies.
{"title":"The E.U.’s Digital Operational Resilience Act: Cloud Services & Financial Companies","authors":"H. Scott","doi":"10.2139/ssrn.3904113","DOIUrl":"https://doi.org/10.2139/ssrn.3904113","url":null,"abstract":"Our report begins by providing an overview of the costs and benefits of cloud technology for financial companies; we find that cloud technology can offer significant benefits to financial companies. We then describe the current regulatory frameworks that apply to financial institutions’ use of third-party technology providers, including cloud service providers, in various jurisdictions. Next, we describe key provisions of DORA that apply to cloud and other technology service providers and how such provisions are similar to or diverge from the current frameworks described in the previous section. We conclude by recommending that the EU revise DORA in certain key respects to better align with the approach in other jurisdictions as DORA’s divergences from other jurisdictions’ regulation of cloud and other third-party technology services may unnecessarily discourage the adoption of such services by financial companies.","PeriodicalId":20999,"journal":{"name":"Regulation of Financial Institutions eJournal","volume":"22 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2021-08-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"88193954","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Spanish Abstract: La crisis de 2007 conocida como la Crisis Financiera Global (CFG) tuvo un fuerte impacto en la economía mundial. Lo que comenzó como un colapso del mercado financiero de EE. UU. Resultó en una verdadera crisis mundial, que afectó tanto al sector financiero como al no financiero. Uno de los mercados involucrados fue el mercado de derivados. Como resultado, tanto los reguladores como las empresas reguladas son conscientes de los riesgos e incertidumbres que se generan en el mercado de derivados, en particular en el mercado de derivados al mostrador (OTCDM). Con el fin de comprender el papel del riesgo y la regulación basada en el riesgo en el contexto del régimen OTCDM y CCP, este trabajo explora la justificación de los derivados como herramientas de distribución de riesgos. Siguiendo la noción de "riesgos manufacturados" de la teoría de la sociedad del riesgo, se explica en detalle por qué el OTCDM es un centro de producción de riesgos. También considera las reformas regulatorias posteriores a la CFG y el avance hacia el uso de CCPs. Presenta el argumento de que la inclusión de CCPs en el OTCDM y el aumento de la compensación central obligatoria añade complejidad al mercado y, por tanto, podría convertirse en una fuente de nuevos "riesgos creados o manufacturados". English Abstract: The recent financial crisis had a strong impact on the worldwide economy, particularly the crisis of 2007 known as the Global Financial Crisis GFC. What started as a US financial market crash resulted in a truly global crisis, impacting both financial and non-financial sectors. One of the markets involved was the derivatives market. As a result, both regulators and regulated firms are aware of the risks and uncertainties manufactured in the derivatives market, in particular in the OTCDM. In order to understand the role of risk and risk-based regulation in the context of the OTCDM and CCPs regime, this paper explores the rationale of derivatives as tools of distribution of risks. Following the notion of ‘manufactured risks’ of the risk society theory, it explains in detail why the OTCDM is a centre of production of risks. It also considers the post-GFC regulatory reforms and the move towards the use of CCPs. It puts forward the argument that the inclusion of CCPs in the OTCDM and the increase in mandatory central clearing adds complexity to the market, and thereby might become a source of new ‘manufactured risks’.
{"title":"Fisiología del mercado de derivados al mostrador (OTC) y la reforma posterior a la crisis financiera global (Physiology of the OTC Derivatives Market and Post- Global Financial Crisis Reform)","authors":"Ligia Catherine Arias-Barrera","doi":"10.2139/ssrn.3898148","DOIUrl":"https://doi.org/10.2139/ssrn.3898148","url":null,"abstract":"Spanish Abstract: La crisis de 2007 conocida como la Crisis Financiera Global (CFG) tuvo un fuerte impacto en la economía mundial. Lo que comenzó como un colapso del mercado financiero de EE. UU. Resultó en una verdadera crisis mundial, que afectó tanto al sector financiero como al no financiero. Uno de los mercados involucrados fue el mercado de derivados. Como resultado, tanto los reguladores como las empresas reguladas son conscientes de los riesgos e incertidumbres que se generan en el mercado de derivados, en particular en el mercado de derivados al mostrador (OTCDM). Con el fin de comprender el papel del riesgo y la regulación basada en el riesgo en el contexto del régimen OTCDM y CCP, este trabajo explora la justificación de los derivados como herramientas de distribución de riesgos. Siguiendo la noción de \"riesgos manufacturados\" de la teoría de la sociedad del riesgo, se explica en detalle por qué el OTCDM es un centro de producción de riesgos. También considera las reformas regulatorias posteriores a la CFG y el avance hacia el uso de CCPs. Presenta el argumento de que la inclusión de CCPs en el OTCDM y el aumento de la compensación central obligatoria añade complejidad al mercado y, por tanto, podría convertirse en una fuente de nuevos \"riesgos creados o manufacturados\". English Abstract: The recent financial crisis had a strong impact on the worldwide economy, particularly the crisis of 2007 known as the Global Financial Crisis GFC. What started as a US financial market crash resulted in a truly global crisis, impacting both financial and non-financial sectors. One of the markets involved was the derivatives market. As a result, both regulators and regulated firms are aware of the risks and uncertainties manufactured in the derivatives market, in particular in the OTCDM. In order to understand the role of risk and risk-based regulation in the context of the OTCDM and CCPs regime, this paper explores the rationale of derivatives as tools of distribution of risks. Following the notion of ‘manufactured risks’ of the risk society theory, it explains in detail why the OTCDM is a centre of production of risks. It also considers the post-GFC regulatory reforms and the move towards the use of CCPs. It puts forward the argument that the inclusion of CCPs in the OTCDM and the increase in mandatory central clearing adds complexity to the market, and thereby might become a source of new ‘manufactured risks’.","PeriodicalId":20999,"journal":{"name":"Regulation of Financial Institutions eJournal","volume":"30 5 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2021-08-02","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"83000001","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2021-07-20DOI: 10.17159/1727-3781/2021/V24I0A10744
Martha Gertruida Van Niekerk, Nkgolodishe Hermit Phaladi
Digital financial services (DFSs), being financial services accessed and delivered through digital channels, have grown rapidly in South Africa as well as globally. The adoption of the technology for DFSs has led to an increase in financial inclusion, enabling more individuals and businesses to have access to useful and affordable financial products and services, where payments, savings, credit, investment and insurance are included. Through the Financial Sector Regulation Act 9 of 2017 financial inclusion was statutorily enacted for the first time. The regulators are now empowered to insist that financial institutions take proactive steps to expand financial inclusion and can take the necessary steps to enforce these powers. One of the factors that have an influence on whether consumers will adopt DFSs is consumers' perspectives of DFSs. Lack of information and knowledge combined with the cost of data negatively influences the adoption of DFSs. The transfer of information to unbanked people in South Africa with regards to DFSs should be enhanced by the state as it strives to improve financial literacy. DFSs are susceptible to financial crimes like fraud, money laundering, terrorist financing, bribery, corruption and market abuse. The challenges that threaten the interests of customers should be addressed by stricter information verification methods when transacting with clients online. Technological detectors and digital identification should be used more effectively to verify customers and to alert authorities to suspicious transactions. Financial institutions might consider authenticating online transactions by thumb-print or a voice recognition system. This paper emphasises that because of the prospects of greater and deeper financial inclusion in South Africa, the use of DFSs has to be improved and developed and the challenges have to be constructively addressed to unleash the true potential thereof.
{"title":"Digital Financial Services: Prospects and Challenges","authors":"Martha Gertruida Van Niekerk, Nkgolodishe Hermit Phaladi","doi":"10.17159/1727-3781/2021/V24I0A10744","DOIUrl":"https://doi.org/10.17159/1727-3781/2021/V24I0A10744","url":null,"abstract":"Digital financial services (DFSs), being financial services accessed and delivered through digital channels, have grown rapidly in South Africa as well as globally. The adoption of the technology for DFSs has led to an increase in financial inclusion, enabling more individuals and businesses to have access to useful and affordable financial products and services, where payments, savings, credit, investment and insurance are included. Through the Financial Sector Regulation Act 9 of 2017 financial inclusion was statutorily enacted for the first time. The regulators are now empowered to insist that financial institutions take proactive steps to expand financial inclusion and can take the necessary steps to enforce these powers. One of the factors that have an influence on whether consumers will adopt DFSs is consumers' perspectives of DFSs. Lack of information and knowledge combined with the cost of data negatively influences the adoption of DFSs. The transfer of information to unbanked people in South Africa with regards to DFSs should be enhanced by the state as it strives to improve financial literacy. DFSs are susceptible to financial crimes like fraud, money laundering, terrorist financing, bribery, corruption and market abuse. The challenges that threaten the interests of customers should be addressed by stricter information verification methods when transacting with clients online. Technological detectors and digital identification should be used more effectively to verify customers and to alert authorities to suspicious transactions. Financial institutions might consider authenticating online transactions by thumb-print or a voice recognition system. This paper emphasises that because of the prospects of greater and deeper financial inclusion in South Africa, the use of DFSs has to be improved and developed and the challenges have to be constructively addressed to unleash the true potential thereof.","PeriodicalId":20999,"journal":{"name":"Regulation of Financial Institutions eJournal","volume":"195 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2021-07-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"75434937","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Advances in the global digital ecosystem are ever continuous. The use of digital devices is already ubiquitous. At one glance, the cascading effects of digitization have crystallized on the evolution of money as we know it. The arrival of Bitcoin on the global financial is a testament to this assertion. As national central banks around the world simmer the prospects of issuing their digital currency, all hands must be on deck and knowledge brought to the fore. The creation and regulation of a digital currency ecosystem is an uncharted destination unguarded even by the constellation of the stars in the galaxy. The Central Bank of Nigeria must steer the frontiers of digital currency innovation by leading the race in the ecosystem. This paper proposes three names for digital currency and a pathway for digital currency regulation while revealing the prospects and challenges in Nigeria.
{"title":"Digital Currency in Nigeria: The Next Big Thing","authors":"D. Odumosu","doi":"10.2139/ssrn.3888207","DOIUrl":"https://doi.org/10.2139/ssrn.3888207","url":null,"abstract":"Advances in the global digital ecosystem are ever continuous. The use of digital devices is already ubiquitous. At one glance, the cascading effects of digitization have crystallized on the evolution of money as we know it. The arrival of Bitcoin on the global financial is a testament to this assertion. As national central banks around the world simmer the prospects of issuing their digital currency, all hands must be on deck and knowledge brought to the fore. The creation and regulation of a digital currency ecosystem is an uncharted destination unguarded even by the constellation of the stars in the galaxy. The Central Bank of Nigeria must steer the frontiers of digital currency innovation by leading the race in the ecosystem. This paper proposes three names for digital currency and a pathway for digital currency regulation while revealing the prospects and challenges in Nigeria.","PeriodicalId":20999,"journal":{"name":"Regulation of Financial Institutions eJournal","volume":"20 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2021-07-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"86719389","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Agency MBS issuers can choose among three securitization venues: individual securitization where an issuer uses her own loans to create an MBS, collective securitization where different issuers deliver loans into a common MBS, and cash window where issuers receive immediate cash payment by selling loans to Fannie Mae or Freddie Mac, who then conduct securitization. We find that issuers with greater immediate liquidity needs (e.g., smaller issuers and shadow banks) have a larger fraction of their loans securitized through cash window. The uniform pricing feature of collective securitization results in cross-subsidy from traditional banks, who have relatively high-value loans, to shadow banks, especially fintech issuers, who have relatively low-value loans;hence, shadow banks and traditional banks prefer collective and individual securitization, respectively. We further show that securitization venues affect the quality and quantity of loans that issuers securitize, using Fannie Mae's policy shock on collective securitization and the COVID-19 shock on cash window.
{"title":"Shadow Bank and Fintech Mortgage Securitization","authors":"Yu An, Lei Li, Zhaogang Song","doi":"10.2139/ssrn.3886103","DOIUrl":"https://doi.org/10.2139/ssrn.3886103","url":null,"abstract":"Agency MBS issuers can choose among three securitization venues: individual securitization where an issuer uses her own loans to create an MBS, collective securitization where different issuers deliver loans into a common MBS, and cash window where issuers receive immediate cash payment by selling loans to Fannie Mae or Freddie Mac, who then conduct securitization. We find that issuers with greater immediate liquidity needs (e.g., smaller issuers and shadow banks) have a larger fraction of their loans securitized through cash window. The uniform pricing feature of collective securitization results in cross-subsidy from traditional banks, who have relatively high-value loans, to shadow banks, especially fintech issuers, who have relatively low-value loans;hence, shadow banks and traditional banks prefer collective and individual securitization, respectively. We further show that securitization venues affect the quality and quantity of loans that issuers securitize, using Fannie Mae's policy shock on collective securitization and the COVID-19 shock on cash window.","PeriodicalId":20999,"journal":{"name":"Regulation of Financial Institutions eJournal","volume":"31 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2021-07-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"87888903","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Spanish Abstract: La generación de un impacto social positivo desde las actividades del sistema financiero se vincula estrechamente al movimiento de fortalecimiento de criterios de sostenibilidad ambiental, social y de gobierno ASG. Nuestro propósito es contribuir al debate en la construcción del criterio social a través de la determinación de los elementos conforman la licencia social, el rol que tiene la regulación de conducta, y la forma en la que la contratación financiera puede contribuir al fortalecimiento de dicha licencia. En la medida en que la construcción de la licencia social se sirve de diversas fuentes de regulación que interactúan con mecanismos creados por los particulares para regular sus intereses, este trabajo empieza abordando la teleología de la regulación y su relación con el contrato, para luego indicar la forma en la que regulación y contrato son herramientas a través de las cuales se promueve el desarrollo económico. En la tercera parte, nuestro argumento presenta las bases para la construcción de la licencia social en el sistema financiero, indicando las fuentes y los destinatarios, además de sus criterios fundantes. En la medida en que la construcción de la licencia social para el sistema financiero se sirve de regímenes creados por agencias regulatorias, explicamos el rol de la regulación de conducta para instituciones y trabajadores del sector. Finalmente, argumentamos la necesidad de reconfigurar la contratación financiera hacia actividades de creación de valor y la correlativa disminución de actividades de extracción de valor. English Abstract:The creation of a positive social impact from financial system is closely linked to the movement to strengthen environmental, social and governance sustainability, known as ESG factors. The purpose of this paper is to contribute to the debate on the construction of social factor through the determination of the elements that make up the social license, the role of conduct regulation, and the way in financial contracts can contribute to the strengthening of such license. It is argued that that the construction of the social license uses various sources of regulation that interact with mechanisms created by individuals to rule their own economic interests. This work begins by addressing the teleology of regulation and its relationship with the contract as an instrument. It then indicates the financial regulation and financial contracts are tools to promote economic development. In the third part, we explore the building blocks for the construction of the social license in the financial system, setting the issuers and recipients, as well as the benchmarks of such license. To the extent that the construction of the social license for the financial system is based on regimes created by regulatory agencies, we explain how regulation of conduct for institutions and individuals fits in this discourse. Finally, we argue the need to reconfigure financial contracts towards value creation
{"title":"La Construcción de la Licencia Social a través de la Contratación Financiera (Assembling the Social License through Financial Contracts)","authors":"Ligia Catherine Arias-Barrera","doi":"10.2139/ssrn.3898157","DOIUrl":"https://doi.org/10.2139/ssrn.3898157","url":null,"abstract":"Spanish Abstract: La generación de un impacto social positivo desde las actividades del sistema financiero se vincula estrechamente al movimiento de fortalecimiento de criterios de sostenibilidad ambiental, social y de gobierno ASG. Nuestro propósito es contribuir al debate en la construcción del criterio social a través de la determinación de los elementos conforman la licencia social, el rol que tiene la regulación de conducta, y la forma en la que la contratación financiera puede contribuir al fortalecimiento de dicha licencia. En la medida en que la construcción de la licencia social se sirve de diversas fuentes de regulación que interactúan con mecanismos creados por los particulares para regular sus intereses, este trabajo empieza abordando la teleología de la regulación y su relación con el contrato, para luego indicar la forma en la que regulación y contrato son herramientas a través de las cuales se promueve el desarrollo económico. En la tercera parte, nuestro argumento presenta las bases para la construcción de la licencia social en el sistema financiero, indicando las fuentes y los destinatarios, además de sus criterios fundantes. En la medida en que la construcción de la licencia social para el sistema financiero se sirve de regímenes creados por agencias regulatorias, explicamos el rol de la regulación de conducta para instituciones y trabajadores del sector. Finalmente, argumentamos la necesidad de reconfigurar la contratación financiera hacia actividades de creación de valor y la correlativa disminución de actividades de extracción de valor. English Abstract:The creation of a positive social impact from financial system is closely linked to the movement to strengthen environmental, social and governance sustainability, known as ESG factors. The purpose of this paper is to contribute to the debate on the construction of social factor through the determination of the elements that make up the social license, the role of conduct regulation, and the way in financial contracts can contribute to the strengthening of such license. It is argued that that the construction of the social license uses various sources of regulation that interact with mechanisms created by individuals to rule their own economic interests. This work begins by addressing the teleology of regulation and its relationship with the contract as an instrument. It then indicates the financial regulation and financial contracts are tools to promote economic development. In the third part, we explore the building blocks for the construction of the social license in the financial system, setting the issuers and recipients, as well as the benchmarks of such license. To the extent that the construction of the social license for the financial system is based on regimes created by regulatory agencies, we explain how regulation of conduct for institutions and individuals fits in this discourse. Finally, we argue the need to reconfigure financial contracts towards value creation","PeriodicalId":20999,"journal":{"name":"Regulation of Financial Institutions eJournal","volume":"15 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2021-07-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"78662905","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The DOJ/ FTC Vertical Merger Guidelines (VMGs) were adopted by the FTC in June 2020 by a party-line 3-2 party line over the dissent of the Acting Chair. One might expect that the VMGs will be withdrawn and/or revised, now that there is a Democratic majority. Revision is appropriate because the VMGs are both incomplete and overly permissible. This Suggested Revision can aid that process.
{"title":"A Suggested Revision of the 2020 Vertical Merger Guidelines (July 7, 2021)","authors":"S. Salop","doi":"10.2139/ssrn.3839768","DOIUrl":"https://doi.org/10.2139/ssrn.3839768","url":null,"abstract":"The DOJ/ FTC Vertical Merger Guidelines (VMGs) were adopted by the FTC in June 2020 by a party-line 3-2 party line over the dissent of the Acting Chair. One might expect that the VMGs will be withdrawn and/or revised, now that there is a Democratic majority. Revision is appropriate because the VMGs are both incomplete and overly permissible. This Suggested Revision can aid that process.","PeriodicalId":20999,"journal":{"name":"Regulation of Financial Institutions eJournal","volume":"93 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2021-07-07","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"80240508","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2021-06-30DOI: 10.17159/1727-3781/2021/v24i0a10742
Howard Chitimira, Prince Ncube
Artificial intelligence (AI) and fifth generation network technology (5G) are now being utilised by some companies and financial institutions such as banks to enhance their competitiveness and expand their businesses. The general types of AI include functional AI, interactive AI, text AI, visual AI and analytic AI. The key components of AI include machine learning, fast Internet connectivity, deep learning, neural networks and advanced data analysis. These components may be complemented by the adoption and use of standard 5G cellular networks. 5G utilises broadband Internet access and Internet connection, and is now employed by some banking institutions, especially in developed countries. It is not clear whether South African banking institutions have adopted 5G for their Internet connectivity and operations. AI and 5G may be used to detect and combat cybercrimes in banking institutions. On the other hand, AI and 5G may also be abused by cybercriminals to commit financial crimes such as money laundering and insider trading. In this regard it is submitted that South African policy makers should carefully revise the Cybercrimes Bill B6-2017 (Cybercrimes Bill) to embrace the use of AI and 5G to detect and combat cybercrimes in South African banks. Accordingly, this article examines the adequacy of the Cybercrimes Bill. It also explores the regulation and use of 5G and AI to detect, prevent and combat cybercrimes in banks and other financial institutions in South Africa.
{"title":"The Regulation and Use of Artificial Intelligence and 5G Technology to Combat Cybercrime and Financial Crime in South African Banks","authors":"Howard Chitimira, Prince Ncube","doi":"10.17159/1727-3781/2021/v24i0a10742","DOIUrl":"https://doi.org/10.17159/1727-3781/2021/v24i0a10742","url":null,"abstract":"Artificial intelligence (AI) and fifth generation network technology (5G) are now being utilised by some companies and financial institutions such as banks to enhance their competitiveness and expand their businesses. The general types of AI include functional AI, interactive AI, text AI, visual AI and analytic AI. The key components of AI include machine learning, fast Internet connectivity, deep learning, neural networks and advanced data analysis. These components may be complemented by the adoption and use of standard 5G cellular networks. 5G utilises broadband Internet access and Internet connection, and is now employed by some banking institutions, especially in developed countries. It is not clear whether South African banking institutions have adopted 5G for their Internet connectivity and operations. AI and 5G may be used to detect and combat cybercrimes in banking institutions. On the other hand, AI and 5G may also be abused by cybercriminals to commit financial crimes such as money laundering and insider trading. In this regard it is submitted that South African policy makers should carefully revise the Cybercrimes Bill B6-2017 (Cybercrimes Bill) to embrace the use of AI and 5G to detect and combat cybercrimes in South African banks. Accordingly, this article examines the adequacy of the Cybercrimes Bill. It also explores the regulation and use of 5G and AI to detect, prevent and combat cybercrimes in banks and other financial institutions in South Africa.","PeriodicalId":20999,"journal":{"name":"Regulation of Financial Institutions eJournal","volume":"95 10 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2021-06-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"83458414","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We exploit the information content of option prices to construct a novel measure of bank tail-risk. We document a persistent increase in tail-risk for the U.S. banking industry following the global financial crisis, except for banks designated as systemically important by the Dodd-Frank Act. We show that this post-crisis difference in tail-risk for large and small banks is consistent with the too-big-to-fail (TBTF) status of large banks being reinforced by the Dodd-Frank designation: Naming the banks whose failure could threaten the financial stability of the U.S. gave investors a list of banks the government deemed as TBTF.
{"title":"What Can Volatility Smiles Tell Us About the Too Big to Fail Problem?","authors":"P. Ngo, Diego Puente-Moncayo","doi":"10.2139/ssrn.3876320","DOIUrl":"https://doi.org/10.2139/ssrn.3876320","url":null,"abstract":"We exploit the information content of option prices to construct a novel measure of bank tail-risk. We document a persistent increase in tail-risk for the U.S. banking industry following the global financial crisis, except for banks designated as systemically important by the Dodd-Frank Act. We show that this post-crisis difference in tail-risk for large and small banks is consistent with the too-big-to-fail (TBTF) status of large banks being reinforced by the Dodd-Frank designation: Naming the banks whose failure could threaten the financial stability of the U.S. gave investors a list of banks the government deemed as TBTF.","PeriodicalId":20999,"journal":{"name":"Regulation of Financial Institutions eJournal","volume":"67 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2021-06-29","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"82038686","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
To determine the scope, form, procedures and principles regarding the sharing and transfer of information in the nature of bank secrets and customer secrets the “Regulation on Sharing of Confidential Information” (“Regulation”) was published in the Official Gazette dated 4 June 2021 and numbered 31501 to enter into force on 1 January 2022. First of all, what does this mean? Accordingly, everyone within the scope of the Regulation must comply with the provisions of this Regulation as of January 1, 2022! I will explain below who needs to be compatible with what. On the other hand, in terms of the close relationship of the issue with the personal data protection legislation, it is extremely important and necessary to consider it together with the data protection legislation in order to determine what obligations the Regulation imposes on whom.
{"title":"On A New and Complex Regulation Directly Relating to Banks: What Does the Regulation on Sharing of Secret Information Bring?","authors":"M. Dülger","doi":"10.2139/ssrn.3866431","DOIUrl":"https://doi.org/10.2139/ssrn.3866431","url":null,"abstract":"To determine the scope, form, procedures and principles regarding the sharing and transfer of information in the nature of bank secrets and customer secrets the “Regulation on Sharing of Confidential Information” (“Regulation”) was published in the Official Gazette dated 4 June 2021 and numbered 31501 to enter into force on 1 January 2022. First of all, what does this mean? Accordingly, everyone within the scope of the Regulation must comply with the provisions of this Regulation as of January 1, 2022! I will explain below who needs to be compatible with what. On the other hand, in terms of the close relationship of the issue with the personal data protection legislation, it is extremely important and necessary to consider it together with the data protection legislation in order to determine what obligations the Regulation imposes on whom.","PeriodicalId":20999,"journal":{"name":"Regulation of Financial Institutions eJournal","volume":"22 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2021-06-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"78719297","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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