Pub Date : 2019-09-18DOI: 10.1080/17521440.2019.1663972
Chi Zhang
In recent years, with the rapid development of China's stock market and the awakening of investors’ awareness of protection, the number of public enforcements in the Chinese public securities market have exploded, and the primary regulator of the securities trading, China Securities Regulatory Commission (CSRC) has become increasingly active in providing remedies for investors. It seems that the quality of rule of law in enforcing securities law of the country has been dramatically improved. However, based on a careful analysis on a series of the cases, this statement may not be quite accurate. This paper aims to deeply explore the social and political factors that are significantly directing the enforcement of securities law in contemporary China by examining the two landmark judicial cases occurred in the recent years.
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Pub Date : 2019-09-18DOI: 10.1080/17521440.2019.1663996
C. Buttigieg, C. Efthymiopoulos, Abigail Attard, Samantha Cuyle
The paper critically examines the framework for the regulation of crypto assets in Malta, with a particular focus on anti-money laundering and funding of terrorism. It identifies the risks relating to crypto assets, and how these are addressed through Malta's Virtual Financial Assets Framework. To this end, the paper argues that the Maltese framework goes beyond the EU's fifth Anti-Money Laundering Directive. In this connection, the paper also argues that the Maltese framework could possibly be a model for a more extensive EU regime in this context. Finally, the paper sets forth recommendations towards action which may be taken at an EU level in order to address the money laundering and terrorism financing threats associated with crypto assets.
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Pub Date : 2019-07-11DOI: 10.1080/17521440.2019.1639293
L. Hiemstra
In the Baumeister judgment of 19 June 2018, the Court of Justice of the European Union (the “Court”) examines the meaning of “confidential information” from the point of view of MiFID. In answering questions referred for a preliminary ruling, the Court examines the criteria for the confidentiality of data. In addition, the Court states that information relating to a supervised entity and provided to a competent authority by such entity itself, does not necessarily qualify as confidential if a period of five years has elapsed. What is the consequence of this judgment for market participants that are subject to financial supervision?
{"title":"Professional secrecy of supervisory authorities under MiFID: no longer sacred?*","authors":"L. Hiemstra","doi":"10.1080/17521440.2019.1639293","DOIUrl":"https://doi.org/10.1080/17521440.2019.1639293","url":null,"abstract":"In the Baumeister judgment of 19 June 2018, the Court of Justice of the European Union (the “Court”) examines the meaning of “confidential information” from the point of view of MiFID. In answering questions referred for a preliminary ruling, the Court examines the criteria for the confidentiality of data. In addition, the Court states that information relating to a supervised entity and provided to a competent authority by such entity itself, does not necessarily qualify as confidential if a period of five years has elapsed. What is the consequence of this judgment for market participants that are subject to financial supervision?","PeriodicalId":43241,"journal":{"name":"Law and Financial Markets Review","volume":"13 1","pages":"228 - 233"},"PeriodicalIF":0.0,"publicationDate":"2019-07-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1080/17521440.2019.1639293","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"47266163","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 : 2019-06-21DOI: 10.1080/17521440.2019.1616888
Gail Pearson
How has a method for calculating living expenses become a byword for distrust and confusion? The HEM encapsulates the mystery of calculation based on aggregated data and the dissolution of the individual into categories. It is at the centre of protracted litigation and legal interpretation of a relatively straightforward legislative provision designed to guide lenders and protect borrowers. It has featured in the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry. The HEM or Household Expenditure Measure is a method to calculate indicative living expenses. It is described as “A measure of what families spend on different types of household items, calculated quarterly by the Melbourne Institute of Applied Economic and Social Research.” The HEMwas constructed at the request of the Risk Managers Roundtable, a group of lenders and others who met to discuss legislative and regulatory matters. The Melbourne Institute is the same body which devised the Henderson Poverty Line to measure poverty in Australia. The Commission of Inquiry into Poverty in Australia, first established in 1972, has been updated annually since that time. In about 2010 the Household Expenditure Measure was based initially on Australian Bureau of Statistics (ABS) information from the ABS Household Expenditure Survey 2009–2010 and is modified quarterly by the Consumer Price Index. This is then adjusted for the HEM by the intended geographic location of the loan applicant, marital status and number of dependents, but not income. In 2012, the Commonwealth Bank of Australia adopted the HEM as a method to calculate living expenses for the purpose of responsible lending obligations. Other lenders followed. It is used for home and car loans. The HEM is based on data to produce an indicative calculation of living expenses. It is not individual to any particular person. It is about categories of persons. The issue is, if a lender relies on the HEM as part of the calculation of whether a potential individual borrower has the capacity to repay a loan without substantial hardship, has that lender met his obligations under responsible lending laws? The regulator, the Australian Securities and Investments Commission (ASIC), says no. One bank, Westpac, admitted breaching the responsible lending laws and was prepared to submit to a penalty until the Federal Court rejected the application by both the regulator and the bank for the resolution. The problem as identified by the Court, was the parties did not agree why there was a contravention, nor how many loans were impacted and judged “not unsuitable” when they should have been assessed as unsuitable. 10 The next hearing is scheduled for six days following 6 May 2019. Into this mix enters the Hayne Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry. The Royal Commission canvassed various sectors of the financial services industry including financial advisers,
{"title":"The HEM and Hayne’s normative principles – credit data and the individual","authors":"Gail Pearson","doi":"10.1080/17521440.2019.1616888","DOIUrl":"https://doi.org/10.1080/17521440.2019.1616888","url":null,"abstract":"How has a method for calculating living expenses become a byword for distrust and confusion? The HEM encapsulates the mystery of calculation based on aggregated data and the dissolution of the individual into categories. It is at the centre of protracted litigation and legal interpretation of a relatively straightforward legislative provision designed to guide lenders and protect borrowers. It has featured in the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry. The HEM or Household Expenditure Measure is a method to calculate indicative living expenses. It is described as “A measure of what families spend on different types of household items, calculated quarterly by the Melbourne Institute of Applied Economic and Social Research.” The HEMwas constructed at the request of the Risk Managers Roundtable, a group of lenders and others who met to discuss legislative and regulatory matters. The Melbourne Institute is the same body which devised the Henderson Poverty Line to measure poverty in Australia. The Commission of Inquiry into Poverty in Australia, first established in 1972, has been updated annually since that time. In about 2010 the Household Expenditure Measure was based initially on Australian Bureau of Statistics (ABS) information from the ABS Household Expenditure Survey 2009–2010 and is modified quarterly by the Consumer Price Index. This is then adjusted for the HEM by the intended geographic location of the loan applicant, marital status and number of dependents, but not income. In 2012, the Commonwealth Bank of Australia adopted the HEM as a method to calculate living expenses for the purpose of responsible lending obligations. Other lenders followed. It is used for home and car loans. The HEM is based on data to produce an indicative calculation of living expenses. It is not individual to any particular person. It is about categories of persons. The issue is, if a lender relies on the HEM as part of the calculation of whether a potential individual borrower has the capacity to repay a loan without substantial hardship, has that lender met his obligations under responsible lending laws? The regulator, the Australian Securities and Investments Commission (ASIC), says no. One bank, Westpac, admitted breaching the responsible lending laws and was prepared to submit to a penalty until the Federal Court rejected the application by both the regulator and the bank for the resolution. The problem as identified by the Court, was the parties did not agree why there was a contravention, nor how many loans were impacted and judged “not unsuitable” when they should have been assessed as unsuitable. 10 The next hearing is scheduled for six days following 6 May 2019. Into this mix enters the Hayne Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry. The Royal Commission canvassed various sectors of the financial services industry including financial advisers, ","PeriodicalId":43241,"journal":{"name":"Law and Financial Markets Review","volume":"13 1","pages":"131 - 140"},"PeriodicalIF":0.0,"publicationDate":"2019-06-21","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1080/17521440.2019.1616888","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"48816270","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 : 2019-06-21DOI: 10.1080/17521440.2019.1612618
J. O'Brien
In February 2019 the Australian Stock Exchange released the fourth edition of its Corporate Governance Principles and Recommendations. At its core a critical question: whether a social licence to operate is needed to accompany legal obligation? If reliance on corporate reputation alone is sufficient, as suggested, what form should it take? The ASX opted for a precautionary approach. All could be resolved, it insisted, if a board could “instil a culture of acting lawfully, ethically and responsibly.” This is progress, albeit limited. As seen in all too many cases in the finance sector and beyond, the financial costs of legal penalties are often written off as price of doing business. This undermines both its deterrence effect and respect for the rule of law itself. One can be compliant with the law but behave in an unethical and irresponsible manner. Demanding the articulation and keeping of promises matters. The ASX notes that “values are the guiding principles and norms that define what type of organisation it aspires to be.” In formulating those values, “a listed entity should consider what behaviours are needed from its officers and employees to build long-term value for its security holders. This includes the need for the entity to preserve and protect its reputation and standing in the community.” Notwithstanding the circulatory argument that privileges shareholder value, its justification comes from the footnoted reference to the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry Interim Report. The Royal Commission had argued that “to preserve and enhance a reputation... the enterprise must do more than not break the law. It must seek to do ‘the right thing.’ What this means in practice is not teased out, either in the accompanying guidance or, indeed, by the Royal Commission itself in its final report beyond a six-level normative framework. In the absence of jurisprudential precedent just what is “the right thing”? What constitutes adequate “seeking”? Does equating a social licence to operate to an undefined form of reputation risk management meet the requisite test for a court of law or the court of public opinion? In the absence of prosecutions, or tangible impact for breaches of community expectation, there is an inevitability to a rational descent into cynicism? The ASX’s minimalist approach stands in sharp contrast to the Organisation of Economic Cooperation and Development (OECD). The OECD has launched a global campaign to renegotiate a “new intergenerational social contract to restore the confidence of citizens in their institutions.” As its Director General, Angel Gurria, warned in June 2018, an approach based “superficial changes” would be insufficient, counterproductive and dangerous. “The truth is this won’t work. We are beyond the quick fixes to address the discontent of the masses.” To this end the OECD Director of the Directorate of Financial and Enterprise Affairs, Greg Medcraft,
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Pub Date : 2019-06-19DOI: 10.1080/17521440.2019.1631959
Min-woo Kang
It is widely accepted that spot foreign exchange (FX) represents immediate delivery for actual demands and commercial purposes. Regulatory exemption is a common practice for spot FX trading in every jurisdiction. This article explores the current regime for spot exchange and examines whether there exists any material regulatory void. By demonstrating that spot exchange has intrinsic investment attributes, we call for regulators to apply the market abuse regulation to currency trades for ensuring market integrity and investor protection in the foreign exchange market. We also stress the role of statutory regulation in controlling misconduct and market transparency. A heavy reliance on self-regulation is limited and will not help prevent the recurrence of the 2013 manipulation scandal. Further, given the global nature of FX markets, international coordination is of critical importance.
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Pub Date : 2019-06-06DOI: 10.1080/17521440.2019.1622849
Pamela Hanrahan
Australia uses a Twin Peaks financial supervisory architecture, which comprises a prudential regulator and a market conduct regulator. The logic of Twin Peaks is that regulatory functions are allocated between agencies according to the objective, rather than the target. This article argues that there are three, rather than two, distinct underlying objectives for financial sector regulation. The third is consumer protection. Regulation would be strengthened by the establishment of a specialist regulatory agency with responsibility for consumer protection in the retail market for financial products and services. The article therefore parts company with the final report of the Hayne Royal Commission, which recommended that the basic Twin Peaks architecture be retained.
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Pub Date : 2019-05-07DOI: 10.1080/17521440.2019.1612991
G. Gilligan
The institutions of the state and those individuals, and/or groups, who manage and/or operate within them are engaged in ongoing production of information and knowledge. These information/knowledge production processes and structures can operate anywhere along a continuum of overt to covert, helping to shape the cultures, systems and societies in which they are situated. Official discourse is a generic label for the information and knowledge that is produced. At any given time, there may be a multitude of mechanisms of official discourse at work in any jurisdiction that are shaped by prevailing political, economic, social, cultural and historical influences. This article considers royal commissions of inquiry, a mechanism of official discourse that has been popular in some of the jurisdictions that were a part of the British Empire and which continue to be influenced by British legal traditions. The analysis is limited to Australia, in particular, to the recent Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry chaired by Commissioner Kenneth Hayne, which sat throughout 2018. This article discusses its effects as a mechanism of official discourse.
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Pub Date : 2019-05-05DOI: 10.1080/17521440.2019.1612616
J. O'Brien
In an era of declining levels of public trust, royal commissions retain symbolic and actual power to provide potential reassurance. The handing down of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry in February 2019 marks a defining moment. It offers, for the first time, a coherent and cohesive normative framework that integrates law, morality and public expectations. In so doing, it invigorates debate on corporate purpose and duty to the society in which it operates. It also provides mechanisms to ensure more effective pathways towards binding sanction. The report, however, suffers from a significant flaw. It presents identified failures in governance in mechanistic terms as independent and episodic rather than a systemic question of sub-optimal culture. The behaviours in the sector reflect the wider inculcation of social norms within and beyond specific communities of practice. In so doing, the report undermines rather than strengthens the power of administrative agencies to guide industry as a whole towards socially beneficial outcomes. Change will only come from a broader exercise in deliberative governance in which cultural renewal is determined, endorsed, and lived.
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