Algorithm-Driven Information Gatekeepers: Legal and Regulatory Aspects

A presentation by Professor Aline Darbellay (Centre for Banking and Finance Law at the University of Geneva)

Prof. Aline Darbellay (Centre for Banking and Finance Law at the University of Geneva) discusses “Algorithm-Driven Information Gatekeepers: Legal and Regulatory Aspects” in a presentation of 15′.

She argues that information gatekeepers manage the flow of information from issuers to investors. The focus of securities regulation was traditionally laid on mandatory disclosure requirements. In modern financial markets, information production is no longer the core issue. Concern has increasingly been raised about the role of information intermediaries as screeners of relevant information. Continue reading “Algorithm-Driven Information Gatekeepers: Legal and Regulatory Aspects”

Public interest and data governance of financial market infrastructures

A presentation by Dr Joseph Lee (University of Exeter)

Dr Joseph Lee, Co-Director of Centre for Corporate and Commercial Law and  Senior lecturer in law,  University of Exeter , discusses in a slidecast the  role of financial market infrastructures (“FMI”), such as stock exchanges, in generating public goods in the age of digitalisation of data.

He identifies what public goods FMIs can produce, discusses what public interests can be achieved through these public goods and analyses the legal and regulatory implications for FMI’s data management, data policies, and data governance. Continue reading “Public interest and data governance of financial market infrastructures”

Sustainable Finance

A presentation by Arnaud Van Caenegem, PhD Researcher (KU Leuven)

Two years have passed since the European Commission published its Action Plan: Financing Sustainable Growth to mainstream sustainability into the financial system. A presentation (16′) by Mr. Arnaud Van Caenegem, PhD Researcher (KU Leuven) covers the coming about of the action plan, its objectives and the progress made, with a particular focus on the Taxonomy Regulation and the Regulation on Sustainability-related Disclosures. It also highlights the major implications of the European Green Deal for the financial sector and elaborates on the next steps in its transformation. Continue reading “Sustainable Finance”

Towards harmonisation of bank insolvency laws

The harmonisation of insolvency rules for European banks was recently put on the table by Germany’s finance minister Olaf Scholz, together with other measures (such as a European deposit insurance scheme) destined to advance the banking union (see his position paper on the goals of the banking union).  According to Minister Scholz:

The lack of harmonisation in this area complicates the resolution of banks with cross-border operations. This becomes particularly problematic when banks and creditors are better placed in proceedings under national insolvency legislation than they would be with a resolution in accordance with the Bank Recovery and Resolution Directive. When this happens, national insolvency legislation undercuts the provisions that are tailored to fit the specific set of interests at play when a bank is wound down.

What is more, the SRB also needs to take into account 19 different national insolvency regimes when performing a resolution due to the no-creditor-worse-off principle, which stipulates that no creditor may incur greater losses as a result of a resolution than they would have in national insolvency proceedings. This is complex, increases legal and compensation risks and results in groups of creditors receiving different treatment despite being fundamentally the same.

For this reason, we need a single European set of laws on bank insolvency.

Coincidentally (or not), a study on the differences between bank insolvency laws and on their potential harmonisation was recently published (the report and the executive summary can be found here). The abstract from the executive summary reads as follows:

 The resolution framework set out under Directive 2014/59/EU (‘BRRD’) provides EU Member States with comprehensive and harmonised arrangements to deal with failing banks at a national level, and is complemented in the euro area by the Single Resolution Mechanism Regulation (SRMR) that sets out a euro-area-wide resolution framework. But under EU law, unlike in the United States, resolution does not function as a standalone substitute for national insolvency proceedings. This study identifies the national insolvency procedures applicable to banks and analyses key differences between them, notably concerning the circumstances according to which the application of reorganisation or winding-up procedures is triggered, the ranking of liabilities, and the available tools to manage bank crises. By highlighting the differences that can be found in the legislative regimes applicable at national level and determining how these national insolvency regimes differ from the resolution regime as set out in the BRRD and SRMR, the study assesses the potential disadvantages that result from the lack of harmonisation of these bank insolvency regimes. Taking these disadvantages into account, policy options are outlined to address these divergences. The feasibility, benefits, obstacles and impact of these options are discussed. In terms of future revision of the current framework, more clarity and predictability of the applicable regime should be sought, particularly for medium-sized banks, with a holistic approach to reform that also takes into account related policies such as those on state aid control and deposit insurance.



Locating pure economic loss: jurisdiction over prospectus liability under Article 7(2) of the Brussels I Regulation Recast

A post by guest blogger Michiel Poesen

In C‑304/17 Helga Löber v Barclays Bank plc, the CJEU had the opportunity to revisit its case law regarding jurisdiction over prospectus liability. The relevant ground for jurisdiction is Article 7(2) of the Brussels I Regulation Recast (previously Article 5(3) of the 2001 Brussels I Regulation): A person domiciled in a Member State may be sued in another Member State in matters relating to tort, delict or quasi-delict, in the courts for the place where the harmful event occurred or may occur. The ECJ confirmed that in the context of prospectus liability, the place where the harmful event occurred can be exceptionally located in the claimant’s domicile. Continue reading “Locating pure economic loss: jurisdiction over prospectus liability under Article 7(2) of the Brussels I Regulation Recast”

Regulating Finance: Levelling the Cross-Sectoral Playing Field

A guest post by Veerle Colaert on a conference in Nijmegen (15 and 16 October 2018)

Financial law as we know it today mirrors the traditional structure of the financial industry. In most legal systems, it is thus divided into banking, insurance and investment services law. Over the past few decades, however, the clear separation between financial sectors has gradually evaporated, as business lines have converged across sectors. Moreover, various FinTech solutions have emerged, which do not fit traditional sector boundaries. This raises the question whether a more cross-sectoral approach to financial regulation is warranted. Continue reading “Regulating Finance: Levelling the Cross-Sectoral Playing Field”

Are markets efficient? A discussion between Thaler and Fama

An earlier blogpost reported the award of the Nobel Prize in Economics 2017 to Richard Thaler of the University of Chicago for his work on behavioural economics.

In this video of the Chicago Booth Review, Thaler, a vehement critic of the idea of market efficiency, engages in an interesting discussion with Eugene Fama, another University of Chicago Nobel Prize laureate (2013) and widely regarded as “the father of the efficient-market hypothesis”.

In his previous work, Eugene Fama introduced the model of “efficient capital markets”, i.e. markets that fully reflect all available information (see the paper: “Efficient Capital Markets: A Review of Theory and Empirical Work”). The most common version of this model that is defended today, is the “semi-strong version”, according to which all publicly available information is incorporated in stock prices (but information that is held privately by some investors not necessarily so).

Thaler has spent much of his time writing about how people are not completely rational, an assumption that strongly underpins the efficient-markets hypothesis, for example in his book “Nudge” (together with Cass Sunstein) and in his book “Misbehaving: The Making of Behavioral Economics”.

In the discussion with Fama, Thaler distinguishes two aspects of the efficient-markets hypothesis: “One is whether you can beat the market. The other is whether prices are correct.” On the first aspect, Fama and Thaler are in agreement: generally, even professional mutual fund managers fail to consistently beat the market, after subtracting management costs (Michael Jensen from Harvard University first provided evidence for this hypothesis in this paper).

Fama and Thaler do disagree (and rather strongly) about the second aspect, however. In the video, Fama argues as follows about the efficient-market hypothesis: Continue reading “Are markets efficient? A discussion between Thaler and Fama”

Tom Vos (KU Leuven) op Oxford Business Law Blog over prijs bij verplicht openbaar bod

Op Oxford Business Law Blog verscheen een bespreking door Tom Vos van het arrest van 20 juli 2017 inzake Marco Tronchetti Promovera SpA e.a. v. Consob, waarin het Hof van Justitie voor de eerste keer oordeelde over de interpretatie van artikel 5(4) van de Overnamerichtlijn, dat in de mogelijkheid voorziet voor nationale financiële toezichthouders om de prijs van een verplicht openbaar bod aan te passen. In deze zaak had de Italiaanse financiële toezichthouder, de Consob, besloten om de prijs van het verplicht openbaar bod te verhogen omdat er sprake was van samenspanning tussen de bieder en één van de verkopende aandeelhouders.

De vraag die werd voorgelegd aan het Hof was of het concept van “samenspanning” niet te onduidelijk was om een prijsaanpassing te rechtvaardigen. Het Hof van Justitie laat het finale oordeel aan de Italiaanse rechter, maar lijkt toch te suggereren dat er geen probleem is met het Italiaanse recht. De uitspraak is ook erg interessant voor Belgische juristen, aangezien België een gelijkaardige bepaling als Italië heeft met betrekking tot de prijsaanpassing bij verplicht bod.

U kon de analyse (in het Engels) van deze uitspraak door Vos reeds lezen in een eerdere post op deze blog.


Insider trading onder de MAR: streng, maar (ook) rechtvaardig?

Post door gastbloggers Stefan Mees en Michiel Stuyts over hun bijdrage in TRV-RPS

Het MAR-tijdperk

Met de inwerkingtreding van de Market Abuse Regulation (hierna “MAR”) op 3 juli 2016 brak een nieuw tijdperk aan binnen de regels met betrekking tot het marktmisbruik. Bij dergelijke juridische omwenteling, is het opportuun om bestaande en nieuwe reglementering te (her)bekijken in een gewijzigde maatschappelijke en juridische context. Continue reading “Insider trading onder de MAR: streng, maar (ook) rechtvaardig?”

‘Minting Capital: The Role of the Corporation’ by Katharina Pistor (Columbia)

The youtube channel of the European Corporate Governance Institute has an interesting video of a discussion on “Minting Capital: The Role of the Corporation”. Professor Katharina Pistor of Columbia University discusses how corporate law can be used to generate wealth for the persons using this “legal code’ and how this can be seen as a legal subsidy.

This presentation develops the topics which Professor Pistor touched upon in her Heremans Lectures as Global Law Professor at the KU Leuven in 2016. She is working on an upcoming book on these topics

Blockchain IPOs: the dusk (/dawn?) of regulation has arrived

A post by guest blogger Cedric Hauben (DLA Piper)

Blockchain projects have been around for over a decade. Despite its turbulent and mysterious evolutions, the prototype case of Bitcoin remains the most well-known blockchain application on the market. It still stands as the leading example in the realm of cryptocurrencies, which is nowadays made up out of numerous variations on the theme called Bitcoin. While specifications vary, the underlying principles remain the same among cryptocurrencies. However, thanks to a shifting horizon, the legal landscape keeps on changing.

 Tip of the iceberg

We know by now that blockchain as a concept is much broader than just virtual currency applications. Hundreds of other use cases have been developed and, according to believers, blockchain shows the potential to realise a similar impact as the internet has had. Some say the practice field of notaries could be heavily diluted once land registration gets implemented on specifically developed blockchains. Continue reading “Blockchain IPOs: the dusk (/dawn?) of regulation has arrived”

Grondwettelijk Hof spreekt zich uit over Arco (en bevestigt Hof van Justitie): garantie strijdig met art. 10 en 11 Gw.

In eerdere berichten werd reeds uitvoerig ingegaan over de strijdigheid van de Belgische Arco-garantie met het Unierecht.

Eergisteren was het aan het Grondwettelijk Hof om na een lange weg (zie eerder RvS 25 maart 2013, nr. 22.969 en GwH 5 februari 2015, nr. 15/2015) een einduitspraak te vellen over de prejudiciële vraag gesteld door de Raad van State: Continue reading “Grondwettelijk Hof spreekt zich uit over Arco (en bevestigt Hof van Justitie): garantie strijdig met art. 10 en 11 Gw.”

Vitale ondernemingen wapenen tegen bedenkelijke buitenlandse investeringen: wachten op de barbaren?

Moet de overheid buitenlandse investeringen een halt kunnen toeroepen in naam van de nationale veiligheid? Een grondige studie van C. Bulten en B. de Jong in Nederland schijnt licht op de zaak.

De geplande investering van het Chinese State Grid in Eandis, een Vlaamse distributienetbeheerder, beheerste vorig najaar een tijdlang het nieuws. Dat 14% van de Eandisaandelen en drie bestuurszetels in handen zouden komen van een Chinees staatsbedrijf, zette de Belgische staatsveiligheid er toe aan een brief te verspreiden die pleitte voor terughoudendheid. Omwille van het strategisch karakter van het distributienet en State Grid’s nauwe relatie met de Chinese inlichtingendienst, zou de staatsveiligheid in gevaar komen.

De ophef die daarop onstond, leidde ertoe dat de deal uiteindelijk zou afspringen. Het gele gevaar was dus geweken. De Vlaming kon weer op zijn beide oren slapen.

Continue reading “Vitale ondernemingen wapenen tegen bedenkelijke buitenlandse investeringen: wachten op de barbaren?”

MiFID II in relation to other investor protection regulation: Picking up the crumbs of a piecemeal approach

Paper by Veerle Colaert (KU Leuven)

The study of the interaction between different pieces of EU financial legislation becomes ever more important – and difficult. A recent paper by Prof. Veerle Colaert (see ssrn or explores the relationship between the MiFID II and other recent EU legislation aiming at investor protection, such as the Insurance Distribution Directive, the PRIIPs Regulation and the UCITS Directive.

Continue reading “MiFID II in relation to other investor protection regulation: Picking up the crumbs of a piecemeal approach”

RegTech as a response to regulatory expansion in the financial sector

Paper by Veerle Colaert (KU Leuven)

In the aftermath of the financial crisis, the financial sector was hit by a tidal wave of new legislation. The question of how financial institutions can remain compliant with this ever expanding financial legal framework has however been largely neglected. A recent paper (see ssrn or by Professor Veerle Colaert (KU Leuven) explores the potential of RegTech in this respect – the use of technological solutions to facilitate compliance with and monitoring of regulatory requirements. Continue reading “RegTech as a response to regulatory expansion in the financial sector”