Tag: Financial Markets
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The Impact of Tightening Financial Regulation
The last week has witnessed tighter financial regulations emerging out of the U.S. and European markets. While some of the reforms are expected to result in migration of investments into more liberal markets in Asia (including India), others represent introduction of stringent measures that are already in place in India. Possible Regulatory Arbitrage First, the
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U.S. Financial Reforms: The “Volcker Rule”
Last week, the U.S. unveiled a series of reforms to deal with some of the lessons learnt from the financial crisis. Following is an extract of the President’s remarks that outline the proposals: First, we should no longer allow banks to stray too far from their central mission of serving their customers. In recent years,
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SEBI Order on Participatory Notes
Just when it appeared that the din surrounding offshore derivative instruments (ODIs) and participatory notes (PNs) had subsided, the significance of regulating these instruments has resurfaced in an order passed by SEBI yesterday in the case of Barclays Bank PLC, a foreign institutional investor (FII) registered with SEBI. By this order, Barclays has been prohibited
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Legal Risks and Financial Sector; Capital Controls
Recent developments in the financial sector have witnessed a sea-change in the nature of legal risks faced by banks and financial institutions. Regulators, banks and financial institutions, as well as their legal advisors (both in-house and external) are required to constantly keep pace with the change. In that context, a recent speech by Shyamala Gopinath,
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The Resurgence of Securitization and CDS
The concepts of securitization and credit default swaps (CDS) have acquired a negative connotation over the last couple of years since they were said to have triggered the global financial crisis during the second half of 2007. More, importantly, the assets involved were sub-prime loans that underwent a process of disintermediation due to which risk
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Financial Crisis, Economics and Regulation
There is a recent assortment of interesting columns regarding the financial crisis, the role that regulation (or the lack thereof) has played in the exacerbation of the crisis, and the various economic instruments utilized by policy makers to rein in the crisis. The following is a list of these readings: 1. Beyond the crisis by
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Merits of a Financial Services Appellate Tribunal
(The following column by Somasekhar Sundaresan appeared in today’s Business Standard) Newspapers have recently reported that a proposal has been mooted in government to convert the Securities Appellate Tribunal (SAT) into a “Financial Services Appellate Tribunal” to hear grievances against orders passed by various sub-sectoral regulators. Currently, the SAT hears appeals only against orders passed
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Budget 2009: Key Features and Some Thoughts
India’s Finance Minister, Mr. Pranab Mukherjee, presented the Government’s annual Budget in Parliament yesterday. While commentators brand it a mixed bag, the stock markets do not seem to have received the Budget favourably as the stock indices experienced their largest Budget-day fall in history. The purpose of this post is to highlight some of the
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A Resurgence of Bank Nationalisations
An offshoot of the global financial crisis has been the significant changes in economic policies in the developed world. The recent phenomenon relates to increasing calls from leading economists to nationalise troubled banks, particularly in the U.S. The concept of nationalisation was previously associated with the so-called ‘socialist’ economies, but is now becoming closer to
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Lessons for Financial Sector Regulation
Lloyd Blankfein, the chief executive of Goldman Sachs, offers his explanation of the things that went wrong in the financial services sector which resulted in contagion and the global financial crisis. In his column in the Financial Times, Blankfein outlines the failings and the lessons from the crisis: – risk management should not be predicated
