Tag: Financial Markets
-
Budget 2009: Key Features and Some Thoughts
[Posted by Umakanth Varottil] 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…
-
A Resurgence of Bank Nationalisations
[Posted by Umakanth Varottil] 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…
-
Lessons for Financial Sector Regulation
[Posted by Umakanth Varottil] 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…
-
Dealing with Duopoly in a Regulated Sector
[Posted by Umakanth Varottil] A recent episode involving determination of fees by commodity exchanges has sparked off an intense debate on the role of a regulator in dealing with a duopoly situation. The regulator here is the Forward Markets Commission (FMC) and the players the two commodities exchanges, NCDEX and MCX. The trigger is a…
-
Rating the Raters
[Posted by Umakanth Varottil] Even since the subprime crisis erupted last year, there has been an extensive debate about the role of credit rating agencies in exacerbating the crisis. Questions have been raised whether the rating agencies ought to have raised the red flag much earlier than they actually did, thereby protecting the interests of…
-
FII Participation in Indian Depository Receipts
[Posted by Shantanu Naravane] A recent post on this blog examined changes to the SEBI DIP Guidelines made with a view to promoting qualified institutional placements [“QIPs”], as a measure to address domestic economic concerns, by enabling greater access to funds. While this shortage continues to be a cause for concern for domestic companies, given…
-
Nationalisation of Large Corporations
[Posted by Umakanth Varottil] An interesting column in the Economic Times by Swaminathan S. Anklesaria Aiyar looks at the biggest government takeovers in history: “Socialists, like Hugo Chavez in Venezuela or Indira Gandhi in India, are famous for nationalising the biggest corporations. But the US government has taken over three of its biggest corporations within…
-
The Feasibility of a Toxic Relief Fund
[Posted by Umakanth Varottil] The new proposal to deal with the financial crisis involves the U.S. Government setting up a special fund to acquire toxic or illiquid financial assets on bank balance sheets. The Times Online has a report: “Henry Paulson, the US Treasury Secretary, hopes to nationalise the global risks associated with America’s sub-prime…
-
Sarbanex-Oxley & the Subprime Crisis
[Posted by Umakanth Varottil] One of our readers points to this column Did Sarbanes-Oxley miss a trick during subprime? in the Mint, where the author observes that the subprime crisis occurred despite the existence of stringent legislation such as the Sarbanes-Oxley Act (SOX). However, unlike past corporate governance failures such as Enron & WorldCom (that…
-
The Impact of Status Quo on Participatory Notes
[Posted by Umakanth Varottil] Last week, there was expectation that SEBI would make some announcements regarding issuance of participatory notes (P-notes) by foreign institutional investors, particularly that curbs on P-notes will be removed. However, no decision was taken by SEBI and it was decided to defer the matter. In an editorial, the Financial Express comes…