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Q&A basel equity levels for banks ‘Not to be Trusted’ to Protect Against Crisis
Anat Admati, a member of the FDIC-appoint-
ed Systemic Resolution Advisory Committee,
tells Dana Wilkie that the Federal Reserve Board
Q: Why are the risk weights problematic?
A: Basel II moved to sophisticated risk
weights and allowed the industry to
for their shareholders, or pay down debt.
There’s no urgency for them to pay divi-
dends, because it endangers the system.
decide what the risk weight was in some
is ignoring key lessons from the financial crisis, Q: How does this affect the work of
one being that in times of stress, the only capital cases, which allows those to be manipu-
lated. Banks can play various games with the Systemic Resolution Advisory
that investors trust is common equity that can
their models of how risky loans are. These Committee?
absorb losses.
models have not worked well before a cri- A: The FDIC is trying to do its job to
sis, but they’re still allowing weak models create a resolution process for sys-
to affect requirements. The resulting eq- temic financial institutions without using
Q: You write that the Federal Reserve uity levels are not to be trusted to protect taxpayer money. If the institutions do not
Board ‘ignored two of the most impor- us from a crisis. have enough loss-absorbing equity, this
tant lessons of the crisis.’ What are would become very difficult. We will then
those lessons? Q: How did the proliferation of syn- keep having banks that are “too big to
A: The two lessons are: First, that banks thetic AAA securities before the crisis fail” which is a very dangerous situation
must use a lot more equity funding, which illustrate that the risk weight system for all of us.
is the only reliable loss-absorbing capital undermines capital regulation?
if we want to prevent crises. Second, that A: Banks can bunch together loans and Q: Has there been any response to
the use of risk weights is very problematic. create securities. If the security gets rated your comments?
AAA, it’s considered riskless. yet banks A: The recommendation to re-examine
Q: You also say Basel III’s bank regula- lost a lot of money, and some were on the Basel III capital requirements and to
tions fail to address structural flaws in the verge of collapse, from these suppos- ban dividends to build banks’ ability to
the current system. Can you elaborate? edly “safe” investments. That’s part of our absorb losses on their own was made in
A: Basel III recognizes that tangible complaint. These risk weights are hiding a fall 2010. yet the Fed has not seriously
common equity is the best type of lot of systemic risks, and also bias banks engaged with those of us who hold these
capital. Basel III still allows other forms away from business lending. views and has not followed the advice
of “regulatory capital” that have proven last year or this.
unreliable in the crisis. Most importantly, Q: Why are you concerned about
the requirements it sets are too low, and premature capital distributions? Q: You recommend ‘simple, straightfor-
they depend on assigning “risk weights” A: The regulators depend on their models ward rules,’ not those ‘heavily reliant
to different investment, which hides risks for allowing banks to pay dividends or on supervisory judgment.’ Are the rules
and creates distortions. buy back shares. Making these payouts too open to interpretation?
is premature and misguided. Banks could A: When rules are too complicated, super-
Q: You write that if a much larger do many other things with the money – vision becomes more difficult and there
fraction of banks’ total, non-risk- for example lend it or invest prudently are more ways to get around them.
weighted assets were funded by
equity, the social benefits would be
substantial and the social costs mini-
mal. What should that fraction be? Age: 55
A: We think they should have at least 20 Hometown: Stanford, California
percent or 30 percent — relative to their
total assets — of loss-absorbing fund- College/university/Grad School(s): Hebrew University, Jerusalem;
ing, ideally equity. Basel, however, asks Yale University
banks to have between 4.5 percent and 7
percent equity, and that’s very little. And Professional background: B.Sc in math and statistics, M.Phi, Ph.D in Financial
it’s not even a percentage of total assets. Economics, Professor of Finance and Economics at Stanford Graduate School
It’s only a percentage of what they call
of Business.
“risk weighted assets,” and risk weights
are a big problem. Mentor: Stephen A. Ross, now at MIT Sloan School.
Family: Married. Three children, ages 25 (girl), 18 (boy), 15.5 (boy).
Favorite Hobbies: Traveling and reading.
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Q&A
eSMA Rules on Short Selling, CDS Will Showcase Harmonized eu Regime for First Time
cies is a continuing challenge. We need to markets. It’s important to avoid regula-
Verena Ross, executive director of the engage with market participants and other tory competition – where regions end up
European Securities and Markets Authority, stakeholders so we get feedback on policy with fundamentally different and poten-
tells Dana Wilkie that Europe will “lead by proposals from those who may be most tially lower standards, and ultimately, a
example” and demonstrate how coopera- affected by them. This includes relevant more risky environment for everyone.
tion between nations can produce effective
industry players, but also investors and The world is strongly linked and any
financial regulation across borders.
users of the markets. one financial market may be damaged
by another market that isn’t sufficiently
Q: What are you working on now? Q: How will ESMA regulations on short regulated. With regulatory competition,
A: We are on track to deliver our selling and credit-default swaps create investors can’t benefit from appropriate
consultation paper on regulating OTC a harmonized framework in the EU? protection, which can’t be in the interest
derivatives, central counterparties A: The regulation will set out a single of any regulator or society as a whole.
and trade repositories to our board of framework for how EU member states
supervisors’ meeting in Copenhagen require market participants to disclose Q: Where is this type of cooperation
June 19. After that, we finalize our work net short positions – to the public and to important?
and prepare for publication at the end of regulators from EU member states – as A: OTC derivatives are a good example
June, or the beginning of July. It will be well as some restrictions on credit-de- of this need for convergence and co-
an accelerated consultation on a tight fault swaps. It will be the first time such operation at a global level. In Europe,
deadline – which will include an open a harmonized EU regime exists. This the result from the G20 commitments
hearing on the issues – but we intend will provide regulators with a toolbox to has been EMIR and, to a degree, the
to submit our draft technical standards monitor the actual use of short selling. provisions on derivatives transparency
to the European Commission in time to EU regulators and ESMA will have the in MiFID II. But the same issues are
meet the G20 deadline. That deadline power to temporarily intervene to ensure occupying our counterparts in the U.S.,
says that by the end of 2012, standard- markets function orderly and investors Asia and other parts of the world. As
ized OTC derivatives contracts should are properly protected. no single regulator can seek to regulate
be traded on exchanges or electronic global financial markets from one loca-
trading platforms and cleared through Q: How can nations collaborate on tion, we will need to rely on equivalence,
central counterparties. OTC derivatives financial regulation? mutual recognition and cooperation to
contracts should be reported to trade A: I strongly believe Europe can lead by make progress. There is no alternative
repositories and non-centrally cleared example here, to show how convergence to close international cooperation, both
contracts should be subject to higher and good cooperation between different in the setting of standards and in the
capital requirements. national member states and their regula- execution of day-to-day supervision, if
tors provides more effective and efficient we want to achieve an efficient system
Q: What types of questions do you regulation of cross-border entities and for global financial markets.
anticipate?
A: The inevitable questions that arise
when translating legislative text into
standards that apply to complex ac-
tivities across 27 member states. It’s too
early to second guess what issues will be
encountered by our team, but based on
past experience, these will be many and Age: 44
varied – requiring the allocation of pre- Hometown: Hamburg
cious resources. It is incumbent on us to
do as much planning and preparation as Residence: Paris
feasible. I suspect one likely area that will College/university/Grad School(s): Hamburg University; School of Oriental
mean significant work is the non-equity
transparency requirements in MiFID II. and African Studies (London).
Professional background: Bank of England (1994 to 1998); Financial Services
Q: What has been challenging?
Authority (1998 to 2011); European Securities and Markets Authority
A: ESMA receives valuable and timely
feedback from the industry, but getting (appointed in 2011).
data on the likely impact of different poli- Hobbies: Tennis
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Q&A
ASIFMA’s Austen on Asian Regulators Taking a More Active Role in Global Rule Innovation
are the region’s regulatory and cultural individuals who may not conduct interna-
Mark Austen, the departing chief operating diversity. Across the region, financial tional business in their native language.
officer for the Association for Financial Markets
markets are at vastly different stages Financial regulation is primarily devel-
in Europe, tells Dana Wilkie that in his new
post as CEO of the Asia Securities Industry & of development. Tokyo, Hong Kong and oped and legislated at the regional level
Financial Markets Association, he sees “no rea- Singapore are very developed, whereas in Europe, whereas regulation is devel-
son” why Asia should feel pressured to follow other markets are in their infancy. This oped nationally in Asia. I also have the
the regulatory lead of the U.S. and Europe. diversity makes it difficult to harmonize impression that Asia has historically been
standards and achieve best practices pressured to follow the regulatory lead
across the region and, unlike Europe, of the U.S. and Europe. I see no reason
Q: Why did you take the job? there is no economic union and no com- why this should continue to be the case
A: Asia is at an exciting crossroads in its mon currency to encourage and frame in the future. As markets develop and
economic development, and it becomes economic cooperation. mature, I anticipate Asian regulators will
clearer every day that the region will no rightly take a more active role in leading
longer be able to rely so heavily on ex- Q: Are there similarities between regu- global regulatory innovation. It’s in the
ports to the West to support future growth. lations in Europe and Asia? economic best interests of Asia to be
As such, Asia will need to move toward A: The G20 reforms and Basel III require- more proactive.
a more consumption-based economic ments for capital and liquidity apply to ev-
model, coupled with greater pan-Asian eryone. So I see financial centers in Asia Q: What’s the most important regula-
trading. Signs of this transition are already and Europe grappling with issues such as tory issue facing Asia right now?
apparent around the region. Asian capital the implementation of central counterpar- A: There are many important issues
markets must also be better developed ties for derivatives, which will concentrate percolating in Asia at the moment, so you
to encourage the investment of domestic risk in one place rather than dispersing it. may be surprised to hear me say that the
streams of finance to supplement bank biggest issue facing the region over the
lending and to attract foreign investment in Q: What is a key difference between the next three to six months could be ad-
infrastructure. ASIFMA can play a positive two regulatory approaches? dressing the fallout from the euro-zone cri-
role by providing technical expertise from A: Europe is not quite as diverse as Asia. sis. A market collapse in Europe will have
local and global viewpoints that can help However, my experiences working there an immeasurable impact on Asia and the
Asian policymakers navigate this transition. as a non-native helped me understand rest of the world. Though it’s too early to
that one size does not fit all in terms of tell exactly what will happen in Asia, I do
Q: What regulatory issues will ASIFMA market development and regulation. This anticipate that the region will experience
focus on during your tenure? experience also sensitized me to working and be required to react to some dramatic
A: Beyond firefighting in response to a in different cultural environments with knock-on effects.
potential euro zone collapse, we will focus
broadly on helping Asian economies as
they continue to develop a healthy mix of
options in their domestic capital markets.
We believe this will allow them to create
financing options to meet the needs of Age: 45
the real economy, which will then become hometown: Born and raised in Hamilton, Canada but now considers London
increasingly less reliant on the traditional
bank lending model. These initiatives may home after living there for the last 17 years.
range from encouraging free-floating cur- Residence: Hong Kong (as of July).
rencies, or open access to markets to at-
tract necessary investment, to something College/university/Grad School(s): London School of Economics, LL.M.;
as technical as promoting the tapping and Osgoode Hall Law School, LL.B.; McMaster University.
retiring of government bond issues regu-
Professional background: Called to the Ontario bar but now more of a “re-
larly to maintain liquid benchmark bonds
and a smooth yield curve. formed lawyer,” having spent the last seven years with AFME and its forerunners in non-legal roles.
Family: Wife, married for 8 years, and two well-fed cats.
Q: What are the major challenges in
Asia? Favorite vacation Spot/hobbies: Kitesurfing, particularly in Brazil, Kenya and Morocco; looking
A: Among the major challenges in Asia forward to checking out the scene in Asia.
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Q&A
living Wills May Not be Finalized for Three to Five Years, International Cooperation a Factor
which entities are the primary funding gies for resolving themselves. Dodd-Frank
Daniel Ryan, leader of the financial services sources, and how entities within the bank- also gives the FDIC orderly liquidation
regulatory practice at PricewaterhouseCoopers
ing organizations are interconnected. authority that would give it additional
in New york, tells Dana Wilkie that the living
wills submitted by five major U.S. banks and powers beyond these bank plans to step
four foreign banks with U.S. operations to U.S. Q: Don’t those details change a lot? in and resolve these banks. In my opinion,
regulators last week may not be final for three A: Not as much as you’d think. Largely, we are in a much better place than in the
to five years. He says there’s still much work to once banks put these structures in place, crisis of 2008.
do in the living will process involving interna- it’s difficult to modify them without incur-
tional cooperation. ring additional costs or disrupting clients. Q: How do U.K. and U.S. plans differ?
And under Dodd-Frank, banks must A: In the U.K., there are smaller organiza-
update plans within 45 days of any mate- tions required to submit living wills than
Q: Were you busy last week with the rial change and refresh their plan at least in the U.S. In the U.S., living wills are
deadline for the largest banks to file? annually in writing. required from banks with $50 billion or
more in assets. In the U.K., it’s 15 billion
A: yes. We had nearly 150 people around Q: Why were the biggest banks pounds. More importantly, the U.K. did not
the world assisting our clients with this required to file before smaller banks? require a Title I type plan from the banks;
process during the past six to 18 months. instead, the plan is being prepared by the
While last week was a very hectic getting A: One of the things U.S. regulators did
that was very smart was to separate the U.K. regulators.
the i’s dotted and t’s crossed, most of
the heavy lifting was actually done in the biggest, most complex banks from the
plain vanilla organizations so they could Q: How will living wills work
past several months. The plans had to regarding conflicts in international
be approved by the boards of directors of spend a lot of time working with the for-
mer to develop a robust and credible plan. law between jurisdictions?
each of the banks prior to submission, so
that meant all of the substantive work had A: This is more than just local regulators
Q: What’s next? meeting with the banks to discuss regula-
to be completed by no later than Memo-
rial Day in most cases to give the boards A: The filing of these documents is really tions. There’s a large assumption in the
and senior management sufficient time to the first step in what’s likely to be a three- living will process that there will be inter-
review the filings. to five-year process. We don’t expect the national cooperation and that regulators
perfect living will to be in place within the globally will work together to cooperate
Q: What will the drafts look like? next week or six months. in resolving large systemically important
financial institutions. Because coopera-
A: Under the Dodd-Frank Act, banks and tion alone will not be sufficient in a severe
Q: What if there’s a crisis in 9 months?
regulators must imagine liquidations in crisis, there is still much work to do here,
two different ways. Title I, which was the A: The regulators now have lots of details
about banks to assess how they would and this is one of the reasons why I say
plan prepared by the banks, addresses the process would take three to five years.
how banks would resolve themselves manage a crisis. The banks have strate-
under the bankruptcy code without federal
assistance. Title II, the plan prepared by
the U.S. Federal Deposit Insurance Corp., Age: 49
addresses how the FDIC would resolve
the banks using the orderly liquidation Hometown: Bronx, NY
authority granted by Dodd-Frank. education: Manhattan College, BS in Accounting; Columbia University,
MBA in Finance.
Q: How will the living wills help
regulators in a future crisis? Professional background: Started career at PricewaterhouseCoopers in the
A: One of the big issues with the financial audit department, auditing banks. Rejoined PwC in 2006 in advisory services.
crisis was that regulators did not have
Advised the boards of many major banks during the financial crisis. Chairman
good information about important details
on the banks they regulated to evalu- of Regulatory Advisory Services.
ate the impact of the crisis so they could Family: Wife Susan and four children.
decide if the entities should be put out of
business or be sold, or some combination Favorite Vacation Spot: Spending as much time as possible with his family at their summer place in
of that. They were flying blind. With the liv- Ogunquit, Maine, just north of Boston.
ing wills, we’re talking about granular level
detail as to where derivatives are booked, Hobbies: Running marathons, fitness.
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Bloomberg Brief Financial Regulation 7
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Q&A
Don’t expect Fully Harmonized global Financial Regulation, Says IoSCo’s Wright
traditions. But I’ve not seen many ex- forum bringing together the securities,
David Wright, secretary general at the amples of over-protectionism in this crisis. banking and insurance regulators to work
International Organization of Securities Com-
Compare this to the 1920s crash and the together on regulating conglomerates.
missions, tells Dana Wilkie that the world can’t
expect fully harmonized financial regulation, extreme measures that were taken then.
and that the “second-best” option is for global There’s not a lot of evidence that the major Q: Will consistency in the application
regulators to agree on as many specifics of key jurisdictions with big capital markets have of the rules ensure a level playing field
issues as possible. deliberately taken measures to protect their between firms in different countries?
financial markets from the free flow of capi- A: We must first determine the margin re-
tal and from competition from the outside. quirements to a sufficient level of granular-
Q: What will motivate global ity. Second, we must monitor the trans-
regulatory cooperation? Q: Are EU equivalence measures position into domestic and regional laws.
a form of protectionism? Third, ensure that actual implementation
A: We’re not going to get fully harmonized
law at a global level. For that to happen, A: Equivalence is not a protectionist in the markets is consistent on a day-by
you need global financial institutions with instrument. Equivalence is like saying, ‘We day-basis. There are no binding, legally
global regulatory powers, including global don’t mind if you trade on our market, but enforceable global securities, banking or
enforcement power. you could argue that you have to trade on the same basis and insurance laws. But major efforts are un-
would be a good way to go, but that’s rules that we do.’ If you didn’t have that, derway with the G-20, Financial Stability
not going to happen. We’re looking at a you’d be saying, ‘We have these high-level Board, IOSCO, International Association
second-best world here, which is a world standards in the EU, but anybody outside of Insurance Supervisors, Committee on
where we’re trying to determine collectively the EU can come in and trade using much Payment and Settlement Systems and
what are the key issues we can agree on, lower standards.’ I’m not defending the the Basel Committee to do everything
and trying to work our damndest so we can EU perspective, but why should a firm possible to ensure even and consistent
all agree on as many specifics as possible. from Australia not apply key prudential or outcomes in all jurisdictions, applying the
trading rules when they trade in the EU? It rules to avoid regulatory arbitrage and
Q: One holdup is the industry’s concern would give them a competitive advantage. global competitive distortion.
about the high cost of regulation.
Q: How does last week’s joint margin Q: What else is on your agenda?
A: If I was on the industry side, I’d be requirements proposal for non-
concerned about costs and what it meant A: One thing that keeps us up at night is
centrally cleared derivatives fit into how to identify emerging risks in securities
for my business. That’s natural. But this is a global regulatory framework?
the industry that caused unemployment to markets. We need to identify these risks
increase and a great deal of hardship for A: This is a very good example of how earlier and bring everybody around the
many people. We have suffered colossal global regulators are working together to table so we can shape a solution before
damage. When the lobbyists and industry repair the global financial system. IOSCO national or regional regulators start form-
complain about costs, I often say to them, is cooperating with the Basel Committee ing their rules. This will allow us to play a
‘Now tell me what the benefits of regula- on Banking Supervision in many areas, bigger role in this process of global financial
tion are? What are the benefits to a safer such as determining capital requirements repair. If we enter the regulatory space too
financial system, where we don’t have the for non-cleared derivatives. IOSCO works long after the EU and the U.S. and Japan
disruption we’ve had the last five years?’ closely with many Financial Stability and Australia are beginning to regulate, then
you’ve got to look at the benefits of creat- Board work streams. There is also a joint that’s where laws start to diverge.
ing a financial system that is much safer
in the future. The financial industry has
to go to work for the economy – not the
economy for the financial industry. Age: 60 Hometown: London Residence: Madrid
Q: How does political pressure education: Graduated from Worcester College in Oxford in 1974 with a degree
affect regulation? in politics, economics and philosophy.
A: No regulator I know has any intention Professional background: Held a variety of positions in the European Commission
of making change for the sake of making
change. What we’re trying to do is make from 1977 to 2011, including deputy director-general for securities and financial
sure that the sorts of events we’ve seen markets and for all financial services policy in DG Internal Market and Services.
do not repeat themselves. Politicians
will draw up their laws according to their Family: Married, no children. Favorite Hobbies: The arts, opera, sports, golf, travel.
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Bloomberg Brief Financial Regulation 8
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Q&A
Regulators Ignoring Dodd-Frank Rules That Allow Them to break up big banks
brilliant management team in banking, the Financial Stability Oversight Council
Phil Angelides, president of Riverview but they couldn’t see this disaster. Clearly (FSOC) to order divestiture if it reviews a
Capital Investments and the former chair-
regulators didn’t have the capacity to over- bank’s living will and determines that the
man of the congressionally appointed
Financial Crisis Inquiry Commission, tells
see all of this bank’s activities. bank is too big to resolve through Dodd-
Dana wilkie that regulators are ignoring Frank or bankruptcy. Section 121 allows
Dodd-Frank provisions that give them pow- Q: Given JPMorgan’s losses, what the FSOC, by a two-thirds vote, to limit
er to break up the nation’s largest banks. should change? a bank’s expansion and order break-up
A: One thing that should change in the remedies. I think it’s high time they begin
wake of the JPMorgan fiasco is that there to think about the use of these powers for
Q: Why do you want regulators to break should not be an allowance for portfolio the benefit of the financial system.
up big banks? hedging. That’s the camel’s nose under
the tent to allow proprietary trading. what Q: Why haven’t regulators taken advan-
A: I have a growing concern about the tage of these provisions?
sheer size of these institutions. I’ve ought to be allowed are specific hedges
come to the conclusion that they’re too for specific transactions, period. Still, we’re A: There’s a long-term mindset among
big to fail, too big to manage, too big to better off if we strip off the market-making regulators to be overly accommodating.
regulate, too complex to understand and speculative activities from depository This isn’t something they’ve done since
therefore too risky to exist. In their cur- insured banks. the late 80s and early 90s when we had
rent form they distort not only the market, very aggressive regulations in the wake of
Q: What are the political implications of the savings and loan crisis. This requires
but our democracy.
breaking up the biggest banks? a cultural change.
Q: Haven’t Dodd-Frank rules reduced A: There’s a growing chorus from many
their power and influence? people expressing concerns about the Q: Are capital requirements for SIFIs a
sheer scale of these institutions – Tom step in the right direction?
A: One could argue that the Volcker rule
modestly shrinks them because they Hoenig, Sheila Bair, Chuck Hagel, alan A: The capital standards are a positive,
have to spin off some of their proprietary Simpson – mainstream, non-radical but they’re pretty modest. They’re now
trading, or that derivatives rules for clear- voices expressing deep concern about at 4.5 percent of risk-weighted assets,
ing houses might put a small dent in the how the market and democracy are being and they go to 7 percent by 2019. They
oligarchy of a handful of large banks that distorted. Regulators do have discretion- ought to move up to 7 percent much
control the majority of derivatives. But the ary powers under Dodd-Frank to do this. more quickly than 2019. at the very mini-
top 10 U.S. banks still have 77 percent of mum, it should be 5 percent of all as-
Q: What powers? sets, regardless of risk, and 10 percent
banking assets – and that’s up from 17
percent in 1970. and look at what regula- A: Section 165B of Dodd-Frank allows for very large institutions.
tors did earlier this year – they approved
a direct merger of Capital One and InG,
which created the fifth-largest financial
institution in the U.S. Dodd-Frank was Age: 59
supposed to tie down Gulliver, but I don’t Hometown/Residence: Sacramento, California
know that that’s possible.
education: Harvard College, B.A. cum laude, 1974; Coro Foundation Fellow.
Q: How could Volcker be tougher? Professional background: President, Riverview Capital Investments,
A: a good start would be to separate true
2007-current; Chairman, Financial Crisis Inquiry Commission, 2009-2011;
banking functions from speculative activi-
ties and investment banking activities – a California State Treasurer, 1999-2007; President, River West Investments,
21st century version of Glass-Steagall. 1986-1998; Chairman, California Democratic Party, 1991-1993.
There ought to be institutions that take
deposits and make loans, but if you want Family: Married to Julie Angelides, three daughters - Megan, Christina and Arianna.
to be a market maker, you ought not to Favorite Restaurant: Hana Tsubaki in Sacramento
take deposits. JPMorgan stands out as a
shining example for why we need to move Favorite Vacation Spot: Sunriver, Oregon
institutions to a more reasonable scale Favorite Charity: Vincent Academy
so we can properly regulate them. we
Hobbies: Tennis, spending time with family, new granddaughter Alexandra.
supposedly had at JPMorgan the most
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Q&A
hSbC Action highlights Difficulties for Anti-Money laundering Chiefs in emerging Markets
and of action under criminal frameworks suffering is exactly the sort of thing which
Ruth Fox and Ben Kingsley, partners at has a much greater deterrent effect. is going to make boards fret. it may well be
Slaughter and May, tell Bloomberg’s Melissa
Fox: There are criminal provisions under that more resources have to be devoted to
karsh that recent action against HSBC high-
lights the practical difficulties for anti-money the AML legislation in the U.k., which have getting compliance right to mitigate the risk
laundering professionals in maintaining control never really been used by U.k. prosecu- of reputational damage. The publicity and a
and oversight of practices across a diverse tors. in other compliance-related areas, public resignation is far more damaging to a
group while making use of local knowledge. U.k. regulators have become more enthu- financial institution than the regulatory fines.
siastic about prosecuting individuals than
they used to be. This has been the case in Q: What needs to be addressed when
Q: Are banks facing more regulatory relation to market abuse offenses. Regula- doing business across territories?
scrutiny over AML programs? tors have clearly taken the view that it is the Kingsley: The trouble is risk-based applica-
Fox: Regulators, certainly in the U.k., have prospect of prison that focuses people’s tion of AML rules requires local knowledge
become more focused in this area recently. minds. if there were to be a financial institu- to apply uniform standards in an intelligent
As a result of the investigations they are con- tion with money laundering problems which way. Global institutions do ideally need to be
ducting, we are beginning to see these cases went beyond the merely careless or negli- able to delegate responsibilities as well as
come through. in the U.k., the Financial Ser- gent it’s not beyond the bounds of possibility operate a rigorous centralized system set-
vices Authority has said that there are at least that there would be individual prosecutions. ting the standards. The practical difficulties
four more cases currently in the pipeline. highlighted by HSBC raise a point that’s be-
Kingsley: what we may see is a read Q: Any other regulatory implications? ing debated in a more general sense about
across to other sectors doing business in a Kingsley: what regulators are now focused whether some institutions have become
similar environment, such as private wealth on is this idea of culture, and of culture be- “too big to manage.” is it feasible that there
managers and brokers and particularly ing led from the top. Questions have been should be one person whose job title is
those who deal in emerging markets. posed by commentators after the regulatory global head of compliance, who is expected
action against HSBC and before that wa- to take on the responsibility for keeping that
Q: Are regulators working together? chovia as to whether the risk of regulatory many balls in the air at once and be sure
Kingsley: From an investigative and en- enforcement in this area might be regarded there’s never going to be a dropped ball in
forcement perspective, we are seeing regu- as just another cost of doing otherwise any jurisdiction? you need somebody to
lators far more joined up on a global scale profitable business. AML may well be an- have a tight grip on group systems and to
than they used to be. From a policy-making other area in which the idea of a wholesale be getting assurances as to their applica-
perspective, the Financial Action Task Force cultural change will gain more momentum. tion, but can you expect to apply those
has to an extent been driving the agenda in systems usefully if you don’t also give some
AML and doing it relatively well. in the eU, Q: What are the compliance costs? discretion to the local team? Of course, as
the Commission is starting to work on a fur- soon as you do that as an individual and as
Fox: Firms are going to have to address
ther round of harmonizing AML legislation. it an organization you become exposed. Re-
the question of whether they are resourcing
seems unlikely that we will see any truly in- solving that is going to be a key challenge
their compliance functions adequately. The
ternational oversight of a difficult regulatory for multinational financial groups.
kind of reputational damage that HSBC is
area like this. what recent revelations might
do, however, is galvanize some of the lead
regulatory authorities in the U.S., europe
and possibly in Asia, through the medium of
the FATF to intensify their joint efforts. Regu- Residence: London and Residence: Islington,
lators are already showing themselves far Hertfordshire London
more willing than they used to be to expend
resources in teaming up to pursue regula- hometown: Chesterfield, hometown: Cambridge
tory infringements. we’re seeing that in the Derbyshire education: Graduate of
context of the Libor investigations.
education: Graduate of the London School of
Q: Are the monetary fines enough? University College London Economics
Kingsley: Typically monetary fines are not Professional background: Trained and qualified Professional background: Trained and qualified
the greatest concern for a financial institu-
tion facing enforcement, although clearly at Slaughter and May; partner since 1986. at Slaughter and May; partner since 2008.
some regulatory fines have been substan- Favorite london Restaurant: Hix Favorite london Restaurant: The Ivy
tial. Regulators increasingly take the view
that the threat of action against individuals Favorite Vacation Spot: Barbados Favorite Vacation Spot: Wyoming
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12.17.12 www.bloombergbriefs.com Bloomberg Brief || Financial Regulation
Bloomberg Brief Financial Regulation 10
9
Q&A
Fail-Safe Rule in Algorithms, Enforced by the SEC, May Limit Unforeseen Trading Errors
strategies to minimize the number and im- byists, most which is based on S&P 500
David Weild, head of capital markets at Grant pact of market disruptions from software stocks, which don’t trade like the rest of
Thornton and CEO of Capital Markets Advisory and human interaction and inputs to that the market. S&P 500 stocks are highly-
Partners, tells Bloomberg’s Melissa Karsh software. A regime through which all inter- liquid and large-cap. Yet, over 80 percent
that in light of recent trading errors regulators actions in the market require some form of of all listed companies are under $2 billion
may want to call for a fail-safe rule in trading fail-safe might help minimize not just the in market cap and considered small-cap
algorithms with the goal of disconnecting the number of significant reportable events or smaller and these stocks represent only
algorithm before it gets overly disruptive. but the magnitude of those events. 6.6 percent of total market value. Small-
cap, micro-cap and nano-cap markets
Q: How would a fail-safe work? are largely orphaned from an intellectual
Q: Have trading errors increased? A: The SEC might first consider the perspective and not represented formally
A: It seems like the number increased. creation of an internal task force to collect within the Division of Trading and Markets.
The major instances reported from and categorize all of the errors. A standing It’s starting to get attention because we’ve
Knight’s algorithm, to the Bats IPO, the Advisory Committee on Market Technol- been banging the drum on it.
Nasdaq IPO of Facebook, and the flash ogy, made up of outside experts, might
crash have been extremely visible and make recommendations to devise stan- Q: What about a transaction tax?
disturbing to investors. Almost all firms dards for quality assurance testing and A: Transaction taxes are not a preferred
with institutional equity businesses now fail-safe standards. When computer trad- way to address the problem. Higher tick
are forced to offer computer trading and ing strategies go awry they have the pro- sizes, or trading increments, that cause
algorithms. Even the small investment pensity to do astounding damage at light- market participants to invest in the Wall
banks have gotten the message from speed. It behooves us to understand the Street ecosystem to rebuild research,
institutional investors that they want the different errors and devise ways to prevent sales and capital commitment is the
trades done algorithmically. Most smaller the most disruptive at their source. For preferred way to attack this problem. The
firms would never have dreamed of get- example, an algorithmic trading engine country is running a market in small-cap
ting into the algorithmic trading business could be required to have an algorithmic stocks at commission rates and tick sizes
and are either trying to create their own fail-safe routine that would take the engine that are appropriate only to large-volume,
proprietary software or using white la- off line and into manual mode when the large-cap stocks. As a result, we’re
beled software from vendors. There need stock, basket or ETF trades outside of a experiencing steady erosion in trading,
to be rules around the implementation of certain range. Then a human being would research, sales, capital commitment and
trading software. Even with testing, quality need to re-verify and reenter the trade to the IPO market. The JOBS Act addressed
assurance can’t possibly foresee every ensure that no mistake had been made. the ability of issuers to better communi-
scenario. There will be instances where cate with investors, but didn’t address the
mistakes are made through the human Q: How have regulators reacted? economic model. Taxing the system will
use of the algorithm. Those mistakes are A: Most people don’t understand the cut down on the amount of trading and
also disrupting the stock market and poi- broader implications of market structure harm liquidity. If the tax doesn’t go back
soning the well of investor confidence. and that includes policymakers. The SEC into the infrastructure, it will accelerate the
tends to be the target of data from lob- degradation of the broader ecosystem.
Q: Why is this happening now?
A: Markets are increasingly complex,
fragmented and dominated by computers
as market participants responded to rule
changes including Regulation ATS and Education: BA Biology, Wesleyan University; MBA International Finance, NYU
Regulation NMS. As a result, we’ve had a Stern School of Business; Attended on exchange with HEC (Paris) and The
renaissance in order routing and comput- Stockholm School of Economics (Stockholm).
er-trading complexity that I’m not sure the Professional Background: Former vice chairman of Nasdaq; former president
controls have kept up with. of PrudentialSecurities.com; and former head of corporate finance, equity
capital markets and tech banking at Prudential Securities.
Q: What can regulators do to curb this?
A: We need a way to monitor the number Family: Wife: Christi, Children: David V (11), Michael (9), Kelly (9)
of mistakes, the size of the mistakes, to
Mentor: Hardwick “Wick” Simmons, retired chairman and CEO of Nasdaq
categorize them, to report on them, and to
understand if this is a growing trend and Charitable Organization: Board chairman of Tuesday’s Children (www.tuesdayschildren.org)
what we need to do to prevent the worst
of these mistakes. We need to figure out Favorite/Least Favorite Regulation: Reinstitute Glass Steagall and do away with Dodd-Frank.
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09.07.12 www.bloombergbriefs.com Bloomberg Brief || Financial Regulation
Bloomberg Brief Financial Regulation 11
10
Q&A
Compliance Issues Found in ‘Dozens of Cases’ Prior to Muni Pay-to-Play Alert, Says di Florio
curities business. Some may not give an the line. if it’s done intentionally, then an
Carlo di florio, director of the SeC’s Office accurate depiction of their contributions, enforcement action is brought.
of Compliance inspections and examinations, the amounts may be off, or not all the
discusses with Dana Wilkie the risk alert his contributions are identified. We’ve seen Q: What makes for a sound
office issued last week. The alert warned that business being conducted within a few compliance program?
firms may be violating Rule G-37 by doing
business with municipal securities issuers
months or a year of a political contribution A: a firm should think ahead. Who isn’t cur-
within two years of their municipal finance being made, rather than waiting two years rently engaged in the municipal securities
professionals making contributions of more as Rule G-37 requires. business, but might get involved soon and
than $250 to the issuers’ elected officials. might create compliance issues? Who is
Q: Why is the two-year limit in place? leaving the compliance function and has
A: if i’m making contributions to your responsibility that someone needs to take
Q: Rule G-37 has been around since campaign, and then you get elected, you over and continue? are they training their
the mid ’90s. Why issue an alert now? might return the favor and hire me to be municipal finance professionals and docu-
A: any time you’re in a political season, the underwriter for your securities. it’s menting the training they get? are they
there’s going to be more campaign con- things like that that are a blatant misuse of doing this training particularly during years
tribution activity. But these risk alerts also public resources. when political contributions tend to be
just started about 18 months ago. higher? Many firms require pre-clearance
Q: does it tend to be top-level people of political contributions, and sometimes
Q: Why the change? who break these rules, or top-tier finan- not just from supervisors, but also from the
cial institutions? compliance department. Some firms just
A: if we examine your firm and find issues
A: i don’t think we see a pattern. We’ve prohibit political contributions.
and talk about it with you, it helps you
strengthen your compliance program and seen non-compliance at the representa-
tive level, at the principal level and at the Q: What will future risk alerts cover?
that’s great, but it impacts just one firm. if A: We’re likely to focus on controls to
we gather observations about a particular supervisor level. We’ve found deficiencies
at firms of various sizes and with vari- prevent the misuse of non-public in-
risk we see across our exams and put formation, which is really important for
out a risk alert, that can have a broader ous volumes of business. i will say that at
firms that are more established, they tend broker-dealers. We hope to do a risk alert
impact on compliance. looking at investment advisers and their
to have more mature compliance process-
es to identify risk and to manage it. obligations to their clients, such as fidu-
Q: did you find actual G-37 violations?
ciary responsibility, conflicts of interest
A: We can’t speak about particular Q: do companies typically break the and preferential treatment.
enforcement matters, but typically if we rules deliberately?
identify a case that rises to a certain level, Q: do your alerts improve compliance?
it’s something we refer to enforcement. So A: Generally, our experience has been
that these are oversights. it could be slop- A: We have a regular dialogue with the
far, no formal enforcement action involving industry when we do exams and they’ll
this risk alert has been concluded. piness. it could be new people come on
board and aren’t given the proper skills to tell us, “We closely track these risk alerts
comply. Or the firm doesn’t have adequate and here’s what we’ve done in response.”
Q: how many exams must unearth
compliance resources. Or it’s unwilling to We go to conferences and hear from firms
compliance issues before you put out
invest in the technology that can automate very positive feedback on these alerts and
a risk alert?
surveillance. Or decision-making gets how they use these them to take a fresh
A: There’s not an exact number, but it’s look at their compliance programs.
a little loose and people start crossing
fair to think about it in terms of dozens
of cases.
Q: What specific compliance issues did
you identify for this alert? Age: 45
A: We have three core reporting re-
Hometown: New York
quirements for the municipal securities
business: report who it is in your firm Education: LLM, Georgetown Law Center; JD Penn State Dickinson;
conducting municipal securities business; BA Tulane University
what the business is engaged in; and
what are the political contributions that Professional Background: Prior to joining the SEC, was a partner in
these people have made. Firms may not PricewaterhouseCoopers’ Financial Services Regulatory Practice.
identify all the people engaged in the se-
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01.04.13 www.bloombergbriefs.com Bloomberg Brief || Financial Regulation
Bloomberg Brief Financial Regulation 12
10
Q&A
IMA’s Saunders on What the volume of new Regulation Means for U.k. Asset Managers
Q: Sick leave? clients are exposed to more risk.
Richard Saunders, chief executive at the a: I’ve had conversations with senior
Investment Management Association, tells people saying the amount of people work- Q: What is the affect of consumer risk?
Bloomberg’s Dana Wilkie that asset manage- ing in this area who go on long-term sick a: The asset management business relies
ment executives are reporting that regulatory leave has gone up.
staffers are taking more long-term sick leave
on investors wanting to place money with
due to “the sheer volume of stress” they are them. And if investors perceive the market
Q: What are the biggest regulatory con- you’re operating in is a high-cost market
under from post-crisis regulations.
cerns among asset managers? without proper choice, then they won’t
a: There are fears about the detailed want to place money with you.
rules under the directive on Alternative
Q: What were key regulatory takeaways Investment Fund Managers. This direc-
from your u.k. asset manager survey? Q: Which rules are bringing real benefits
tive covers hedge funds, closed ended to end investors?
a: The main finding is that regulation investment trusts, real estate funds, a: In Europe there has been a succession
has risen to the top of the agenda of charity funds and certain pooled pension of Undertakings for Collective Investment
asset management CEOs in the U.k. in vehicles. Some of the rules that were in Transferable Securities directives, which
a way that was probably unthinkable 10 introduced are aimed at countering so- is basically the European mutual fund
years ago. The principal concerns are the called “letter box entities,” and the fear is model. This has undoubtedly worked to the
extraterritorial measures, the potential for that they may take too narrow a view of benefit of investors. It’s developed a well-
protectionism and that global regulatory what can and cannot be delegated by the regulated and safe model that’s applied
initiatives under the auspices of the G20 manager of a fund vehicle. universally across Europe and has given
are not being implemented in a universal very wide choice to consumers. Anything
or consistent way. Q: how is a narrow view problematic? that moves us toward better protection of
a: One of the worries is that we won’t be client assets is a good thing. But the regu-
Q: What are some extraterritoriality is- able to delegate portfolio management. lations do sometimes get it wrong.
sues on both sides of the atlantic? For instance, say you run a Japanese
a: In the U.S., the Foreign Account Tax fund and you want to delegate portfolio Q: You’re urging regulators to improve
Compliance Act is imposing require- management to a desk in Tokyo. you have the dialogue with the industry. how
ments on financial institutions operating to manage it from somewhere else, and has that been lacking?
in non-U.S. jurisdictions that have U.S. you may not have the expertise in a new a: Sometimes the problem is when things
investors. On the other side of the coin, place that you could have had if you man- get political. politicians, particularly in
we are seeing increasing attempts by aged it in Tokyo. Or you may just decide Europe, are driven by widespread miscon-
the European Commission to introduce you can no longer have a Japanese fund. ceptions among voters about the causes
into European legislation the doctrine of of the financial crisis. Then it becomes
“reciprocity and equivalence,” which says Q: What about otc derivatives rules? difficult to just sit down and say, “Look,
if people wish access to the European a: The way the OTC derivatives clear- this is what we think are the unintended
market, they must have domestic rules ing is being introduced on this side of the consequences of this piece of legislation,”
that are equivalent to European rules. Atlantic, it’s going to make hedging of cli- because it’s assumed you’re trying to talk
So you have the U.S. exporting require- ent portfolios more difficult, which means your own book as an industry.
ments one way and Europeans exporting
them the other way, and the industry gets
caught in the middle.
Q: What does the volume of new regu- Age: 60
lation mean for asset managers? Hometown: Llanelli, South Wales. Now lives in London.
a: It’s certainly having an impact on
cost and hiring. We haven’t attempted a Education: Master of Mathematics, Cambridge University
systemic measurement of this, but we do Professional Background: HM Treasury until 1995
hear very persistently that while all these
regulations are not seriously damaging Family: Married, two adult sons.
profit margins, they are nonetheless hav-
ing a significant impact. We’re also hear- Favorite Hobbies: Athletics (track and field in U.S. English), chess
ing stories about more sick leave because Favorite/Least Favorite Financial Regulation: Least: Alternative Investment Fund Managers Direc-
of the sheer volume of stress being put on
regulatory people. tive. Most: UCITS Directive.
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01.04.13 Bloomberg Brief || Financial Regulation
Bloomberg Brief Financial Regulation 13
10
Q&A
One-Third of the Decline in Banks’ ROE Related to Regulation, Says Roland Berger’s Boehme
testing we had to do for living wills; the trader is doing, you need to have someone
Markus Boehme, senior partner and global European Market infrastructure Regula- from risk management who understands
head of investment banking at Roland Berger tion; the Markets in Financial instruments what each trader is doing as well.
Strategy Consultants, tells Bloomberg’s Dana Directive; and new reporting and record-
Wilkie that as much as one-third of the drop that keeping requirements. Just with the re- Q: What are these departments doing
global investment banks saw last year in return quirement to clear swaps centrally, there to prepare for upcoming rules?
on equity is related to regulatory requirements. is the threat that – not only will it cost a: Market risk management depart-
money – the rules might also be stricter ments are investing in methodological
than anyone imagined. improvements to more effectively measure
Q: What’s the impact of new regulation value-at-risk, market risk-weighted asset
on investment banks? Q: can you quantify these costs? consumption. Since the consumption is
a: if you look at our figures on return on a: There are studies that look at the cost now much higher than before Basel 2.5, it
equity, you get a sense of how much of an of compliance, and while they indicate pays to make these investments. Before, it
impact there is. ROE dropped from 15 to that regulatory costs have risen dramati- didn’t matter all that much if the figure was
7 percent between 2010 and 2011. Maybe cally, to be fair, that rise starts from a overstated by 10 percent or so. Compli-
a third or so of that is directly related to very low base. Theoretically, it may have ance and regulatory departments are add-
regulations such as the Basel accords. risen by 50 percent, but the original ing staff to cover the additional reporting
Everyone who moved from Basel ii to Ba- regulatory costs for banks may have and oversight needs.
sel 2.5 at the end of last year took a direct started at only 1.5 percent or 2 percent of
hit on their ROE. a bank’s cost structure. Q: What role is regulation playing in
bank restructuring?
Q: What aspect of the Basel accords Q: Which departments are most affected? a: We’ve recently seen a lot of tactical
hit banks the hardest? a: Departments few people consider. moves such as weeding out low perform-
a: The capital requirements. Last year, There is increased cost pressure on cor- ers, things like that, which relatively quick-
when Basel 2.5 came into effect, banks porate finance, trading, the front office, the ly can help to control 5 to 10 percent of
had substantial increases in capital re- people who do operations and those who your costs. Banks are also rethinking the
quirements. Basel 2.5 sets higher market do iT. There were a lot of regulatory calls way they do business, including whether it
risk-weighted asset requirements through to beef up risk management, so when it makes sense to offer the types of complex
comprehensive risk measurement on cor- comes to the cost for risk management products that have been offered in the
relation trading and specific – and much staff alone, it can quickly add up. But past. Finally, banks are pooling certain ac-
higher – capital requirements on certain banks can’t write a blank check because tivities, partnering with other institutions to
securitization tranches held in trading these departments have a major impact share the costs of certain activities, such
books. on costs. And these days, controlling regu- as combining back office functions.
latory risk is very complex.
Q: What about Basel iii? Q: What role did regulations play in
a: Basel iii will increase counterparty Q: how so? recently reported bank layoffs?
risk-weighted assets and set more strin- a: Because financial products have be- a: They were the key catalyst for banks
gent requirements on funding and liquid- come extremely complex. it is sometimes to take action. Capital requirements grew
ity, which will increase the cost of funding mind boggling how many different prod- at the same time that markets converged
both trading and banking book position. in ucts and variations are out there. To have to what will likely be permanently lower
addition, it will – step by step – raise the someone who properly understands what a production levels.
amount of capital to be held against the
bank’s risk-weighted assets.
Q: have other regulations had a similar
impact on Roe? hometown: Munich, Germany
a: The impact of other regulations is residence: Singapore
probably more subtle. Taken together,
they have a major impact, but we can’t education: University of Munich, Harvard University for Ph.D. and master’s
pinpoint the impact regulation by regula- degree in business administration.
tion. Banks have to consider the time professional Background: 15 years in management consulting with global
and effort it takes to comply with the
investment banks and corporate and investment banking divisions in Asia, New
whole set of provisions under Dodd-
York, London, Europe and Latin America.
Frank, including the Volcker rule; all the
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01.04.13 Bloomberg Brief || Financial Regulation
Bloomberg Brief Financial Regulation 14
10
Q&A
Non-insurance Activities, interconnectedness Likely to Make insurers Systemically Relevant
with 10 of those joining this year. concentration, management complexity
and conflicts of interest. And they address
Peter Braumüller, chairman of the interna-
tional Association of insurance Supervisors, Q: What’s the goal of the revised guide- how to minimize regulatory arbitrage.
tells Bloomberg’s Dana wilkie that the insur- lines for financial conglomerates?
ance watchdog is reviewing several “difficult a: The guidelines, which we issued along Q: how do they minimize regulatory
issues” that are likely to make insurers systemi- with the Basel Committee and the interna- arbitrage?
cally relevant, including non-traditional activities a: we wanted to look at the regulatory
tional Organization of Securities Commis-
and financial system interconnectedness.
sions, are designed to improve superviso- blind spots, or gaps, from jurisdiction to
ry oversight of financial conglomerates in jurisdiction to make sure there is compre-
banking, insurance and securities trading. hensive oversight of financial conglom-
Q: What’s next for the plan to identify erates, which we hope will reduce the
systemically important insurers? Q: Why are they being revised? chance of regulatory arbitrage. The most
a: we are reviewing the comments over a: The financial crisis highlighted the important improvements are in corporate
the next few weeks. There are several significant role that financial groups, governance and risk management.
very difficult issues when trying to get the including financial conglomerates, play in
methodology right for insurance. the stability of global and local economies. Q: What are the corporate governance
Due to their economic reach and their improvements?
Q: What’s difficult? mix of regulated and unregulated entities a: The key improvement is requiring a
a: it is mainly non-traditional insurance across borders, such as special purpose robust governing framework — one that
and non-insurance activities, as well as in- entities and unregulated holding com- clearly works in practice. One guideline
terconnectedness to the financial system, panies, financial conglomerates present focuses on the composition of the board,
that are likely to make insurers systemi- challenges for supervisory oversight. in ensuring that among board members,
cally relevant. Since this is not normally at hindsight, the crisis exposed situations in there is sufficient experience and aware-
the core of an insurer’s business, or in the which regulatory requirements and over- ness of risks arising across the conglom-
focus of insurance supervisors, it can be sight did not fully capture all the activities erate. Also, the growing scale and com-
challenging to get the definitions right for of financial conglomerates or fully con- plexity of financial conglomerates has led
some items and to collect the appropriate sider the impact and cost that these activi- to an increase in the volume of entities,
data. Furthermore, it is important to reach ties may pose to the financial system. risks and operations to which the financial
global consistency in terms of definitions conglomerate has been exposed. The
and data, which is challenging because of Q: how is this addressed for insurers? revisions direct the board to oversee these
the differing treatment of these definitions a: The revisions are designed to em- additional exposures and complexities.
and data from jurisdiction to jurisdiction. phasize essential elements of financial
For example, variable annuities could be conglomerate supervision, such as the Q: What about risk management?
defined differently in different jurisdictions detection and correction of multiple uses a: The focus is on having risk manage-
and also contain different levels and types of capital – for example, double- or multi- ment across the entire level of a conglom-
of embedded guarantees. ple-gearing. They emphasize the assess- erate, with group-wide risk concentration
ment of group risks, such as contagion, and intra-group transactions.
Q: how’s the iais working with other
international regulatory bodies?
a: we need cooperation across borders
to adequately supervise insurers and Age: 53
insurance groups. That’s difficult un-
less supervisors can quickly and easily Hometown: Vienna
share confidential information. To do that,
Professional Background: Almost 30 years of experience as an insurance
supervisors need assurances that the
supervisor. Worked with the European Commission and European Free
information being requested is for a legiti-
Trade Association in Brussels. Member of the management board of the
mate purpose and that it will be treated
confidentially. This can be provided by European Insurance Occupational Pensions Authority (EIOPA).
the Multilateral Memorandum of Under- Family: Divorced, one son.
standing. The iAiS recently reached a
milestone when Connecticut became Hobbies: Mountain biking, skiing, running, theatre, writing.
the first U.S. signatory. we are now at 32
Favorite/Least Favorite Financial Regulation: Most: Global principles for the financial sector (FSB,
signatories representing more than 48
IAIS, BCBS, IOSCO).
percent of worldwide premium volume,
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