Antoine Bouveret
Economiste, European Securities and Markets Authorities (ESMA)
Nadège Jassaud
Senior Financial Sector Expert , IMF
Viviane Leflaive
Associée, KPMG FranceRégulation et Marchés Financiers
Les objectifs du cours
This lecture aims at analyzing and discussing the current changes in the field of financial regulation as well as their impact on the domestic and worldwide financial landscape:
- How to describe and characterize the regulatory flaws that triggered the subprime financial crisis? How to interpret the current sovereign crisis?
- What is the role of the different international bodies (the G20, the the International Monetary Fund (IMF) and the Financial Stability Board (FSB)) ? Who decides ? At which level?
- What impact will Basel 3 have on banks’ business models? Who has committed to applying Basel 3 and under what deadlines?
- Does the regulatory reform provide credible answers to mitigate the « too big to fail » phenomenon? Are capital surcharges enough? Will crisis resolution schemes work?
- How to define the macroprudential framework? How should systemic risk be tackled by authorities (new macroprudential tools)? How to interlink monetary, fiscal, microprudential and macroprudential policies?
- What are the main changes of « solvency 2 »? Strengths and weaknesses. Links to Basel 3.
- What are the outlooks for markets and non regulated players? How do changes matter in the Hedge Fund industry and credit rating agencies?
- What changes to expect on the Over the Counter market: the example of the credit derivatives?
- Financial innovation and financial stability: the case of high frequency trading.
The approach is deliberately focused on regulation: the objective is to discuss regulatory changes and to highlight the conjectural and structural changes to banking systems. The lecture requires good basic knowledge on banking issues. The evaluation will be based on oral “presentations” from the students and a brief written summary.
Plan du cours
I - Basics of regulation
- Why do we need micro-prudential regulation in financial markets?
- Regulatory pitfalls at the heart of the financial crisis?
- Reforming the regulation: the G20 Commitments
- Reforming the supervisory architecture: IMF, FSB, BIS
- The special case of Europe
II - Banking regulation
- From Basel 1 to Basel 2
- The new Basel 3 reform
- Timeline and implementation issues
- Beyond Basel 3 : addressing the Too-big-to-fail issue
- Capital surcharge
- Resolution regimes
- Quality of supervision
- Beyond Basel 3: defining the new macro-prudential policy
- Tools for monitoring systemic risk
- Tool for mitigating systemic risk
- Articulating macro and micro policies
III - Insurance regulation
- Basics of insurance regulation
- The current Solvency 1 regime
- Key features of Solvency 2
- Timeline and implementation issues
- Beyond Europe: the Solvency Modernization Initiative and other non-European insurance solvency initiatives
- Beyond Solvency 2: addressing the Too-big-to-fail issue?
- Resolution regimes
IV - Credit rating agencies
- Definitions
- Corporate rating versus structured finance
- Lessons from the crisis and regulatory reforms
V - Securitization
- Main features of the market
- Risks and vulnerabilities
- Restarting the securitization market?
VI - Hedge funds
- Hedge funds and financial stability: size, players and strategies
- US regulation
- EU Directive on Alternative Investment Fund Managers
VII - Derivative markets and other financial innovation
- Main challenges for financial stability
- Regulatory response
- High frequency trading
Bibliographie
Examen
- Each small group of student (2 or 3) will make a presentation of 15 minutes maximum and answer questions from the audience.
- The slides (maximum 7 slides) will have to be sent two days in advance to the three professors (60% of the total mark).
- Another group of students will make a summary of each presentation, including the questions and reactions of the audience.
- A final exam could be added at the end of the year, if needed.
Presentation (50%), participation (25%), summary (25%)