ECMI Policy Briefs

Policy Briefs are short papers, of not more than ten pages, which discuss upcoming or recently implemented EU financial regulation and how it will affect market architecture, various business models, intermediaries, end-users, and other stakeholders. You can download an electronic copy of our commentaries for free by following the links below.

The Eurozone Debt Crisis

CEPS Policy Brief 251, August 2011: As the Eurozone debt crisis reaches a turning point, ECMI Research Fellow Diego Valiante argues for a more organised intervention by the ECB to stop contagion through the creation of a quantitative easing programme, coupled with a political agreement among member states on a more federalist budget for the Eurozone. The roots of this crisis and how institutions have repeated some of the mistakes of the Argentine crisis, both in 1998 and 2010, are considered in this paper.

NYSE Euronext – Deutsche Börse Merger: Let the dance go on!

ECMI Policy Brief 18, March 2011: Research Fellow Diego Valiante offers his insights into the motivations, potential synergies and implications of the proposed merger between NYSE Euronext and Deutsche Börse, which he sees as a continuation of the intricate series of dances begun two decades ago between exchanges worldwide and which now escalates at global level in the non-equity business. The author finds that the liberalization process and regulatory changes brought about by the financial crisis have revived this long-term process.

What reforms for the credit rating industry? A European perspective

ECMI Policy Brief 17, October 2010: Despite having singled out credit rating agencies (CRAs) early on in the financial crisis as needing more regulation, policy-makers in the EU seem not to be reassured by the measures that have been adopted in the meantime, and want to go further. This paper starts with an overview of the credit rating industry today. The second section analyses the use of credit ratings and shows how the authorities have created a captive or artificial market for CRAs.

The MiFID Metamorphosis

ECMI Policy Brief 16, April 2010: In their assessment of the Markets in Financial Instruments Directive (MiFID), adopted by the EU in April 2004 and implemented at Member State level by the end of 2007, Karel Lannoo and Diego Valiante find that the legislation has been remarkably successful in terms of improving market structure and efficiency. In their view, the upcoming MiFID review should therefore take a ‘light touch’, clarifying some definitions and extending price transparency to related segments of securities markets.

Regulatory Challenges for the EU Asset Management Industry

ECMI Policy Brief 15, April 2010: The European asset management industry is feeling squeezed from all sides, as a result of growing prudential, product and conduct regulation. A new Directive, UCITS IV, has only just been enacted, and already new challenges are emerging in the regulation of hedge and venture capital funds, the review of the regulatory regime for depositaries (or financial custodians) and amendments to the MiFID Directive. In addition, a new European supervisory framework is in the making, which implies much stricter controls on enforcement.

Comparing EU and US Responses to the Financial Crisis

ECMI Policy Brief 14, January 2010:  Since 2003, the EU and the US have conducted a vibrant regulatory dialogue on financial regulation, but domestic priorities seem to have taken precedence in response to the financial crisis. This ECMI Policy Brief compares the institutional and regulatory changes occurring on both sides of the Atlantic. On the institutional side, it compares macro- and micro-prudential reforms.

Integrating Europe's Back Office: 10 years of turning in circles

ECMI Policy Brief 13, June 2009: The financial crisis has sharpened the debate on Europe’s back office architecture. This paper reviews the ECB’s decision to proceed with its Target 2 Securities (T2S) project, which aims to establish a common IT platform for securities settlement, reducing differences between current infrastructures. The apparently solid configuration of the project shakes, however, when we closely examine the impact of this common infrastructure on the competitive landscape.

The Reform of the Credit Rating Agencies: A Comparative Perspective

ECMI Policy Brief 12, February 2009: Credit ratings are a quasi-public good, and investors and financial markets regulators need an independent assessment of the credit-worthiness of an issuing entity because of information asymmetries and principal agent problems. In light of the high volatility of market-based measures and the failure of internal risk management, private CRAs are best fit for purpose. However, natural barriers of entry in the rating business and conflicts of interest have led to an inflation of ratings and a deterioration in their quality.

Shedding Light on the UCITS-MiFID Nexus and Potential Impact of MiFID on the Asset Management Sector

ECMI Policy Brief 11, April 2008: There remains considerable confusion as to how exactly the MiFID and UCITS directives will interact in the long run. This uncertainty reflects the growing pains of a regulatory transformation that represents no less than a tectonic shift from intense and prescriptive product regulation to a more flexible, principles-based regulation of management functions. Unlike UCITS, MiFID is a horizontal directive that cuts across the entire financial services industry (except for insurance).

The Future of Europe's Financial Centres

ECMI Policy Brief 10, December 2007: The intention of this article by Karel Lannoo is to subject European financial centres to a SWOT analysis, assessing their Strengths, Weaknesses, Opportunities and Threats. We start with a closer definition of the term financial centre and a classification of the different kinds of financial centres found in Europe.

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