GENERAL Financial Supervision of the EU In order to put into action the conclusion of the European Council and Euro Area summit at the end of June 2012, on 12 September 2012 the Commission adopted a set of legislative proposals on the establishment of a single supervisory mechanism for banks led by the European Central Bank. The set was accompanied by a Communication on a roadmap for completing the banking union over the coming years. Already in September 2009 the Commission brought forward proposals to replace the EU's existing supervisory architecture with a European system of financial supervisors (ESFS), consisting of three European Supervisory Authorities – a European Banking Authority, a European Securities and Markets Authority, and a European Insurance and Occupational Pensions Authority. The three European supervisory authorities (ESAs) and a European Systemic Risk Board (ESRB) were established as from January 2011 to replace the former supervisory committees. Cross-border mergers and acquisitions Report(107 KB)
Dodd–Frank Wall Street Reform and Consumer Protection Act The Dodd–Frank Wall Street Reform and Consumer Protection Act (Pub.L. 111–203, H.R. 4173; commonly referred to as Dodd-Frank) was signed into federal law by President Barack Obama on July 21, 2010 at the Ronald Reagan Building in Washington, DC. Passed as a response to the Great Recession, it brought the most significant changes to financial regulation in the United States since the regulatory reform that followed the Great Depression. It made changes in the American financial regulatory environment that affect all federal financial regulatory agencies and almost every part of the nation's financial services industry. As with other major financial reforms, a variety of critics have attacked the law, some arguing it was not enough to prevent another financial crisis or more "bail outs", and others arguing it went too far and unduly restricted financial institutions. Origins and proposal Share in GDP of U.S. financial sector since 1860 Overview Duties
ESRB : European Systemic Risk Board Value-at-Risk (VaR) EmailShare Value-at-risk (VaR) is a probabilistic metric of market risk (PMMR) used by banks and other organizations to monitor risk in their trading portfolios. For a given probability and a given time horizon, value-at-risk indicates an amount of money such that there is that probability of the portfolio not losing more than that amount of money over that horizon. For example, if a portfolio has a one-day 90% value-at-risk of USD 3.2 million, such a portfolio would be expected to not lose more than USD 3.2 million, nine days out of ten. Different choices for the probability and time horizon correspond to different value-at-risk metrics. a time horizon—one trading day in our example;a probability—90% in our example;a currency—USD in our example. We name a value-at-risk metric by listing those three items followed by “VaR”, so the value-at-risk metric of our example is called one-day 90% USD VaR. Notes References
The Sarbanes-Oxley Act 2002 Sarbanes–Oxley Act The bill was enacted as a reaction to a number of major corporate and accounting scandals including those affecting Enron, Tyco International, Adelphia, Peregrine Systems and WorldCom. These scandals cost investors billions of dollars when the share prices of affected companies collapsed, and shook public confidence in the US securities markets. The act was approved by the House by a vote of 423 in favor, 3 opposed, and 8 abstaining and by the Senate with a vote of 99 in favor, 1 abstaining. President George W. In response to the perception that stricter financial governance laws are needed, SOX-type regulations were subsequently enacted in Canada (2002), Germany (2002), South Africa (2002), France (2003), Australia (2004), India (2005), Japan (2006), Italy (2006), Israel and Turkey. Debate continued as of 2007 over the perceived benefits and costs of SOX. Major elements Timeline and passage of Sarbanes–Oxley
J.P. Morgan | Back Testing Value-at-Risk by Romain Berry J.P. Morgan Investment Analytics & Consulting email@example.com This article is the sixth in a series of articles exploring risk management for institutional investors. Over the past five articles, we have covered the basics about computing Value-at-Risk (VaR) to assess the market risk of a portfolio of traditional financial instruments. We explained at a high level the pros and cons of the three main methodologies, namely Analytical, Historical and Monte Carlo Simulations. Background Back Testing is a technique used to reconcile forecasted losses from VaR with actual losses at the end of the time horizon (generally 1 day, 1 week, 2 weeks, 1 month, 1 quarter, 6 months or 1 year). In cases where the VaR has been underestimated and thus when the portfolio has experienced a loss greater than VaR, we say that VaR has been "breached", and such an event is called a "breach" or "violation" of VaR. We reproduce in Exhibit 1 the graph of a Back Testing exercise.
Financial Risk Management 1.9.4 Emergence of Risk Management In 1990, risk management was novel. Many financial firms lacked an independent risk management function. This concept was practically unheard of in nonfinancial firms. risk reduction through safety, quality control, and hazard education; andalternative risk financing, including self-insurance and captive insurance. Such techniques, together with traditional insurance, were collectively referred to as risk management. More recently, derivative dealers had been promoting “risk management” as the use of derivatives to hedge or customize market risk exposures. The new “risk management” that evolved during the 1990s is different from either of the earlier forms. On January 30, 1992, Gerald Corrigan, President of the New York Federal Reserve, addressed the New York Bankers Association. … the interest rate swap market now totals several trillion dollars.
The Laws That Govern the Securities Industry Securities Act of 1933 Often referred to as the "truth in securities" law, the Securities Act of 1933 has two basic objectives: require that investors receive financial and other significant information concerning securities being offered for public sale; and prohibit deceit, misrepresentations, and other fraud in the sale of securities. The full text of this Act is available at: Purpose of Registration A primary means of accomplishing these goals is the disclosure of important financial information through the registration of securities. The Registration Process In general, securities sold in the U.S. must be registered. a description of the company's properties and business; a description of the security to be offered for sale; information about the management of the company; and financial statements certified by independent accountants. Registration statements and prospectuses become public shortly after filing with the SEC. Corporate Reporting
UK Stewardship Code The UK Stewardship Code aims to enhance the quality of engagement between asset managers and companies to help improve long-term risk-adjusted returns to shareholders. The Code also describes steps asset owners can take to protect and enhance the value that accrues to the ultimate beneficiary. The Code sets out a number of areas of good practice to which the FRC believes institutional investors should aspire and operates on a 'comply or explain' basis. The FCA requires UK authorised asset managers to report on whether or not they apply the Code. The UK Stewardship Code First published in July 2010, the Code was revised in September 2012. The Feedback Statement details the changes to the 2012 Code and explains the rationale for the amendments. Printed copies of the Code can be obtained free of charge from FRC publications, tel: 020 8247 1264, email: firstname.lastname@example.org and online at: www.frcpublications.com. There is no fee payable to become a signatory to the Stewardship Code.
European Financial Reporting Advisory Group - EFRAG 14/04/2014 | EFRAG INSIDER - First quarter 2014 EFRAG Insider was created in the course of 2010 to inform founding and funding members about current developments in all EFRAG activities. EFRAG Insider is now available to a wider audience and is published every quarter on average. 14/04/2014 | EFRAG's report on the findings from the limited survey on the proposed simplifications to IASB ED Leases EFRAG released a report that summarises the findings from a limited survey on the proposed simplifications to the accounting for lessees under IASB’s Exposure Draft Leases. 11/04/2014 | EFRAG's Draft Comment Letter on the IASB's ED/2014/1 Disclosure Initiative (Amendments to IAS 1) EFRAG published its Draft Comment Letter on the IASB's ED/2014/1 Disclosure Initiative (Amendments to IAS 1). 09/04/2014 | EFRAG’s feedback statement on the IASB’s ED/2013/11 Annual Improvements to IFRSs 2012-2014 Cycle 08/04/2014 | EFRAG Update March / April 2014