Josée Weydert,  Jad  Nader & Vincent Wellens

Luxembourg’s well-known financial secrecy laws are changing. Bill n° 7024 amending inter alia Article 41 of the Financial Sector Act of 5 April 1993 (the “FSA”) in this respect, initially gave rise to much discussion but was ultimately adopted. Barriers to several financial outsourcing transactions will officially disappear and the (IT) outsourcing landscape could undergo substantial changes. This newsflash takes a closer look at some of the most important changes which not only deal with the rules on professional secrecy but also clarify several organisational requirements to be complied with in outsourcing transactions.
Continue reading…

Mr Randal K Quarles, Vice Chairman for Supervision of the Board of Governors of the Federal Reserve System, reflects on 10 Years after the Global Financial Crisis: How Has the World Economy Changed and Where Will It Go? “The U.S. economy appears to be performing very well and, certainly, is in the best shape that it has been in since the crisis and, by many metrics, since well before the crisis. Recent volatility in equity markets is a reminder that asset prices can move rapidly and unexpectedly. However, it is my assessment that the underlying fundamentals of the U.S. economy are sound and much improved relative to earlier in the decade.”

Continue reading…

The European Central Bank (ECB)  has declared  that the Latvian bank ABLV, the second largest bank of the country, can no longer be saved. After ECB blocked all payments at the bank, the ECB decided that it is not in the public interest to further rescue the ABLV, the debts are too large to rescue the bank.

North Korean missile program

Liquidity problems of ABLV are the result of sanctions that were recently imposed by the US Treasury Department. The USA believes the bank has done business with parties that support the North Korean missile program and that the bank has laundered money.

Savings are guaranteed

The central bank of Latvia claimed that ABLV had sufficient buffer capital to save it, but according to the ECB, that is not the case. Savings of up to € 100,000 are guaranteed via the deposit guarantee scheme. Latvian Prime Minister Kuinskis will convene an emergency meeting about the risks at other Latvian banks.

Domestically, the Bank co-operates closely with both the Financial Conduct Authority (FCA) and the Payment Systems Regulator (PSR) in relation to supervising market infrastructure and payment systems respectively. The frameworks for co-operation are set out in Memorandums of Understanding (MoUs) which are reviewed annually by the parties involved, including by seeking feedback from supervised Financial Market Infrastructures (FMIs). Co-operation supports effective supervision and policymaking by sharing information between the regulators and promotes efficiency by minimising duplication.
Continue reading…

The Financial Conduct Authority (FCA) has announced that it is seeking views on how technology can make it easier for firms to meet their regulatory reporting requirements and improve the quality of the information they provide. The FCA regularly explores how technology can make our regulations more efficient and reduce the regulatory burden on firms. One of the ways we do this is through ‘TechSprints’ that bring together financial services providers, technology companies and subject matter experts to develop solutions to regulatory challenges.
Continue reading…

The paper ‘An explanation of negative swap spreads: demand for duration from underfunded pension plans’ of the BIS, examines the reasons for the persistent negative 30-year swap spread. Because of the credit risk implicit in Libor, swap rates should exceed the (theoretical) risk-free rate and rise when bank credit risk increases. Further, Treasuries (against which swap spreads are computed) are “safe haven” assets whose yields fall during a crisis, so that they trade at a liquidity premium. On this basis, the 30-year swap spread should have increased after the Lehman default. Yet, instead, it declined into negative territory. This we seek to explain.

Continue reading…

The aim of the GDPR is to protect all EU citizens from privacy and data breaches in an increasingly data-driven world that is vastly different from the time in which the 1995 directive was established. Although the key principles of data privacy still hold true to the previous directive, many changes have been proposed to the regulatory policies; the key points of the GDPR as well as information on the impacts it will have on business can be found below.
Continue reading…

Kenny van Ierlant

The digital transformation prompted by rapidly changing business models, as part of the chain reversal, has already turned the world upside down. Numerous companies and governments (organizations) have invested heavily in the digitization of their business processes as part of the chain reversal by automating non-automated processes in order to save heavily on the costs of labor to benefit the shareholders! The premise that this approach will lead to “agility” and lower cost-income ratios will not materialize the majority of case. This digitization also reveals a great sociological problem, namely that top management has no idea how such a transformation should be implemented. The lack of essential knowledge at the top level is a guarantee for many accidents and destruction of shareholder value.
Continue reading…

The Bank for International settlement (BIS) develop a stylised shadow banking map for China with the aim of providing a coherent picture of its structure and the associated financial system interlinkages. Five key characteristics emerge. One defining feature of the shadow banking system in China is the dominant role of commercial banks, true to the adage that shadow banking in China is the “shadow of the banks”. Moreover, it differs from shadow banking in the United States in that securitisation and market-based instruments play only a limited role.

Continue reading…