Franklin Allen Elena Carletti Joanna Gray Mitu Gulati

197 Pages·2017·7.12 MB·English

Franklin Allen
Elena Carletti
Joanna Gray
Mitu Gulati
FLORENCE SCHOOL
OF BANKING & FINANCE
The Changing Geography of
Finance and Regulation in Europe

iii
The Changing Geography
of Finance and Regulation
in Europe
EDITED BY
Franklin Allen
Elena Carletti
Joanna Gray
Mitu Gulati
AUTHORS
Lachlan Burn
Jonathan Faull
Andrei Kirilenko
Brigid Laffan
Jean-Pierre Landau
Yannis Manuelides
Eva Micheler
David Miles
Martin Sandbu
Agnieszka Smoleńska
Pierre Schlosser
Jeromin Zettelmeyer
European University Institute
Florence, Italy
Brevan Howard Centre at Imperial College
London, United Kingdom
Baffi Carefin, Bocconi University
Milan, Italy
Published by
European University Institute (EUI)
Via dei Roccettini 9, I-50014
San Domenico di Fiesole (FI)
Italy
First Published 2017
ISBN: 978-92-9084-545-4
doi:10.2870/564655
QM-04-17-684-EN-N
© European University Institute, 2017
Editorial matter and selection © editors 2017
Chapters © authors individually 2017
This text may be downloaded only for personal research purposes. Any
additional reproduction for other purposes, whether in hard copies or
electronically, requires the consent of the Florence School of Banking and
Finance. If cited or quoted, reference should be made to the full name of
the author(s), editor(s), the title, the year and the publisher.
Views expressed in this publication reflect the opinion of individual
authors and not those of the European University Institute.
Cover artwork: Christopher Trollen
v
Contents
The Contributors vii
Acknowledgements xii
Preface xiii
Executive Summary, Agnieszka Smoleńska and Pierre Schlosser 1
PART 1
The New World of FinTech 5
Explaining the Infrastructure Underpinning Securities Markets:
Market Failure and the Role of Technology, Eva Micheler 7
An Introduction to FinTech, Andrei Kirilenko 25
Keynote Speech - Debt As Money: Implications For Financial
Stability, Jean-Pierre Landau 35
PART 2
Regulatory Arbitrage Across Jurisdictions 51
English law and Jurisdiction Post Brexit, Yannis Manuelides 53
Regulatory Arbitrage: Some Thoughts, Lachlan Burn 79
After Brexit: Rebooting Euro Area Financial Integration,
Jeromin Zettelmeyer 95
PART 3
A Case Study: Brexit 111
Brexit, Financial Markets and the Wider Economy, David Miles 113
Changing Geography of Finance and Regulation in Europe:
Brexit Case Study, Jonathan Faull 121
Brexit: A Tale of Exit Over Voice, Brigid Laffan 129
Connecting and Disconnecting Critical Financial Market
Infrastructures: Oversight and Regulation of CCPs After Brexit,
Agnieszka Smoleńska 141
Dinner Speech - Lessons From the Past for the Future,
Martin Sandbu 153
Postface - Still Looking for the Banking Union’s Fiscal Backstop,
Pierre Schlosser 163
Conference programme 179
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THE CONTRIBUTORS
Franklin Allen is Professor of Finance and Economics and Executive Director
of the Brevan Howard Centre at Imperial College London since July 2014.
Previously he was on the faculty of the Wharton School of the University of
Pennsylvania, where he now has Emeritus status. He was formerly Vice Dean and
Director of Wharton Doctoral Programs, Co-Director of the Wharton Financial
Institutions Center, Executive Editor of the Review of Financial Studies and is
currently Managing Editor of the Review of Finance. He is a past President of
the American Finance Association, the Western Finance Association, the Society
for Financial Studies, the Financial Intermediation Research Society and the
Financial Management Association, and a Fellow of the Econometric Society. His
main areas of interest are corporate finance, asset pricing, financial innovation,
comparative financial systems, and financial crises.
Lachlan Burn is Partner at Linklaters in London, specializing in banking and
capital markets issues. His expertise includes debt securities, global deposit
receipts, convertible bonds, repackagings and derivatives off all types. He is a
Solicitor of the Senior Courts of England and Wales, a member of the London Stock
Exchange’s Primary Markets Group, member of the Legal and Documentation
Committee of the International Capital Markets Association, and editor of the
Capital Market Law Journal (Oxford University Press). Previously, he held several
positions at Linklaters, in London and Paris, and served as a member of the Legal
Risk Review Committee, the Listing Authority Advisory Committee and the
Financial Markets Law Committee.
Elena Carletti is Full Professor of Finance at Bocconi University. Previously
she was Professor of Economics at the European University Institute, holding a
joint chair in the Economics Department and the Robert Schuman Centre for
Advanced Studies. She is also Research Fellow at CEPR, Extramural fellow at
TILEC, Fellow at the Center for Financial Studies, at CESifo, at IGIER and at the
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The Contributors
Wharton Financial Institutions Center. Among other appointments, she worked
as consultant for the OECD and the World Bank, has served in the review panel
of the Irish Central Bank and of the Riskbank and has been a board member
of the Financial Intermediation Research Society. Her main research areas are
Financial Intermediation, Financial Crises and Regulation, Competition Policy,
and Corporate Governance.
Sir Jonathan Faull was born in Chatham, Kent in 1954. He has recently
retired after 38 years in the European Commission. He spent most of his early
Commission career in the Directorate General of Competition, working his way
up from the starting grade to become Deputy Director General. From 1989 to
1992 he worked in the cabinet (private office) of the competition Commissioner
(Leon Brittan). He was the Commission’s Spokesman and Director General
of Press and Communication (1999-2003), Director General of Justice and
Home Affairs (2003-2010), Director General of Internal Market and Services
(2010-2015) and Director General of the Task Force on the British referendum
on membership of the EU (2015-2016). He is the author of many articles on
European law and policy; co-editor of a leading work on European Competition
Law; Visiting Professor, King’s College London and College of Europe, Bruges;
Emeritus Professor, Vrije Universiteit Brussel; Member of the Advisory Boards of
the Centre for European Reform and the Institut Jacques Delors – Notre Europe.
He was knighted in the Queen’s Birthday Honours in June 2017.
Joanna Gray is Professor of Financial Law and Regulation at Birmingham
Law School. Her expertise lies in the broad areas of financial markets law and
corporate finance law. Previously she was Professor of Financial regulation at
Newcastle Law School and held positions at leading universities including UCL,
London, Universities of Strathclyde, Dundee and Newcastle University. She has
also conducted executive education and CPD activity for City of London law
firms, for clients in the banking and finance sectors and for the IMF, Reserve
Bank of India, Turkish Capital Markets Board, the Moroccan Capital Markets
Board and financial regulatory staff on the Global Governance Programme at
the EUI. She has participated in high level policy seminars as an academic expert
with the Bank of England, European Central Bank, the UK Financial Services
Authority and the Australian Prudential Regulatory Authority.
Mitu Gulati is a Professor of Law at Duke Law School, Duke University. Previously,
he taught at Georgetown University Law Center, and at the UCLA School of Law,
and visited among others the University of Chicago, Duke University Law School,
and the University of Virginia School of Law. Prior to joining academia, he held
positions in law firms in New York, Boston and Newark. His main expertise lies
in the field of sovereign bond contracts; current research interests include the
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The Contributors
historic evolution of concepts of sovereign immunity and the role that law can
play as a symbol. He has authored articles, among others in the Journal of Legal
Studies, the Review of Finance and Law and Social Inquiry, as well as books and
book chapters.
Andrei Kirilenko is the Director of the Centre for Global Finance and Technology,
a Senior Research Fellow at the Brevan Howard Centre for Financial Analysis,
and Visiting Professor of Finance at the Imperial College Business School.
Previously he was Professor of the Practice of Finance at the MIT Sloan School
of Management and Co-Director of the MIT Center for Finance and Policy.
Earlier he was the Chief Economist of the U.S. Commodity Futures Trading
Commission (CFTC), where he was the recipient of the CFTC Chairman’s Award
for Excellence, and held various positions at the International Monetary Fund,
working on global capital markets issues. His work focuses on the intersection
of finance, technology and regulation. He is a recognized world expert on high
frequency, algorithmic trading and the principles of regulation of automated
financial markets.
Brigid Laffan is Director and Professor at the Robert Schuman Centre for
Advanced Studies and Director of the Global Governance Programme at the
EUI.Previously, she was Professor of European Politics at the School of Politics
and International Relations (SPIRe) University College Dublin, Vice-President
of University College Dublin and Principal of the College of Human Sciences.
She was the founding director of the Dublin European Institute UCD and in
2004 she was elected as a member of the Royal Irish Academy. In 2014 Professor
Laffan was awarded the Academic Association for Contemporary European
Studies’ (UACES) Lifetime Achievement Award, as well as the THESEUS Award
for outstanding research on European Integration. In 2010 she was awarded the
Ordre national du Mérite by the President of the French Republic.
Jean-Pierre Landau is a former Deputy Governor of Banque de France (2006-
2011) and former Executive Director for France at International Monetary Fund
and the World Bank (1989-1993). He also served as Executive Director for France
at the European Bank for Reconstruction and Development, Minister Counselor
at the French Embassy in London, as well as in various positions at France’s
Ministry of Finance. He has been a member of the Board of Directors of the
Bank for International Settlements (BIS) and a member of the Financial Stability
Forum. He is currently Associate Professor with the Department of Economics
at Sciences Po - Paris.