The Project's academic
focus is the study of:
|
1) |
The interaction between law and financial
markets, including: |
| |
a) |
the extent to which market behaviour shapes the law
and vice versa; |
| |
b) |
new laws, regulations and EU directives which are
specifically intended to enable the law to "keep up" with market
developments; |
| |
c) |
the effect of laws and regulations covering
anti-money laundering, anti-terrorism etc. on market behaviour . |
| |
d) |
the impact of codes of conduct and other types
of "soft" law; |
| |
e) |
the approach of the courts to financial
law issues and the response of market participants; |
| |
f) |
the role of law in assisting the development of
(i) markets in emerging economies in Central and Eastern Europe (ii) a
single financial services market in the EU; |
| |
g) |
the extent to which national laws can, by
themselves, serve and regulate global market activity. |
|
2) |
Substantive law in key areas, such
as: |
| |
a) |
set-off and netting and related issues in
clearance and settlement systems; |
| |
b) |
financial collateral and other forms of
security interest relevant to wholesale and retail markets; |
| |
c) |
recharacterisation ; |
| |
d) |
insolvency law's so-called "rescue culture"; |
| |
e) |
dematerialised securities and indirect holding
systems; |
| |
f) |
lender liability; environmental and "stakeholder"
issues; liability for keeping "doomed" businesses afloat; "suitability"
and mis-selling; impact of the compensation culture and consumerism,
complaints procedures, role of ombudsman etc. |
| |
g) |
insider dealing and other forms of market abuse. |
|
3) |
The Financial Markets Regulatory System,
including: |
| |
a) |
the relationship between the UK's system, based
on the Financial Services and Markets Act, and "soft law"; |
| |
b) |
the approach of the Financial Services Authority to
law making, enforcement and sanctions; the advantages and disadvantages
of concentration of power in the regulator; |
| |
c) |
the extent to which a level playing field is being
established in the EU (and between the EU and the US); |
| |
d) |
the limits of regulation in relation to the
control and management of systemic risk; |
The Project provides a framework for (a)
collaborative work such as workshops, seminars and collective writing projects
and (b) a research group involving not only LSE staff but also lawyers and
others from outside academia seeking to explore issues in a mixed
academic/practitioner environment.
In due course, it is expected that various
aspects of the Project's study topics will become the focus of new,
self-standing academic and training courses. (A new LLM course on legal risk in
the financial markets, for example, was introduced in 2007/08).
The Project involves the LSE Law
Department's established experts in related fields such as EU, regulatory,
criminal and insolvency law working together with finance lawyers to study the
application in practice of legal developments in those fields in the specific
context of the financial markets.
The Director of the Project is
Professor Michael G. Bridge. Other LSE lawyers participating in the
Project include Julia Black,
Jonathan Fisher QC,
Jeffrey Golden,
Roger McCormick,
Eva Micheler and
Philipp Paech.
The Project has launched a new
research initiative on Sustainable Finance. This is being led by the Roger
McCormick.
Initial Objectives
The Sustainable Finance Project’s objectives are, first, to develop and, as far
as possible, achieve international consensus on the following:
a) the legitimate aspirations of market participants and others in relation to
sustainability in the context of financial market activity;
b) what is meant by “sustainable” in the context of:
-
lending to capital projects
-
lending to corporates
-
retail banking
-
insurance and re-insurance (including insurance broking)
-
private equity, venture capital and hedge funds
-
wholesale financial markets
-
sovereign wealth funds
-
microfinance; and
c) the relationship between ethical awareness (as reflected in the culture of a
financial institution) and the desire to conduct business with due regard to
"sustainability"; and
d) the ways in which the adoption of good governance practices and principles
can be buttressed by greater accountability, changes in culture and structural
changes in the relationships with stakeholders in civil society
In the context of the above, the Sustainable Finance Project will explore the
possibility of extending the concept of “ESG” (environment, social, governance)
to embrace Systemic Responsibility within financial institutions, i.e. the
adoption of a business and risk management culture that takes full account of
the institution’s responsibilities (in addition to those of regulatory bodies)
in relation to the maintenance of a sustainable financial system, particularly
in times of extreme financial instability.
Other objectives of the Project include
-
the development of a methodology for assessing the success of market
participants in achieving sustainability goals;
-
assessing the relationship between the success referred to above (or lack of
it) and reputational risk and other formal or informal sanctions;
-
assessing the impact on the above issues of law and regulation and of “soft
law”.
International Comparative Legal
Risk
Under the umbrella of the Sustainable Project, a further research exercise has
been initiated on International Comparative Legal Risk (the "ICLR Project"). Its
objective is to examine how certain kinds of legal risk affect banks in
different jurisdictions, the impact of those risks on the sustainability of
banks’ business models and the implications of such risks for what has become
known as “sustainable banking”. In addition to LSE, other universities in other
jurisdictions have joined (and are encouraged to join) in the work programme.
One of the starting points for the ICLR Project is to analyse and compare the
approach of regulators to certain disciplinary matters. This includes analysis
of regulators’ track records of fines imposed (and comparable activity, such as
exacting sums to be paid in settlement of regulatory action).
Another area of research concerns the analysis and comparison of the experience
of individual banks in different jurisdictions in relation to legal risks
presented by:
(1) regulatory
disciplinary action,
(2) consumer
complaints,
(3) class action
lawsuits, and
(4) environment,
social and governance (ESG) matters.
Additional objectives are:
-
to compare accessibility of
information across relevant jurisdictions;
-
to assess whether the
information in the public domain shows that individual banks are (or are
not) improving their management of the legal risks referred to above and
compare that information with how banks assess their own "culture" ; and
-
to examine whether certain
kinds of legal risk phenomena are spreading.
Objective indicators
A key feature of the ICLR Project is the search for, and analysis of, objective
data in the public domain that provide information relevant to assessment of the
above risks. Work has already begun on a table of data that demonstrates the
experience of individual banks in relation to the risk of regulatory fines and
related matters.
The initial table is based on:
(1) fines (and
sums paid in settlement of fines);
(2) suspension
orders;
(3)
disqualification orders;
(4) sustained
consumer complaints.
Other “indicators” may be added at
a later stage.
A second table, on ESG matters, is
being considered. One of the key issues for this is the selection of criteria
that are based sufficiently on facts rather than opinions. In due course, it is
hoped to extend the ICLR Project’s scope to include examination of any
correlation between the position of individual banks in the two tables.
Enquiries about the Sustainable Finance Project should be addressed to
rsmccormick@btinternet.com.
(Mobile phone: 07802 604 316)
Recent Events
LAW AND FINANCIAL MARKETS PROJECT
Wednesday 26 October 2011
The London Law Club Event
A loose association of London academics and judges gathered together under the
aegis of the LFMP, to consider a presentation paper on '"Direct Transfers" in
the Law of Unjust Enrichment' by Stephen Watterson. ̶ flyer
̶ read the paper
LAW AND FINANCIAL MARKETS PROJECT
Wednesday 26 January 2011
European
Takeover Law - The Case for a Neutral Approach
Speaker: Professor Luca Enriques (Commissioner of the Italian securities
regulator, Consob; Professor of Law at the University of Bologna; member of the
European Corporate Governance Institute)
SUSTAINABLE FINANCE PROJECT
10 February 2011
'The Equator
Principles: their application and effectiveness in project finance'
Speaker: Paul Watchman
LAW AND FINANCIAL MARKETS PROJECT
18 March 2011
Professor Julia Black discussing her paper
'Breaking
up is hard to do: The future of UK financial regulation'
LAW AND FINANCIAL MARKETS PROJECT
29 March 2011
Seminar: 'Disguised Returns
of Capital'
Eva Micheler
LAW & FINANCIAL MARKETS PROJECT
30 March 2011
COLLOQUIUM:
'Global Finance Crisis and Economic Crime'
Speaker: Richard Alderman (Director, SFO)
[flyer] [discussion
paper abstract]
[Alderman transcript]
LAW & FINANCIAL MARKETS PROJECT
CONFERENCE:
12 May 2011
Cross-jurisdictional netting and global solutions
[see top of this page for papers, documentation &c.]
LAW & FINANCIAL MARKETS PROJECT
CONFERENCE:
12 May 2011
Cross-jurisdictional netting and global solutions
The internationalisation of the financial market requires netting to connect
smoothly across jurisdictions so as to guarantee that netting agreements remain
enforceable even in the event of insolvency of one of the parties. Recent
legislation on bank resolution (e.g., in the UK, the Banking Act 2009) has
highlighted the potential incompatibilities of netting agreements with bank
resolution procedures. Against this background, international initiatives are
unfolding at present, as the European Commission and Unidroit are about
launching relevant projects in this area.
Paper
Presentations
LAW & FINANCIAL MARKETS PROJECT / TRANSNATIONAL LAW PROJECT
16 May 2011
‘Arbitration and Financial Markets Dispute’
Speakers: Jeffrey Golden (LSE) and Jan Paulsson (LSE)
The 2nd LSE Arbitration Debate, which is jointly organised by
the Transnational Law Project and the Law & Financial Markets Project, brings
together Jeffrey Golden, the main author of the ISDA Master Agreements and the
driving force behind efforts to set up an International Financial Court, and Jan
Paulsson, who will take on Jeffrey’s question marks about the suitability of the
general use of arbitration for financial market disputes.
[see
flyer]
6-8 July 2011
Financial
Law Issues
for Lawyers in Transition Economies
A three day series of seminars in London jointly hosted by The
London
School of Economics and Political Science and the European Bank for
Reconstruction and Development.
Financial Markets Law and Regulation
for Transition Economies
Professor Roger McCormick, director of the
