LL207: International Financial Regulation

Course Content

This course uses the financial crisis of 2007-2010 as a starting point to explore the challenges of regulating global financial markets. The course is internationally oriented and draws on the rules set by the global regulatory committees (Financial Stability Board, Basel, etc.) and on European post-crisis regulation, with a few digressions and comparisons with the American regulatory debate, without focusing in details on any specific jurisdiction.

Essential purpose of the course is, first, to analyse some of the main techniques of financial regulation and to explore their rationales and dynamics from a number of disciplinary perspectives. Second, this course addresses seven policy areas in more detail that have all been substantially reinforced after the financial crisis and are that considered to the hottest topics in regulation.

Course Structure

General Part:

1. Introduction: The Anatomy of the Financial Market
   (What is the financial market? Who is regulated, and why? Introduction to the Financial Crisis)
2. The ‘Why’: Rationales for Regulating the Financial Market
   (Systemic Risk, Market Integrity, Principal/Agent Problem, Competition)
3. The ‘How’: Key Elements and Tools of Financial Regulation
   (Risk models, Disclosure, Resilience and Behavioural Rules)
4. The ‘Who’: Global and EU Regulatory and Supervisory Structures
   (Financial Stability Board and G20, Basel-IOSCO, EU Institutions and ECB, National Supervisors and Regulators)

Specific Policy Areas:

1. Banking and Financial Stability
2. Prudential Regulation: The Basel Bank Capital Accords
3. The EU Banking Union, Single Supervisory Mechanism and beyond
4. Pulling the Shadow Banking Sector out of the Dark
5. Wild West Banking vs. Utility Banking: Structural Reforms
6. Rating Agencies: Outlawed Gatekeepers
7. From OTC Derivatives to CCP Clearing
8. Wrap-up: The Financial Crisis, Systemic Stability and Market Pressures

Learning Outcomes

• Understand the rationales and main elements of financial regulation, the ‘why’, ‘how’ and ‘who’. 
• Get to know the seven most important policy areas in the field of financial regulation.
• Acquire the knowledge and tools to follow and shape the national and international debate on financial markets regulation.

Who should sign up for this course?

This course is designed to be of both high academic and direct practical value. It appeals to students preparing for a career in financial markets as well as to practitioners wishing to broaden their horizon. It will be of particular interest for the

• Private financial sector (strategy, management, compliance, legal, governmental and international affairs, etc)
• Legal practice specialising in the above mentioned activities
• Government and governmental agencies (policy makers from treasuries, ministries of economy/finance/justice, foreign office, etc.)
• Central banks (management, legal, regulation and oversight, international affairs, etc.)
• International organisation and EU organs and agencies (policy makers, strategy, legal, international affairs, etc.)
• Non-governmental organisations and advocacy groups active in the field of international financial markets
• Students interested in any of the above, or pursuing a masters programme related to financial markets

The course is a good match with LL206 International Financial Law, which concerns the commercial law side of financial markets, together the courses provide for the full picture of financial markets law and regulation. However, participation in LL206 is not a formal prerequisite for taking LL207.

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Texts*

There are two excellent background books on the financial markets (not specifically on regulation). They provide all necessary knowledge for those intending to take the course without having any prior knowledge of financial markets:

 P. Coggan, Inside the City – How the Money Machine Works   (Penguin Books, 2008) – written by a journalist, this is an accessible account for the non-specialist. It is highly recommended to read this book before coming to the course. Price around 10.00 GBP.

S. Valdez and P. Molyneux, An Introduction to Global Financial Markets 7^th or 8^th edition (Palgrave Macmillan) - this is a more detailed and technical introduction to financial markets which serves as a reference work during the course. It is recommended to purchase this book (it will be useful also after the course, a really good investment). Price around 30.00 GBP.

*A more detailed reading list will be supplied prior to the start of the programme

**Course content, faculty and dates may be subject to change without prior notice