Stricter Rules Research Articles

MiFID II and MiFIR: stricter rules for the EU financial markets

This article analyses and discusses the new MiFID II and MiFIR rules for the EU financial markets. In particular, it analyses the concepts “regulated market”, “Multilateral Trading Facility” (MTF), “Organised Trading Facility” (OTF) and “(systemic) internalisation”. It also discusses (i) pre-trade and post-trade transparency, (ii) transaction reporting, (iii) data services providers, (iv) concentration of trading, (v) position limits, and (vi) position management powers in the case of trading in commodity derivatives and reporting obligations.

MiFID II: Stricter conduct of business rules for investment firms

The article offers a detailed account of the new MiFID II conduct of business rules applicable to investment firms providing investment services. In each case, the new rules are compared with the existing MiFID I regime. The article addresses the following topics: (i) the definition of ‘investment firm’; (ii) the reclassification of certain cases of dealing on own account to dealing on behalf of the client; (iii) client classification; (iv) the general duty of loyalty; (v) information obligations; (vi) know your customer rules; (vii) best execution; (viii) client order handling; (ix) conflicts of interest; (x) inducements; and (xi) obligations to record telephone conversations and electronic communications. The article shows that conduct of business rules are tightened, clarified and expanded in various respects. For investment firms and their advisers, the devil is well and truly in the detail. The stricter rules will in any event make it necessary to modify many aspects of the standard contracts and other documentation used in contacts with clients.

Empirical Evidence on Earnings Management Strategies and Their Consequences in Innovative Small and Medium Entities

We investigate innovative Small and Medium Entities’ (SMEs) earnings management strategies and their related economic consequences. Uncertainty and complexity surrounding innovative SMEs’ activities lead to high information asymmetries between managers and investors which facilitate earnings management strategies. Yet managers do not want to be penalized by market participants which could impair their innovative capacity and future performance. It is generally argued that real activities-based earnings management are more difficult to detect by outsiders than accrual-based earnings management. We examine SMEs listed on the AIM London stock exchange, an exchange for firms of smaller size, over the 1995-2014 period. We document that innovative SMEs engage less intensively in accrual-based earnings management and more intensively in real activities-based earnings management relative to non-innovative SMEs. Our evidence shows that innovative SMEs undertake earnings management strategies that are more difficult to detect externally. We find that the combination of low accruals earnings management and high real earnings management is done efficiently by focusing resources towards investments in R&D in the future years which lead to higher market value. We further examine the role of external monitoring on accounting quality, comparing innovative SMEs listed on stock exchanges with different regulatory requirements, i.e., the AIM London and the Nasdaq stock exchanges. We document that stricter rules reduce the level of accrual earnings management, while it leads to more use of real earnings management. This paper contributes to the literature on SMEs’ financial reporting quality and on the effect of regulation on financial reporting quality.

MiFID II and MiFIR: Stricter Rules for the EU Financial Markets

MiFID II and MiFIR: Stricter Rules for the EU Financial Markets

Valuing historical context of three individuals exhumed from desecrated historic graves in Zeerust, North West Province

Since the promulgation of heritage legislation in 1999, under the new government after the end of Apartheid, stricter rules and regulations determine the management of cultural heritage in South Africa. This includes the processes related to the exhumation and reinterment of human skeletal remains. However, from time to time, projects are experienced where the rules are discarded, resulting in extraordinary circumstances. These need to be handled in a different way in order to protect and preserve the cultural heritage as well as the dignity of the buried individuals. Such an example is that of three desecrated historical graves from the town of Zeerust, in the North West Province. Despite the legislation, and the fact that the three graves were visible, the developer continued with the development. Only when members of the public complained, the heritage authorities were consulted. By this time the development had almost been completed. It was unfortunately impossible to preserve the graves in situ. Negotiations with different stakeholders were necessary and, based on the legislation, a solution accepted by all, was reached.Although the discussion to follow stems from a mainly archaeological study, the aim is to provide and value historical background research on the graves and the three individuals buried there. Also the value of the larger historical context is pointed out. This would provide information on the deceased which would to some extent restore their dignity. Apart from the archaeological methods that had to be utilized to exhume the graves, methods include a literature survey and archival search on the property, as well as on the graves and the individuals buried there. The article will also briefly discuss relevant aspects of heritage legislation in South Africa.It will be debated that historical context is extremely important, and perhaps could contribute in restoring the dignity of buried individuals. Though not ever complete, it does provide a legacy of the life of the three people to be discussed.

Disability pension due to common mental disorders and healthcare use before and after policy changes; a nationwide study.

Background: Despite common mental disorders (CMDs) being a main reason for preterm exit from the labour market, there is limited knowledge regarding healthcare use around the time of being granted disability pension (DP) due to CMD. The aim was to study specialized healthcare use before and after being granted DP due to CMD and whether these trajectories differed before and after changes in DP granting criteria in Sweden in 2008. Methods: Included individuals lived in Sweden, aged 19–64 years with incident DP due to CMD before (wave 1, 2005–06, n = 24 298) or after (wave 2, 2009–10, n = 4056) the changes in 2008. Healthcare trajectories during a 7-year window were assessed by generalized estimating equations. Between- and within-wave differences were examined by interaction models. Results: Psychiatric healthcare increased until the year preceding DP and declined thereafter, with one exception; such outpatient care kept increasing in wave 1 following DP. In the year preceding DP, 4.6 and 19.2% of the individuals in wave 1 had psychiatric in- and specialized outpatient care, respectively, compared with 7.9 and 46.6% in wave 2. No clear pattern was observed regarding somatic healthcare. The slopes of the different DP waves differed mainly during DP granting years (1 year prior to 1 year after), showing a sharper decline in wave 2. Conclusion: Transition to DP due to CMD seems to be associated with changes in psychiatric healthcare use, with higher rates in the year preceding DP. Outpatient healthcare patterns somewhat differed among those granted DP after stricter rules were introduced.

Fatsoen moet je doenŽ1

Abstract Conduct matters: On rules for scientific integrity1Discussions of scientific integrity of research in discourse studies (taalbeheersing) should not be limited to experimental research only, for rules for scientific conduct apply to all sorts of research: experimental and observational, quantitative and qualitative, empirical and theoretical. Nowadays, written codes are available that specify simple and clear principles of honesty, carefulness, reliability, verifiability, impartiality, independence, and responsibility. In response to breaches of these principles, Hornikx and Batenburg (2016) make a plea for new rules and practices that pertain to the macro and the micro level of the scientific ecosystem. Their proposals contain further specifications of available rules for what is logically and socially acceptable and thereby suggest that the present codes do not suffice and that new and stricter rules are an appropriate and effective response to transgressions. It might be wise to consider another question first: Do scientists in our discipline take the existing rules sufficiently serious? My answer, derived from my own experience and environment in research and teaching, is negative. Therefore, rather than new rules, we need more interaction with students, PhD’s and colleagues on matters of integrity.

Fight fire with fire: the ultimate active defence

Purpose This paper proposes an approach to deal with malware and botnets, which in recent years have become one of the major threats in the cyber world. These malicious pieces of software can cause harm not only to the infected victims but also to actors at a much larger scale. For this reason, defenders, namely, security researchers and analysts, and law enforcement have fought back and contained the spreading infections. However, the fight is fundamentally asymmetric. Design/methodology/approach In this paper, the authors argue the need to equip defenders with more powerful active defence tools such as malware and botnets, called antidotes, which must be used as last resort to mitigate malware epidemics. Additionally, the authors argue the validity of this approach by considering the ethical and legal concerns of leveraging sane and compromised hosts to mitigate malware epidemics. Finally, the authors further provide evidence of the possible success of these practices by applying their approach to Hlux, Sality and Zeus malware families. Findings Although attackers have neither ethical nor legal constraints, defenders are required to follow much stricter rules and develop significantly more intricate tools. Additionally, attackers have been improving their malware to make them more resilient to takeovers. Originality/value By combining existing research, the authors provide an analysis and possible implication of a more intrusive yet effective solution for fighting the spreading of malware.

'One Size Does Not Fit All' Institutional Determinants of Financial Safety Net Effectiveness

The main objective of this study is to identify both similarities and differences among seemingly homogenous countries (OECD) in respect to their safety net design and a supervisory role played by central banks. The goal is achieved using an extensive data set, describing financial supervisory institutions between 2000-2013, hence including recent modifications in response to global financial crisis. The data show the existence of similar supervisory standards in both crisis- and non-crisis countries. Whether it is a presence of a single supervisory authority, allocation of macroprudential responsibilities in a country, or implementing capital adequacy requirements, while working well in certain countries, did not make others immune to a crisis. At the same time, data show that non-crisis countries implemented stricter rules than those in crisis-countries, and that this process started way before the burst of Global Financial Crisis. Often, these more rigorous rules were observed in countries with past crisis experience, indicating an importance of learning mechanism. With empirical analysis, we prove that certain basic safety net elements (obligatory reserve requirements of sufficient coverage of deposit insurance scheme), as well as high level of central bank financial transparency are negatively correlated with the speed of credit growth. Based on results and discussion on previous empirical analyses we give recommendations for institutions involved in the financial safety net.

Putting the Mr. Big technique back on trial: a re-examination of probative value and abuse of process through a scientific lens

Purpose– A recent Supreme Court of Canada (SCC) ruling resulted in stricter rules being placed on how police organizations can obtain confessions through a controversial undercover operation, known as the Mr. Big technique. The SCC placed the onus on prosecutors to demonstrate that the probative value of any Mr. Big derived confession outweighs its prejudicial effect, and that the police must refrain from an abuse of process (i.e. avoid overcoming the will of the accused to obtain a confession). The purpose of this paper is to determine whether a consideration of the social influence tactics present in the Mr. Big technique would deem Mr. Big confessions inadmissible.Design/methodology/approach– The social psychological literature related to the compliance and the six main principles of social influence (i.e. reciprocity, consistency, liking, social proof, authority, scarcity) was reviewed. The extent to which these social influence principles are arguably present in Mr. Big operations are discussed.Findings– Mr. Big operations, by their very nature, create unfavourable circumstances for the accused that are rife with psychological pressure to comply and ultimately confess. A consideration by the SCC of the social influence tactics used to elicit confessions – because such tactics sully the circumstances preceding confessions and verge on abuse of process – should lead to all Mr. Big operations being prohibited.Practical implications– Concerns regarding the level of compliance in the Mr. Big technique call into question how Mr. Big operations violate the guidelines set out by the SCC ruling. The findings from the current paper could have a potential impact of the admissibility of Mr. Big confessions, along with continued use of this controversial technique.Originality/value– The current paper represents the first in-depth analysis of the Mr. Big technique through a social psychological lens.

China and India's insertion in the intellectual property rights regime: sustaining or disrupting the rules?

ABSTRACTThis paper looks at the insertion of China and India in the contested and highly legalised regime of intellectual property rights (IP). In doing so it pays particular attention at two dimensions, the internal adoption of this regime and external endorsement/contestation of international IP norms. Much has been written about whether emerging countries will challenge or support the maintenance of an open rules-based multilateral trade system. In this context, the differentiated integration of these two countries in the IP regime is notable. Domestically, China despite much criticism for widespread IP infringement has followed a maximalist interpretation of TRIPS. India, on the contrary has followed other emerging countries in pursuing a more critical, minimalist understanding. These positions have also been visible at the multilateral arena. This empirical finding runs contrary to the assumption that defiance results from market power. The divergence is the more surprising given a recent explosion of patent filings in both countries. From a political economy perspective, this should translate into support for stricter rules under TRIPS. In explanaining the two countries’ divertent insertion this paper looks beyond economic (market) power and domestic interests and underlines the role of ideational legacies, domestic interests and regulatory capacity. The paper thus stresses the need to look deep into domestic politics and ideational cleavages, as well as at their evolution over time, in order to better understand the international behaviour of emerging countries.

Explaining Recent Modifications to the Treatment and Use of Repurchase Transactions

The research outlined in this article considers recent events that have transpired in the repurchase transaction market. In the United States, the Financial Accounting Standards Board (FASB) has changed the accounting treatment of repurchase transactions. Across the globe, regulators have changed the treatment and capital required for financial institutions to participate in repurchase transactions. The intended effect is clear: new rules treat repurchase agreements as debt and require participating institutions to provide additional financial statement disclosures about repurchase agreement activities. What impact will the stricter rules have on the repurchase transaction market? Federal Reserve data on the repurchase transaction market suggest that the recent changes have decreased repurchase market activity. Remaining questions for practitioners and theoreticians might include the effect that a smaller repo market might have on other credit markets as well as the financial markets as a whole.

Family Migration Policies and Politics

This article aims at characterizing and explaining Swedish family migration policies from a European comparative point of view. The analysis shows that Sweden applies equally strict eligibility rules for members beyond the nuclear family as most other European countries. Moreover, Sweden introduced such stricter rules much earlier than other countries. In other respects, however, Swedish family migration policies stand out as exceptionally liberal in European comparison; few, if any, requirements are imposed on the sponsor and joining family members acquire equal rights status either immediately or 2 years after admission. To explain this situation, the article analyzes political processes behind two important family migration policy decisions in 1997 and 2010. The conclusion is that Swedish welfare state ideology and party politics importantly contribute to understanding why Sweden diverges from European trends in family migration policies.

Direction of Policy Convergence in the EU: The Case of Genetically Modified Maize Labelling Policies

The aim of this article is to contribute to the academic dialogue of policy convergence by examining the direction taken by the policy to label genetically modified maize in the European Union. Considering international harmonisation as the causal mechanism, this article provides a chronological account of policy outputs, understood as directives and regulations related to this policy area. Additionally, there is an analysis of the increase of the degree of policy convergence. Furthermore, different national perspectives on the issue are presented, offering an insight about policy direction in terms of the interaction that governments of member states have between them and with the European Commission. Concomitantly, the direction that policy convergence takes points at strengthening member states’ views of developing stricter rules through time. Subsequently, results demonstrate that policy convergence can appear only with member states’ consent, regardless of the position that regional institutions may have; although they may influence the process to some extent. Nonetheless, this does not mean that the current direction should be taken for granted.

MANAGING FINANCIAL REGULATION: THE REGULATOR'S TOOLKIT, THE ROLE OF PRIVATE ACTORS, AND INTERNATIONALIZATION

The failure to regulate international financial markets in an adequate way is widely understood to be one of the foremost causes of the global financial crisis (e.g. De Larosiere Committee 2009; Financial Services Authority 2009). As the President of the European Commission, Jose Manuel Barroso, stated, ‘The banking crisis exposed the gaps in financial services supervision in Europe. Our market was interdependent, but oversight was purely national’ (European Commission 2010). Regulatory institutions had even created incentives for irresponsible behaviour. For instance, banks were not required to retain on their books part of the securities they issued, over-the-counter (OTC) trading of derivatives was not centrally registered, and hedge funds and private equity firms were not obligated to comply with the capital standards of the Basel II framework. Yet there is also agreement that economic growth requires a regulatory framework that stimulates – rather than suffocates – competition, entrepreneurship, and innovation. Hence, banks worry about the possible negative effects of the regulatory response to the crisis. They fear that economic recovery will be hampered by increased regulation and stricter rules, such as the higher bars for funding and capital levels (Financial Times 2013). Banks also complain about the overlapping of rules and regulators at multiple levels of government, as this adds to complexity and generates uncertainty. For example, to limit

Current issues in legal cases of compensation for healthcare malpractice

The number of medical malpractice lawsuits filed each year in Hungary has considerably increased since 1990. The judicial decisions and practices on determining and awarding wrongful damages recoverable for medical malpractices in the Hungarian civil law have been developing for decades. In the meantime, a new Hungarian Civil Code (Act V of 2013) has entered into force, which among others, necessitates the revaluation of assessment of damages recoverable for medical malpractices. There are two main areas where fundamental changes have been introduced, which may significantly affect the outcome of medical malpractice lawsuits in the future. In the early stage of medical malpractices it was unclear whether the courts had to consider either the contractual relationship between patients and healthcare providers (contractual liability) or general codal articles on damages arising from non-contractual liability/torts (delictual liability) in their judgement delivered in the cases. Both the theoretical and practical experience of the last ten years shows that healthcare services agreements are concluded between healthcare providers and patients with the aim and intention to provide appropriate professional healthcare services to patients, which meet patients' interests and wishes. The medical service is violated if it fails to meet patients' interests and wishes as well as the objectives of the agreement. Since the new legislation implies a stricter liability for damages in the case of breach of contract and stricter rules for exempting the party in breach from compensation obligations, the opportunities to exempt healthcare providers from these obligations have become limited compared to previous regulations. This modification, which was aimed at further integrating the established judicial practices into legislation, stipulates the application of the rules for liability for damages resulting from medical malpractice in non-contractual situations. This paper analyses dogmatic and practical problems related to this topic. Another important area of current analysis is the institution of injury fees, which replaced the reimbursement of non-pecuniary damages. The mere fact of infringement allows setting injury fees. Taking into consideration the current resources in staff and equipment available in healthcare, this regulation may promote claims for injury fees impartial. Consequently, courts will have to apply other criteria when judgment in 'trivial cases', which might not require legal assessment, is delivered.

Implementation of Solvency II and its potential impact on market of insurance companies

The ambition of this article is to demonstrate positives, but also the fall back of the Solvency II and of the delayed and uncoordinated implementation among the national regulators. This article summarizes the trends in insurance market regulation following the introduction and consequent implementation of the Solvency II as a new regulatory framework for the insurance companies. Solvency II represents a critical step in terms of tightening of the regulatory framework for the insurance providers, especially by setting stricter rules for reporting and capital adequacy. On the other hand, Solvency II represent a major risk of increased costs related to implementation of the Solvency II principles in day to day business reporting of the insurance companies potentially harming status quo of the insurance market as the costs related to implementation of Solvency II and their reporting to national regulators.

Finanspagten og issue-linkage inden for eurosystemet

This article claims that the reform negotiations of the euro can only be understood as a form of issue-linkage, where two groups of states (euro-winners and euro-losers) want either stricter rules for state scal behavior (euro-winners) or increased assistance mechanisms in the form of temporary aid packages or permanent transfers for countries hit by asymmetric economic shocks (euro-losers). e two issues were linked in the negotiations in 2011 and 2012, where a quid pro quo was reached, where Germany got ‘its’ Fiscal Compact that strengthened the rules for behavior in exchange for concessions on the transfer issue both in relation to accepting ECB interventions in the market to aid euro-losers facing high interest rates, and the entry into force of the permanent aid mechanism (ESM) a year ahead of schedule. Euro-losers were however only able to link the two issues when they were able to exploit their economic weakness and the risk that market pressure could result in the collapse of the euro. As this pressure has eased in the fall of 2012, the pace of reforms has slowed down, with few indications that further progress will be made on strengthening the transfer side of Economic and Monetary Union any time soon.

Termination of sickness benefits or transition to disability pension after changes in sickness insurance: a Swedish register study

Purpose: To assess whether the changes in Swedish sickness insurance in 2008 were associated with termination of benefits (TOB) or transition to disability pension (DP) for individuals in compensated sick leave of varying duration. Changes were (1) introduction of sick-listing guidelines and (2) stricter criteria for eligibility to disability pension and sickness cash benefit and time limits for the latter. Methods: The study population consisted of 2 556 211 cases of compensated sick leave with onset during 2006–2010 from the Swedish national social insurance registers. TOB and DP were analysed with Cox-proportional hazard regression. Results: After the introduction of sick-listing guidelines, TOB increased for both women [hazard ratio (HR) 1.10] and men (HR 1.07). The additional introduction of stricter rules 4 months later were modestly associated with TOB (HR: women 1.01, men 0.99) and transition to DP among men decreased with stronger associations for spells exceeding 180 days (HR 0.86). For women transition to DP surprisingly increased with stricter criteria (HR 1.09), although this pattern was reversed in sick leave spells exceeding 1 year (HR 0.90). Conclusions: Introducing sick-listing guidelines for different illnesses and diseases could have had a considerable impact on TOB. The additional introduction of stricter eligibility rules and time limits seem to have contributed less to TOB but clearly reduced DP in longer sickness spells.Implications for RehabilitationSick-listing guidelines could be a supportive tool for doctors and sickness insurance administrators in the sick-listing process and reduce unnecessary prolongation of sick leave.Specific time limits in sickness insurance and stricter eligibility rules for disability pensions have an impact on compensated sick leave and the welfare of individuals. This has to be considered in the vocational rehabilitation process in order to enhance sustainable return to work.Changes in sickness insurance could influence the duration and exit from compensated sick leave and such changes needs to be considered in studies of vocational rehabilitation, return to work and disability pension.

“At scale” author name matching with Hadoop/MapReduce

PurposeThe purpose of this paper is to describe a process for extracting and matching author names from large collections of bibliographic metadata using the Hadoop implementation of MapReduce. It considers the challenges and risks associated with name matching on such a large‐scale and proposes simple matching heuristics for the reduce process. The resulting semantic graphs of authors link names to publications, and include additional features such as phonetic representations of author last names. The authors believe that this achieves an appropriate level of matching at scale, and enables further matching to be performed with graph analysis tools.Design/methodology/approachA topically‐focused collection of metadata records describing peer‐reviewed papers was generated based upon a search. The matching records were harvested and stored in the Hadoop Distributed File System (HDFS) for processing by hadoop. A MapReduce job was written to perform coarse‐grain author name matching, and multiple papers were matched with authors when the names were very similar or identical. Semantic graphs were generated so that the graphs could be analyzed to perform finer grained matching, for example by using other metadata such as subject headings.FindingsWhen performing author name matching at scale using MapReduce, the heuristics that determine whether names match should be limited to the rules that yield the most reliable results for matching. Bad rules will result in lots of errors, at scale. MapReduce can also be used to generate or extract other data that might help resolve similar names when stricter rules fail to do so. The authors also found that matching is more reliable within a well‐defined topic domain.Originality/valueLibraries have some of the same big data challenges as are found in data‐driven science. Big data tools such as hadoop can be used to explore large metadata collections, and these collections can be used as surrogates for other real world, big data problems. MapReduce activities need to be appropriately scoped so as to yield good results, while keeping an eye out for problems in code which can be magnified in the output from a MapReduce job.