BRANDON BECKER, STUART KASWELL, JUDY POPPALARDO and CHERIE MACAULEY
The growth of new trading opportunities, advances in technology, and investor interest in fast, cheap execution have all challenged the dominance of traditional exchanges and…
Abstract
The growth of new trading opportunities, advances in technology, and investor interest in fast, cheap execution have all challenged the dominance of traditional exchanges and encouraged the development of alternative trading systems. This article explores the vigorous debate among market participants that has ensued, and outlines their various positions on how these developments should impact the existing regulatory structure.
BRANDON BECKER, YOON‐YOUNG LEE and FRANCA HARRIS
This article gives an in‐depth examination of the Securities and Exchange Commission's new Regulation S‐P. This rule implements the privacy requirements of last year's financial…
Abstract
This article gives an in‐depth examination of the Securities and Exchange Commission's new Regulation S‐P. This rule implements the privacy requirements of last year's financial modernization legislation, better known as the Gramm‐Leach‐Bliley Financial Services Modernization Act. That legislation contains a Title designed to protect the financial privacy of consumers. Regulation S‐P is the SEC's Implementation of that provision. The authors walk the reader through this regulation and its application in some detail. You cannot practice in this industry without a familiarity of Regulation S‐P. This article will take you very far along that path.
Brandon Becker, Mark S. Shelton and Cathy H. Ahn
On June 27, 2002, the Second Circuit Court of Appeals ruled in Caiola v. Citibank, N.A. (Caiola II) that cash‐settled options are “securities” under Section 3(a)(10) of the…
Abstract
On June 27, 2002, the Second Circuit Court of Appeals ruled in Caiola v. Citibank, N.A. (Caiola II) that cash‐settled options are “securities” under Section 3(a)(10) of the Securities Exchange Act of 1934 (Exchange Act). In doing so, the Second Circuit disagreed with the Southern District of Ohio and the lower Caiola court (Caiola I), both of which took the position that certain cash‐settled options based solely on the value of a security were not securities because they “did not give either counterparty the right to exercise an option or to take possession of any security”. The Court adopted the Securities and Exchange Commission’s (SEC) view, widely supported in the securities bar, that “neither the right to take possession of any security nor the right to choose whether to exercise a necessary feature of an option on a security”.
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Brandon Becker, Bruce H. Newman, Andre Owens, Soo J. Yim and Christie Oberg
The purpose of this paper is to discuss the implications of a recent SEC settlement with Morgan Stanley & Co. (MS & Co.) with regard to: communication and coordination among…
Abstract
Purpose
The purpose of this paper is to discuss the implications of a recent SEC settlement with Morgan Stanley & Co. (MS & Co.) with regard to: communication and coordination among legal, compliance, business, and technology departments when designing, implementing, and maintaining operating systems and compliance policies and procedures; and the SEC's view of best execution in the context of net trading and market making.
Design/methodology/approach
The paper describes the Settlement Order. Itdiscusses, in light of the Order, the need for firms to coordinate among departments when they implement new systems or make changes to new systems; and provides a legal and regulatory analysis of the basis for MS & Co.'s liability, including a brief history of regulations on best execution and riskless principal trading. It also offers principal lessons to be drawn.
Findings
The Settlement Order found that MS & Co. would at times execute with the Street at a better price than it provided to a customer. The SEC noted that MS &Co. violated its duty of best execution in violation of the 1934 Exchange Act but particularly emphasized that the practice was inconsistent with MS & Co.'s established internal policies and procedures and certain disclosures provided by the firm to third‐party broker‐dealers from which it received orders.
Practical implications
Broker‐dealers need to clearly define their processes for implementing new systems or changing existing systems, including approval requirements, responsible individuals, and periodic review procedures to ensure adherence to stated policies and procedures. Broker‐dealers need to disclose net trading practices or similar trading practices to other broker‐dealers that are routing orders to them. They should also review their net trading practices in light of Regulation NMS.
Originality/value
The paper provides practical guidance and review of regulations concerning net trading, riskless principal trading and best execution from experienced securities lawyers.
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Brandon Becker, Elizabeth K. Derbes, Russell J. Bruemmer, Franca Harris Gutierrez and Martin E. Lybecker
The purpose of this paper is to summarize and provide commentary on the US Department of Treasury's Blueprint for a Modernized Financial Regulatory Structure, issued on March 31…
Abstract
Purpose
The purpose of this paper is to summarize and provide commentary on the US Department of Treasury's Blueprint for a Modernized Financial Regulatory Structure, issued on March 31, 2008.
Design/methodology/approach
The paper summarizes and comments on the short‐, intermediate‐, and long‐term recommendations laid out in the Blueprint. The short‐term recommendations are to modernize the President's Working Group on Financial Markets, principally by broadening its focus to include the entire financial sector; to address gaps in mortgage origination oversight, principally though creating a federal Mortgage Origination Commission; and to enhance the Federal Reserve Board's current temporary liquidity provisioning process. The Treasury's intermediate‐term recommendations are intended to modernize the regulatory structure and to eliminate duplication. They are to phase out and transition the thrift charter to the national banking charter; to merge the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC); to establish a uniform, comprehensive regulatory system for, and create a federal charter for, “systemically important” payment and settlement systems; and to create an optional federal charter for insurers. The Blueprint's long‐term optimal regulatory structure envisions an “objectives‐based” regulatory approach in which three primary regulators would be established to focus individually on market stability regulation, prudential financial regulation and business conduct; three types of charters for financial institutions: federal insured depository institutions, federal insurance institutions, and federal financial services providers; the Federal Reserve Board assuming the role of market stability regulator; a prudential federal regulatory agency to regulate financial institutions with some type of explicit government guarantee associated with their business operations; and a conduct‐of‐business regulatory agency to regulate the business conduct of all financial institutions. In addition to the three objectives‐based regulators, the Blueprint recommends establishing two other regulatory entities: a federal insurance guarantee corporation and a corporate finance regulator.
Findings
The Blueprint finds that substantial regulatory reform is necessary to respond to significant developments including globalization of the capital markets, innovative and sophisticated new financial products and trading strategies, growing institutionalization of the capital markets, and convergence of financial service providers and financial products. Among the areas where one may see action and debate in the near future are: broadening the scope and membership of the President's Working Group on Capital Markets, adoption of uniform minimum licensing standards and the creation of a mortgage origination commission, further discussion of the terms and conditions attached to non‐depository institutions' access to the Federal Reserve discount window, continuing debate around the possible merger of the SEC and the CFTC, and updating by the SEC of the self‐regulatory organization (SRO) rule‐making process.
Originality/value
The paper is a clear and concise summary with commentary from expert securities lawyers.
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Deborah Smart, Lucy Jane Henshall and Libby Oldham
This chapter intends to provoke thought around assumptions about young people providing care, what influences how young carers are perceived and how stigma and judgement…
Abstract
This chapter intends to provoke thought around assumptions about young people providing care, what influences how young carers are perceived and how stigma and judgement associated with caring are discussed. We conclude by emphasising the significance of the role as an educator in creating discussion about the breadth and diversity of care experiences. This role includes both educating young people about young caring and being mindful that your students may currently be or previously been a young carer.
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Khalid Ballouli, Jason Reese and Brandon Brown
Although current literature offers support for understanding sport consumer behavior from psychological and sociological perspectives, there is a lack of research that examines…
Abstract
Purpose
Although current literature offers support for understanding sport consumer behavior from psychological and sociological perspectives, there is a lack of research that examines the effect of one’s emotional response to team outcomes on subsequent economic decisions. The purpose of this paper is to bridge this gap by studying how emotional responses to sport events moderate a typical endowment bias in the secondary ticket market.
Design/methodology/approach
This research comprised a 3×2×2 between-participants design with emotional state (positive, negative, and neutral), role (seller, buyer), and fan identification (high, low) as the three factors. Prospect theory and social identity theory guided hypothesis development whereby it was proposed that, depending on the affective response of study participants to positive, negative, or neutral publicity concerning the team, team identification would impact the transaction function (buyers vs sellers) on price values for tickets to a future event.
Findings
Findings revealed an interaction effect of emotions and team identification on the endowment effect to the extent that bargaining gaps between sellers and buyers increased or decreased depending on mood states and levels of identification with the team.
Originality/value
This study adds to the literature on emotions and the key role they play in effecting pricing decisions and consumer behavior, especially given fan identification is such a significant area of study with numerous implications for sport business and management.