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The purpose of this paper is to review the development of the Capital Requirements Directive (CRD) and examine the manner in which this has been implemented for investment firms in Malta. The paper also assesses the challenges that small and medium‐sized investment firms may face as a consequence of the proposed CRD IV, which seeks to safeguard the stability of the European banking sector.

A literature review of relevant EU and Malta legislation and policy documents has been carried out. The arguments made in the paper are the result of the author's reflections on the subject and discussions held with other policy experts on capital adequacy in Malta and the UK.

The paper considers the CRD from the perspective of small and medium‐sized investment firms and sheds light on the challenges faced by Malta with regards to the implementation of the CRD for these type of firms. It also examines the approach taken by the Malta Financial Services Authority in order to address these challenges.

Possible future challenges that might arise in view of CRD IV are also considered. It is a central argument of this paper that capturing investment firms, particularly small and medium‐sized firms, within the scope of regulation, the main purpose of which is to address systemic risk, may result in over‐regulation.

Basel II and the EU CRD introduce, for the first time, specific Operational Risk requirements for credit institutions and investment firms. With less than 2 years available to prepare for the introduction of the simpler Operational Risk approaches, some firms would find it useful for the FSA to prescribe specific detailed Operational Risk standards that could be taken into account whilst preparing for the implementation of the EU Directive. However a variety of considerations, including differences between firms in terms of size, scale of activity and complexity and uncertainties over the final version of the Directive, will prevent the FSA from prescribing a detailed range of qualitative Operational Risk standards. This paper seeks to identify the general Operational Risk standards currently embodied in the Basel and EU documents and to distil these standards into ten qualitative Operational Risk elements that are likely to be considered by the FSA as part of any assessment of a firm's Operational Risk framework. Given the variables and uncertainties that will impact on the FSA's expectations for specific firms this paper reflects the authors' views and not the corporate views of the FSA.

The purpose of this paper is to explain a new directive of the European Union adopted by the European Parliament on May 6 that governs, among other things, the amount of capital that banks and other credit institutions are required to hold in respect of credit risk.

The paper explains the background to the 5 percent retention agreement, outlines provisions of the new Article 122a, explains exemptions to the 5 percent retention, and discusses additional requirements for investing and originating credit institutions.

The amended Capital Requirements Directive requires investing credit institutions to demonstrate to their regulators that they understand the risks and valuations of their securitization positions, and have detailed performance and monitoring systems in place. Originators and sponsors will also have to comply with significant new disclosure rules, and originators will be required to align their lending criteria for securitized exposures with loans made for their own banking book. Further amendments are in prospect.

The paper presents practical guidance by experienced securities lawyers.

The purpose of this paper is to examine the complexities of reorganizing and/or liquidating troubled banks under the European Union's (EU) current institutional framework as it is defined by its directives and by national supervisory, remedial, and insolvency practices.

The paper compares provisions of different EU directives that impact financial institutions and summarizes national remedial practices.

The paper documents the diversity that currently exists among national supervisory, remedial and failure resolution practices for banks. It also assesses the economic efficiency of the institutional framework for resolving problem banks that is defined by the Reorganization and Winding‐up Directive and identifies components of the directive that can hamper efficient cross‐border resolutions.

There is a deficiency in publicly available information on EU member countries' practices for disciplining and resolving troubled banks.

The paper assesses issues/conditions that can hamper efficient cross‐border resolutions – issues on which policymakers should focus when they reform the current framework. It also explores areas of coordination with other EU directives that deal with financial crisis management that are relevant in the current financial crisis.

The paper makes policy recommendations for reforming the EU's current institutional framework for resolving troubled banks.

Introducing radical changes to the methodologies for the determination of capital requirements, the final stage of the Basel III standards, which is referred to as “Basel IV” by the industry, will be a significant challenge for the global banking sector. This article reviews the main components of the new framework, analyses its ongoing implementation in the European Union and discusses its potential impact on banks, putting forward policy recommendations.

This article uses primary sources such as the publications by the Basel Committee for Banking Supervision and the European Commission. It also reviews the secondary sources, including both academic articles and analyses by various stakeholders. However, this article does not undertake any empirical analysis.

This article discusses that Basel IV will introduce strategic, operational and regulatory challenges for banks in scope. It also identifies a number of areas which are subject to further debate in the European Union such as the enhanced due diligence requirements under the new credit risk framework; governance, reporting and control rules under the operational risk framework; exemptions for certain derivative transactions under the credit valuation adjustment framework and the level of application of the capital floors within banking groups. This article concludes that the global implementation of the reforms by all jurisdictions and transposition into national banking laws concurrently with the European Union in line with the Basel Committee's implementation timeline is important from a financial stability standpoint.

The article presents an up-to-date and comprehensive review of the practical implications of Basel IV standards. It analyses the implementation of the standards in the case of the European Union, reviews the potential policy implications and presents recommendations for risk management practitioners.

This paper aims to investigate whether enhanced requirements result in the depositories exiting the business. Furthermore, this paper attempts to analyse prospective changes to the operating structures caused by the Alternative Investment Fund Managers Directive (AIFMD). Most importantly, this paper discusses the processes to evaluate and manage counterparty risk relating to prime brokers. AIFMD makes fundamental changes to the depository liability and managing counterparty risk by making a depository bank liable for any losses to investor assets, even those held within third-party custodians appointed by the depository. Depositories will also need to calculate the probability of default of their sub-custodians and use complex credit models to calculate any capital requirements under the fourth Capital Requirements Directive (CRD IV).

This paper is based on an insightful secondary analysis of the AIFMD with practical implications drawn for depository banks. The analysis of this topical research has been broken down into the following sections: assessing and managing counterparty risk of prime brokers; insurance against defaults of prime brokers; and regulatory-driven challenges and changes to depository banks.

The post-Lehman banking industry has realised that counterparty risk cannot be ignored. This has triggered heated debates among regulators and practitioners whereby any depository bank should clearly separate the assets of its clients from the depository assets and its own assets. This paper argues that the custodian services will witness consolidation with the big players remaining and small custodians forced to leave the business in light of the enhanced liabilities under the AIFMD. In addition to this, this paper has stressed that assessing counterparty risk should be supported by an insightful analysis of the culture of a prime broker; its legal, structural and regulatory safeguards; and quality of assets. Moreover, managing risks associated with prime brokers entails significant costs to depositories. Thus, depository banks are advised to factor these costs into their pricing models.

Given the magnitude of recent regulatory initiatives and complex challenges faced by depositories, an important question arises whether depository banks would exit the business in light of the regulatory-induced liabilities. This paper addresses the aforementioned question and provides practical implications into managing emerging risks by depository banks. At this point, the majority of depositories are in a process of developing in-house solutions for managing risks related to prime brokers, and hence would benefit from practical insights into these processes that are provided in this paper.

The purpose of this paper is not only seek to trace developments that have contributed to the importance of risk in regulation, but also to justify why risk has become so significant within regulatory and governmental circles.

This task will be facilitated through a consideration of theories associated with risk, and by reference to two forms of risk regulation, namely risk‐based regulation and meta regulation. As well as a consideration of the application of both in jurisdictions such as the UK, the paper adopts a comparative approach through references to the their application in jurisdictions such as Germany, Italy, and the USA, and also through a comparison between meta‐regulatory strategies and risk‐based regulation.

This paper concludes that all regulatory strategies should take into consideration the importance of management responsibilities – both on individual and corporate levels. Meta‐risk regulation has not only assumed such a prominent position in regulation through its application in Basel II, but also is preferred to risk‐based regulation – not only because of the element of ambiguity which risk‐based regulation introduces into its assessment (through a consideration of the external environment of the firm), but also because of its impact of the use of external auditors in regulation and supervision.

The practical implications of a move towards risk‐based regulatory strategies, and meta‐regulatory strategies in particular, is that courts are simply not adequately equipped to deal with the pace with which some financial instruments, such as derivatives, operate.

This paper not only introduces originality through its comparative approach and the choice of jurisdictions involved, but also through the attention it draws to the need for more innovative techniques such as meta regulation. Meta regulation can be considered to be the most evolved and collaborative form of regulation, which is best suited for such an ever‐evolving and changing regulatory environment that currently exists.

The aim of the paper is to provide a review of potential Britain’s exit from the European Union (EU) and its implication on financial markets regulation in the EU and UK. It explores the terrain for financial markets regulation in the EU, pointing out how it impinges on the national legal system of EU countries and what it could mean for the UK. It navigates the legal reforms the UK will have to undertake to fill the void caused by its exit from the EU. Lastly, the paper proffers its thoughtful analysis of the reform to undertake if the UK exited the EU, both in the UK and the EU.

The paper has internalized empirical data generated by different interest groups on the implication of potential British exit from the EU on markets and other core issues which underpin the UK/EU relationship. These data were available in most major UK newspapers, academic journals and textbooks, especially in expositing conceptual and theoretical issues underpinning the paper. It has drawn comparisons with other jurisdictions, especially in East Africa, to demonstrate the inherent challenges in integration of regional markets on individual member countries. The paper also articulates other regulatory issues such as mutual recognition and the cost of Brexit on businesses in the EU/UK.

The findings of the paper confirm that British interests are likely to be better protected if it remains the member of the EU but could be undermined if it relinquishes its membership. Studies have been carried out by academic think tanks and the International Monetary Fund (IMF), and they all indicate that British exit from the EU could be counterproductive for the UK. Contemporary global challenges need global solutions, thus Britain will still need to forge alliance with EU countries.

The limitation of the paper was that there are not many comparative studies carried out on countries which have exited regional market initiatives and their experiences after that. The paper has alluded to the experience of Uganda, which quit the East African Community (EAC) in 1977 and rejoined it 23 years later. In a crucial issue like Brexit, the paper would better evaluate the potential Brexit is drawing on experiences of countries which have exited and how they have fared after that. There were not many comparable case studies on countries which have exited regional markets.

The paper discusses important practical issues relating to Brexit and its implications on the UK/EU government and economies. It is practical because it weighs in on important policy and legal issues on regulation of markets in the post-Brexit era in the UK and EU. As the UK government goes for a referendum to decide its future relationship with EU, it will need to evaluate its decisions by internalizing academic literature on Brexit, such as this paper.

The paper has social implications because Brexit will affect people and markets in varied ways. It addresses pertinent issues related to the UK and its implication in the post-Brexit era on the UK/EU economies.

The paper is timely, original and a must read because it discusses pertinent issues of the potential British exit and its implication for the UK and other stakeholders in a distinctive way.