Capital adequacy regulation of financial conglomerates in the European Union

Over the past few decades, changes in market conditions such as globalisation and deregulation of financial markets as well as product innovation and technical advancements have induced financial institutions to expand their business activities beyond their traditional boundaries and to engage in cross-sectoral operations. As combining different sectoral businesses offers opportunities for operational synergies and diversification benefits, financial groups comprising banks, insurance undertakings and/or investment firms, usually referred to as financial conglomerates, have rapidly emerged, providing a wide range of services and products in distinct financial sectors and oftentimes in different geographic locations. In the European Union (EU), financial conglomerates have become part of the biggest and most active financial market participants in recent years. Financial conglomerates generally pose new problems for financial authorities as they can raise new risks and exacerbate existing ones. In particular, their cross-sectoral business activities can involve prudentially substantial risks such as the risk of regulatory arbitrage and contagion risk arising from intra-group transactions. Moreover, the generally large size of financial conglomerates as well as the high complexity and interconnectedness of their corporate structures and risk exposures can entail substantial systemic risk and can therefore threaten the stability of the financial system as a whole. Until a few years ago, there was no supervisory framework in place which addressed a financial conglomerate in its entirety as a group. Instead, each group entity within a financial conglomerate was subject to the supervisory rules of its pertinent sector only. Such silo supervisory approach had the drawback of not taking account of risks which arise or aggravate at the group level. It also failed to consider how the risks from different business lines within the group interrelate with each other and affect the group as a whole. In order to address this lack of group-wide prudential supervision of financial conglomerates, the European legislator adopted the Financial Conglomerates Directive 2002/87/EC8 (‘FCD’) on 16 December 2002. The FCD was transposed into national law in the member states of the EU (‘Member States’) by 11 August 2004 for application to financial years beginning on 1 January 2005 and after. The FCD primarily aims at supplementing the existing sectoral directives to address the additional risks of concentration, contagion and complexity presented by financial conglomerates. It therefore provides for a supervisory framework which is applicable in addition to the sectoral supervision. Most importantly, the FCD has introduced additional capital requirements at the conglomerate level so as to prevent the multiple use of the same capital by different group entities. This paper seeks to examine to what extent the FCD provides for an adequate capital regulation of financial conglomerates in the EU while taking into account the underlying sectoral capital requirements and the inherent risks associated with financial conglomerates. In Part 1, the definition and the basic corporate models of financial conglomerates will be presented (I), followed by an illustration of the core motives behind the phenomenon of financial conglomeration (II) and an overview of the development of the supervision over financial conglomerates in the EU (III). Part 2 begins with a brief elaboration on the role of regulatory capital (I) and gives a general overview of the EU capital requirements applicable to banks and insurance undertakings respectively. A delineation of the commonalities and differences of the banking and the insurance capital requirements will be provided (II). It continues to further examine the need for a group-wide capital regulation of financial conglomerates and analyses the adequacy of the FCD capital requirements. In this context, the technical advice rendered by the Joint Committee on Financial Conglomerates (JCFC) as well as the currently ongoing legislative reforms at the EU level will be discussed (III). The paper finally closes with a conclusion and an outlook on remaining open issues (IV)

Calculation of subsonic and supersonic steady and unsteady aerodynamic forces using velocity potential aerodynamic elements

Expressions for calculation of subsonic and supersonic, steady and unsteady aerodynamic forces are derived, using the concept of aerodynamic elements applied to the downwash velocity potential method. Aerodynamic elements can be of arbitrary out of plane polygon shape, although numerical calculations are restricted to rectangular elements, and to the steady state case in the supersonic examples. It is suggested that the use of conforming, in place of rectangular elements, would give better results. Agreement with results for subsonic oscillating T tails is fair, but results do not converge as the number of collocation points is increased. This appears to be due to the form of expression used in the calculations. The methods derived are expected to facilitate automated flutter analysis on the computer. In particular, the aerodynamic element concept is consistent with finite element methods already used for structural analysis. The method is universal for the complete Mach number range, and, finally, the calculations can be arranged so that they do not have to be repeated completely for every reduced frequency

Multimodal Affective Feedback: Combining Thermal, Vibrotactile, Audio and Visual Signals

In this paper we describe a demonstration of our multimodal affective feedback designs, used in research to expand the emotional expressivity of interfaces. The feedback leverages inherent associations and reactions to thermal, vibrotactile, auditory and abstract visual designs to convey a range of affective states without any need for learning feedback encoding. All combinations of the different feedback channels can be utilised, depending on which combination best conveys a given state. All the signals are generated from a mobile phone augmented with thermal and vibrotactile stimulators, which will be available to conference visitors to see, touch, hear and, importantly, feel

Phase stability and oxygen transport properties of mixed ionic-electronic conducting oxides

The application of mixed ionic-electronic conducting oxides as oxygen separation membrane for the production of oxygen offers significant advantages over conventional cryogenic distillation. Perovskite- and fluorite-type oxides are promising candidates for such application. The research described in this thesis is mainly focused on i) crystal chemistry and phase stability of either Zr- or Nb-substituted Ba0.5Sr0.5Co0.8Fe0.2O3-¿ (BSCF), and those of the parent perovskite phase, and ii) oxygen surface exchange kinetics of selected perovskite- and fluorite-type oxides

Monolithic arrays of surface emitting laser NOR logic devices

Monolithic, cascadable, laser-logic-device arrays have been realized and characterized. The monolithic surface-emitting laser logic (SELL) device consists of an AlGaAs superlattice lasing around 780 nm connected to a heterojunction phototransistor (HPT) in parallel and a resistor in series. Arrays up to 8×8 have been fabricated, and 2×2 arrays show uniform characteristics. The optical logic output is switched off with 40 μW incident optical input

Monolithic arrays of surface emitting laser NOR logic devices

Monolithic, cascadable, laser-logic-device arrays have been realized and characterized. The monolithic surface-emitting laser logic (SELL) device consists of an AlGaAs superlattice lasing around 780 nm connected to a heterojunction phototransistor (HPT) in parallel and a resistor in series. Arrays up to 8×8 have been fabricated, and 2×2 arrays show uniform characteristics. The optical logic output is switched off with 40 μW incident optical input

Policies And International Integration: Influences On Trade And Foreign Direct Investment

This paper assesses the importance of border and non-border policies for global economic integration. The focus is on four widely-advocated policies: removing explicit restrictions to trade and FDI; promoting domestic competition; improving the adaptability of labour markets; and ensuring adequate levels of infrastructure capital. The analysis covers FDI and trade in both goods and services, thus aiming to account for the most important channels of globalisation and dealing with most modes of cross-border services supply. It first describes trends in trade, FDI and the four sets of policies using a large set of structural policy indicators recently constructed by the OECD, including the new summary indicators for FDI-specific regulations described in Golub (2003). It then estimates the impact of policies on bilateral trade and bilateral and multilateral FDI. The results highlight that, despite extensive liberalisation over the past two decades, there is scope for further reducing policy barriers to integration of OECD markets. Remaining barriers have a significant impact on trade and FDI, with anticompetitive domestic regulations and restrictive labour market arrangements estimated to curb integration as much as explicit trade and FDI restrictions. Simulating the removal of such barriers suggests that the quantitative effects of further liberalisation of trade, FDI and domestic product and labour markets on global integration could be substantial

Computational Fluid Dynamics Analysis of the Stall Characteristics of a Wing Designed Based on Prandtl's Mininum Induced Drag

Stall characteristics of a wing designed based on Prandtls minimum induced drag solution using the bending moment as the design constraint is presented. Flow field is resolved using the Reynold-Averaged Navier Stokes solver OVERFLOW, version 2.2l, with fully turbulent flow approximation. The turbulence was resolved using the Spalart-Allmaras turbulence model with rotational and curvature correction. Grid independence study show acceptable grid resolution is achieved. The stall angle-of-attack was predicted at 17.25. CFD analysis show that large separations begins inboard, near the symmetry plane, and exists at stall. However, the separated region remain localized and the flow at the wing tip remain attached

Cell death regulation in Drosophila: Conservation of mechanism and unique insights

Programmed cell death, or apoptosis, is a genetically encoded form of cell suicide that results in the orderly death and phagocytic removal of excess, damaged, or dangerous cells during normal development and in the adult. The cellular machinery required to carry out apoptosis is present in most, if not all cells, but is only activated in cells instructed to die (for review see Jacobson et al. 1997). Here, we review cell death regulation in the fly in the context of a first pass look at the complete Drosophila genome and what is known about death regulation in other organisms, particularly worms and vertebrates

Depressed clad hollow optical fiber with fundamental LP01 mode cut-off

We propose a depressed clad hollow optical fiber with fundamental (LP01) mode cut-off suitable for high power short-wavelength, especially three-level, fiber laser operation by introducing highly wavelength dependent losses at longer wavelengths. The cut-off characteristic of such fiber structure was investigated. A Yb-doped depressed clad hollow optical fiber laser generating 59.1W of output power at 1046nm with 86% of slope efficiency with respect to the absorbed pump power was realised by placing the LP01 mode cut-off at ~1100nm