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Current research projects

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Liquidity and stress testing requirements in Asset Management:

  • Assessment of the Financial Stability Board’s policy recommendations to address structural vulnerabilities in the asset management industry.

Liquidity regulatory requirements in banking:

  • What is market liquidity?
  • Is the Basel III approach correct?
  • Unintended consequences of the current regulatory framework.

Regulation of derivatives:

  • Dodd–Frank (titles VII and VIII): more financial stability or moral hazard?
  • American regulation of OTC derivative markets
  • European regulation on speculation in the OTC derivative markets (ESMA)

Researchers interested to collaborate, should contact us at: frc@ufm.edu

 

 

FRC Position Papers

FRC’s first achievement in support of sustainable asset management

In 2015 a new regulation was proposed by the Financial Stability Board (FSB) to increase oversight on ‘too big to fail’ asset managers.

In response to such proposal, the FRC published its first position paper (” The Systemic importance of large Asset Managers and Investment Funds”) which strongly criticized the proposed measures.

The paper has been invited for presentation to the University of Oxford, the Financial Conduct Authority, the American Economic Association, and the Public Choice Society. The paper was also listed on SSRN’s Top Ten download list for ERN: Systemic Risk and ERN: Banking & Monetary Policy

In 2016 the FSB abandoned plans to designate certain asset managers or funds as “systemically important” after a strong pushback from the industry.

Download the paper here.

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The Journal of New Finance

The Finance Research Center launches The Journal of New Finance

Mainstream Modern Finance has been challenged by the 2007-08 crisis and is undergoing a paradigm crisis. We are also observing the inability of the tools used by standard macroeconomics to provide reliable forecasts. In both disciplines, critics have started a disorganized offensive, but for the moment orthodoxy still rules.

Regulators have also admitted the inadequacy of the pre-crisis regulatory environment. Still, in order to address the crisis and guarantee financial stability in the future, they have added stacks of new requirements based on the theories belonging to Modern Finance. What are the certainties that the same flaws that led to error ten years ago, are not at work today?

We believe that an ambitious research program should make standard practice the analysis of the failures of the discipline, emphasizing the model flaws and the potential unintended consequences.

After all, Cliff Asness warned that: “Making people understand that there is a risk (and a separate issue, making them bear that risk) is far more important, and indeed far more possible than making a riskless world. And if I may go further, trying to create and worse, giving the impression you have created, a riskless world makes things much more dangerous.”

Download here the prototype of the first issue.