1. Prof. Eric De Keuleneer Prof. Pierre Francotte Eric Boyer de la Giroday (Chairman, ING Belgium) Year: 2014-15 FIELD PROJECT FINANCIAL MARKETS AND SERVICES (ECON S-532) 1

2. Field Project - General You have to register for one Field Project. Choice between: – European Regulation/ECONS-533 – European and International Business/GESTS-543 – Financial Markets and Services/ECONS-532 Deadline for registration: Wednesday 11/2. 2

3. Purpose of Field Projects Put you in a context similar to a stage in a company either as an employee or as a consultant: – produce and present a team report containing analyses and recommendations. – produce two individual summary notes (1 page). Help you learn how to prepare a report, like in a real professional environment, including: – how to interact with your « employer » – how to work in team with « colleagues » under set deadlines – how to produce a report and make a presentation that meet the objectives of your audience. 3

4. Real life setting An important facet of what you will learn is to manage the complexities of operating in an uncertain environment and limited control over time and resources, such as: – Managing expectations of an « employer » (Professor), – Working with colleagues (fellow students in your team or other teams) who can help or hinder your objectives, – Seeking to analyse situations: with incomplete or uncertain information and data, and yet... having to formulate useful conclusions and... make clear recommendations, within a timetable that is typically constrained. 4

5. FP Theme: Unintended Consequences “Unintended consequences of actions or regulations by EU authorities.” 8 different topics in financial field (cf below). Objective is to have you: – think beyond the obvious, – do it with intellectual rigour, and – develop feasible solutions. 5

6. Topics Topic New banking regulationHigh Frequency Trading SIFIsAsset Managers Solvency IICCP Regulation LIBOR/ForexTrading Venues 6

7. 1. The new banking regulatory environment The financial crisis has triggered a vast range of changes in regulation and supervision of banks. These changes clearly aim at making financial intermediation safer and avoid the disasters experienced. Has enough or too much been done and what consequences can be expected from macro and micro economic point of views? 7

8. 2. SIFIs Big is not necessarily beautiful, but small is not enough. Taking a critical look at regulations more specifically affecting SIFIs (Systemically Important Financial Institutions), is it serving its purpose without negative consequences? 8

9. 3. Solvency II regulation The insurance sector in Europe is confronted to a major change in regulation. This regulation will have substantial impacts on assets holding and allocation in insurance companies and beyond the sector. For the better or the worst? 9

10. 4. LIBOR/Forex scandals Several large banks have recently been heavily sanctioned for their role in the setting of reference rates. Conspiracy, isolated cases or methodological shortfall? Given the requirement for such reference rates, what should be done to ensure relevance, objectivity and absence of economic rent? 10

11. 5. High Frequency Trading HFT has become a main feature of stock and derivative exchanges. It has been villified by some and defended by others, but in any case regulation is on the way. What positive and negative impact could this regulation have beyond what the policy-makers expect? 11

12. 6. Regulation of Asset Managers There has been a flurry of new regulations on asset managers, whether UCIT funds or alternative investment managers. It is expected by policy-makers to strengthen financial stability and improve customer protection. What are possible unintended consequences and should we worry bout them? 12

13. 7. CCP Regulation Central counterparties are playing a key role in the new regulatory framework, whether for derivatives or bonds/equities. This increased role is designed to reduce risk in the market. How has the regulation of CCPs been calibrated and have all key consequences been sufficiently assessed? 13

14. 8. Trading venues regulation MiFID sought to create more competitition for exchanges by new « trading venues» so as to improve services and reduce prices. It had some unintended consequences, which prompted the adoption of MiFID II. What other unintended consequences could emerge from MiFID II and has a proper balance now been found? 14

15. FP Structure Group report and presentations (February-April) – 8 groups, each examining one topic, with support from either EB or PF Lectures and Individual Notes (end April-May) – 4-5 lectures where lessons of the topics of reports are examined in greater depth, examining transversal implications. – Each student must produce two 1-page notes on topics discussed in class. 15

16. Report and presentation Your final output is a written report and an oral presentation of the report to a panel that includes your professors and some external experts, in front of the whole class. You will prepare an outline and get input from your Professor on a draft of this outline so as to ensure you are on the right track. 16

17. Output of teams Each team will have to: – prepare an outline – submit a report – make an oral presentation with the support of a power point presentation. 17

18. But with individual input Each member of the team will have to: – take the lead in a specific part of the report – present the corresponding part to the panel – answer specific questions from panel. 18

19. Outline 3-page note. Must include: – basic storyline of the report, – preliminary « selected » bibliography, and – next steps for work to be done and timetable. To be submitted to Professor by Friday, 27/02. 19

20. Report Max 15-page paper (excluding bibliography). Must provide analysis of issues and articulate conclusions based on scientific analysis and research. – Not a « journalistic » description. – Master thesis methodology. Final draft submitted to Professor by Monday 13/04. Final paper circulated to all students by Friday 17/04. 20

21. Presentation Each team will make a presentation – summarizing key points of the report, – supported by a power point presentation. Presentation to a panel playing the role of « decision-maker » on analysis. Presentation in front of full class. – Probing questions from panel/audience like in a real life professional environment. Presentations on 22/04 and 29/04. 21

22. Grading Your grade will be based on the report and the individual notes. Report: – the outline, – the report, – the oral presentation and supporting PPT Assessed like in a real life working environment: – the technical substance of the output, but also – the quality of the argumentation (how convincing, presentation, structure, etc), – autonomy from the Professor and effectiveness of interaction with teammates in the preparation, and – ability to meet deadlines. 22

23. Timetable - Class Dates: – February 4: Introduction – February 11: Follow up and launch of Group Reports – April 22: Oral Presentations – April 29: Oral Presentations – May 6: Lecture 1 – May 13: Lecture 2 – May 20: Lecture 3 – May 27: Lecture 4 Attendance required (individual notes). 23

24. Next steps Team composition will be confirmed by Wednesday 11/2 – No pre-constituted groups – Composition organised by professors – Each student may express individual preference for up to 3 topics indicating order of preference if more requests than slots, selection will be made by luck of the draw. 24

25. Contact E-mail address Pierre Francotte: pierre.l.francotte@gmail.com or pfrancot@ulb.ac.be Website: francotte.wordpress.com 25