Professor Emilios Avgouleas is the inaugural holder of the International Banking Law and Finance Chair at the University of Edinburgh. He is the director of the inter-disciplinary LLM in International Banking Law and Finance. Emilios is a qualified lawyer with many years of practice in the field of global markets.
As an academic he is an acknowledged expert on financial market regulation, banking law and finance, and global economic governance. Emilios has published extensively in the wider field of International and European finance law and economics and behavioural finance. He is the author of a large number of scholarly articles and of two monographs: Governance of Global Financial Markets: The Law, the Economics, the Politics (Cambridge, 2012); The Mechanics and Regulation of Market Abuse: A Legal and Economic Analysis (Oxford, 2005). He co-authors with Sir Ross Cranston of the forthcoming edition of Principles of Banking Law (Oxford, 2014). Emilios also acts as an external examiner for a substantial part of the LSE LLM programmes.
Emilios' work has been cited in financial market policy reports and impact studies published by the EU Commission, the House of Lords - EU Committee, and the Irish Commission on Banking. He has frequently given evidence before Parliamentary and government Committees both in the UK and abroad.
On 27 September 2013 Emilios co-organized with the SG chief economist the Edinburgh High Level Workshop on the Future of the European Financial Services Industry in the Banking Union. http://www.ed.ac.uk/news/2013/bankingunion-190913
On 4 December 2013 Emilios gave the Durham Castle Lecture on Global Finance in December 2013. Speakers in the series comprise leading academics and leaders from the fields of development, religion, and journalism: https://www.dur.ac.uk/castle.lectures/programme/
Emilios was before joining Edinburgh a University Professor of International Financial Markets and Financial Law at the University of Manchester. During his doctoral studies he received a law department teaching fellowship and held an associate research fellowship with the LSE's Financial Markets Group. He has practised extensively in the broader field of International financial law and structured finance. He worked as an Associate at the Derivatives and Financial Institutions Group of Clifford Chance LLP, as a Managing Associate at the Financial Markets Group of Linklaters, and as an equity partner at a big Athens Law Firm.
Research Interests and Grants
Emilios is currently involved in a number of research projects in the fields of global financial governance, bank structure, competition and supervision, and financial stability and monetary policy.
Grants: Arts and Humanities Research Council (AHRC) (2008-2009): Governance of global financial markets; award grade A+
Australian Research Council (2013-2016): for joint research with Professors Buckley(PI) and Arner on the study of systemic risk transmission channels.
Asian Development Bank/HKU (2013) (jointly with HKU academics) for research on the lessons the European Banking Union holds for East Asian Economic Integration.
Academic and Visiting Engagements
Emilios has given annual lectures, lectures, and seminars and has chaired workshops in a number of leading UK and International Universities, such as Oxford, Cambridge, Berkeley, LSE, MIT, Harvard, Duke, Hong Kong University, University of Copenhagen, UCL, etc. and has held a number of visiting posts. Longer term visiting posts have been: Professor, Duke-HKU JD Programme, HK, July 2014; Global Capital Markets Center Prof. Fellow at Duke University's Law School and Fuqua School of Business (AY 2008-9); Professor of Capital Markets Law, China-Europe School of Law, China University of Political Science and Law, Beijing (2009); Dennis J. Block Center Fellow, Brooklyn Law School (New York, 2007).
Knowledge Exchange and Public Policy Engagements
Emilios has advised governments, development organisations, and central banks on issues ranging from bank rescues to sovereign debt restructuring and financial stability. More recently, the Scottish government on issues of financial stability, bank supervision, and monetary policy. Also, a fmr Greek PM on issues of economic development and market integrity, and leading NGOs on issues of structural reform in the banking sector and ethical finance and economic development. Moreover, during his time in practice Emilios worked on or led cutting edge advisory and transactional projects in the fields of structured finance, sovereign debt, and financial regulation with a distinctly global focus.
Recent Public Lectures and Academic Seminars
'A Critical Evaluation of the Systemic and other Consequences of Bail-in centred bank recapitalisations' in the Wharton Business School and European University Institute Department of Economics conference 'Bearing the Losses from Bank and Sovereign Default in the Eurozone', Florence, 24 April 2014.
'Towards a New Perception of Systemic Risk', in the European University Institute Conference: 'Changing Paradigms after the Crisis: Social and Economic Perspectives' Robert Schuman Centre for Advanced Studies, The Global Governance Programme, Florence, 21 March, 2014.
'Costs and Benefits of the European Banking Union' Roundtable: A Banking Union for Europe, organized by the EABH and the Frankfurt School of Finance & Management, with the participation of ECB and Basel Directors and leading academics Frankfurt Am Main, 17 January 2014.
Closing Speaker in Law Society for England and Wales, Scottish Society, and Edinburgh Commercial Law Centre workshop: 'The Law Society's Paper on Fiduciary Duties for Financial Intermediaries', 15 January 2014.
Durham Castle Lecture: How Can We Control the Forces of Doom Looming Over the Global Economy, Durham Castle Lecture Series 2013-4, 4 December 2013, Great Hall, Durham Castle. https://www.dur.ac.uk/multimedia/video/lectures/castle/
'Why and How Banks Became Too-big-to-Fail: Transactional Banking, Leverage and Financial Innovation' in the Hong Kong University, University of New South Wales, Edinburgh University Conference 'Reconceptualizing Global Finance', Hong Kong University, 13-14 December 2013. Also conference co-organizer and co-chair. http://www.law.hku.hk/aiifl/documents/GlobalFinance-Flyerdd20Nov2013.pdf
'Beyond the Banking Union: The Possible and Desirable Role of the ECB in Resolving the Banking Crisis', in the Levy Institute and Ford Foundation Conference: 'The Eurozone Crisis, Greece, and the Experience of Austerity', November 8-9, 2013, Athens International Conference Center.
'Cross-border Bank Restructuring and Resolution', Joint Session of Banking Law and Insolvency Law Sections, International Bar Association, Annual Conference, Boston, 7-12 October 2013.
Workshop chair's Concluding Remarks, Edinburgh High Level Workshop, 'The Future of the Financial Services Industry in the European Banking', Edinburgh University Law School, 27 September 2013.
'State Intervention and Anglo-American Bank Regulation', Opening Speech in 34th Annual Congress of Geselschaft fur Rechtsvergleichung (German Comparative Law Society), University of Marburg, 12 September 2013.
ILA Regional Conference 2013, Roundtable, 'Legal Issues on Sovereign Debt', Roundtable chair, Athens, 31 August 2013.
'Regional Financial Arrangements: Lessons from the Eurozone Crisis for East Asian Financial Institutions and Infrastructure', Annual Financial Stability conference, Asian Development Bank and Korean Financial Supervisory Service, 2 July 2013, Seoul, South Korea. Acting also as conference chair and discussant.
'European Banking the Bumpy Road to Recovery', in the Business Leaders' symposium: 'Whither Europe?, 21 June 2013, Cambridge Judge Business School, University of Cambridge.
'The European Banking Union as a Fellowship of Ifs', in the symposium, 'Evolution in Monetary Law and Policy', Tercentenary of the Regius Chair, University of Glasgow, 14 June 2013.
'Contours of the European Banking Union and Some Doubts!', Bank of England and Prudential Regulation Authority, QMUL, Georgetown, 'Workshop of a distinguished group of experts on financial stability and the WTO', Bank of England, 17 May 2013
'Financial Stability and Trade', 13th Annual WTO Conference, British Institute of International and Comparative Law, 16 May 2013.
'Unresolved Riddles of Financial Stability Reforms' in 22nd Hyman Minsky Annual Conference, 'Building a Financial Structure for a More Stable and Equitable Economy', Levy Economics Institute & Ford Foundation, NYC, 17-19 April 2013.
'The Leverage cycle and Bank Executive Compensation', International Financial Regulation Workshop, Boalt Hall (Berkeley) School of Law, University of California, Berkeley, 19-20 April 2013.
'The Global Regulation of the International Insurance Industry', in Geneva Association, 29th PROGRES Seminar on Insurance Regulation and Supervision, Geneva, 11-12 April 2013
Conference Chair. 'Reshaping European Banking'. European Law Academy, Trier, 28 February -1 March 2013. Also Presenting a paper on 'Shadow Banking and Risk Migration'
Workshop Chair, 'Workshop on the Financial Sustainability of Banks', R. McCormick (LSE), UCL, Centre for Ethics and Law, 6 February 2013.
'Libor's Legacy: Too-big-to-fail, Too-big-to-regulate, and now Too-unethical-to-control, but is there an Alternative to the Mega-bank Model?' in the Allen & Overy, and Universities of New South Wales and Leeds conference, 'My Word is My Bond: Regulating for Integrity in the City', 15 January 2013, Allen & Overy LLP, London.
'Edges of Macroprudential Regulation and Some Scepticism', Credit Research Centre Seminar Series, School of Business, University of Edinburgh, 7 December 2012.
'Global Governance of Financial Markets', School of Law Seminar Series, University of Glasgow, 21 November 2012.
'Market Discipline and Corporate Governance in the EU Banking Sector: Intellectual Fallacies, Cognitive Boundaries, and Groupthink' with J. Cullen, in Law and Society Research Workshop: 'Post-crisis Trajectories of European Corporate Governance: Dealing with the Present and Shaping the Future', QMUL and the Leeds University Center for Business Law, September 2012.
'Why Global Finance Needs an Institutional Big Bang? How it Can be Achieved?' presented at Adolf Berle Center, 4th International Symposium, 'Rethinking Financial/Securities Markets', University College London, Faculty of Laws and University of Seattle, June 2012
'Systematic Governance Failures, Debt, and the Greek Crisis' presented at Debt, Sovereignty and Civil Society, Stavros Niarchos Foundation Center at Simon Fraser University and St Antony's College, University of Oxford, Vancouver, 25 April 2012.
'The Impact of Shadow Banking on the Regulation and Structure of the Banking Industry: Time for a Radical Rethink', meeting of the finance, financial law and international trade law experts, QMW, CCLS, London, 18 May 2012.
'Is there a case for a more standardised approach to sovereign debt restructuring? What is the role for the CDS market?', Financial Markets Law Committee and Association Europeenne pour Le Droit Bancaire et Financier Sovereign Debt Conference, held at the Bank of England, 6 February 2012.
Comment, 'Bank Structure, Regulation and Competition' presented at Financial Markets Group and the International Centre for Financial Regulation (25 Nov), LSE, 2011. Also conference co-rganizer and co-chair.
'Regulating Global Financial Institutions: The Unresolved Challenge', Law & Finance Seminar Series, University of Oxford, Law Faculty, 3 November 2011
FOCOFIMA Lecture: 'Global Financial Governance at Crossroads: Reasons to Despair, Reasons to Have Hope', University of Copenhagen, Faculty of Law, 10 June 2010.
'A Critical Evaluation of International Financial Regulation Reform in the Aftermath of the Global Financial Crisis', Bank Negara (Central Bank of Malaysia), Kuala Lumpur, 3 November 2009.
'The State of Financial Regulation after the London and G20 Summits and US and EU Regulatory Reform Proposals', Securities and Futures Commission, Hong Kong, 6 October 2009.
'International Financial Regulation After the London G20: New Challenges and Policy Directions', Public Lecture, Law School, Duke University, 7 April 2009.
'International Financial Regulation and the Governance of Global Financial Markets: Meeting the Challenges', 3CL (Centre for Corporate and Commercial Law), Faculty of Law, University of Cambridge, 17 February 2009.
Emilios holds an LLM in Banking and Finance Law and a PhD in Law and Economics both from the LSE, where he received a teaching scholarship. He completed his undergraduate studies at the University of Athens Law School, where he was the recipient of state scholarships, and spent time as ERASMUS LLB student in an English law school.
Emilios is a member of the editorial board of seven well known journals in the field of International Economic and Banking and Finance Law and holds, inter alia, the following academic memberships: Co-convenor of the International Financial and Monetary Law Network; Royal Economic Society (RES); International Securities Regulation Committee of the International Law Association (ILA).
Emilios is frequently cited by the world media on matters of economic and financial policy:
Financial Times (on the Greek Crisis) : http://www.ft.com/cms/s/0/7c9cef2c-24db-11e2-86fb-00144feabdc0.html#axzz2Jn74C8Sc
Risk Magazine (on macroprudential regulation): http://www.risk.net/risk-magazine/feature/2239270/macroprudential-supervision-the-case-against
TIME Magazine (on Libor): http://world.time.com/2012/07/04/ex-barclays-chief-bob-diamond-grilled-over-rate-fixing-scandal/
Reuters (on the Eurozone debt crisis):http://uk.reuters.com/article/2012/02/16/uk-greece-debt-experts-idUKTRE81F10720120216 reproduced in the guardian http://www.guardian.co.uk/business/2012/feb/16/greece-bailout-eurozone-crisis-live
Recent interviews on the Eurozone crisis and Greece
Economic Analysis of Corporate Finance Law (Honours) (Course Organiser)
European Law of Capital Markets (LLM) (Course Organiser)
Practice of Corporate Finance and the Law (LLM) (Course Organiser)
Regulation of international Finance: the Law, the Economics, the Politics (LLM) (Course Organiser)
Chia-Hsing Li 'Regulation of Financial Firms' conduct in the European Banking Union and the UK'
Margarita Sweeney-Baird 'Financial Law in Scotland: The integration of Financial Law and Regulation within Scots Private Law'
Amanda Wyper 'An Evaluation of the Legal issues surrounding the implementation of the Automatic Enrolment Pensions Regime in the UK'
Emilios Avgouleas Governance of Global Financial Markets: The Law, the Economics, the Politics (Cambridge University Press, 2012)
Abstract: The recent financial crisis proved that pre-existing arrangements for the governance of global markets were flawed. With reform underway in the USA, the EU and elsewhere, Emilios Avgouleas explores some of the questions associated with building an effective governance system and analyses the evolution of existing structures. By critiquing the soft law structures dominating international financial regulation and examining the roles of financial innovation and the neo-liberal policies in the expansion of global financial markets, he offers a new epistemological reading of the causes of the global financial crisis. Requisite reforms leave serious gaps in cross-border supervision, in the resolution of global financial institutions and in the monitoring of risk originating in the shadow banking sector. To close these gaps and safeguard the stability of the international financial system, an evolutionary governance system is proposed that will also enhance the welfare role of global financial markets.
Emilios Avgouleas The Mechanics and Regulation of Market Abuse: A Legal and Economic Analysis (Oxford University Press, 2005)
Abstract: Economic theory indicates that financial markets play a prominent role to the efficient allocation of resources in the modern world. Financial markets can fulfil this role if they enjoy the confidence of investors and are free of abuse. The financial frauds associated with the collapse of Enron and the major crises in world leading corporations such as WorldCom, Adelphia, Tyco, and the 'Wall Street financial scandals' have shown that fraud, manipulation, and insider dealing retain a catastrophic presence in modern financial markets. Proper deterrence of market abuse is necessary not only for the effective operation of modern financial markets, but also for regaining investor confidence. This book analyses the mechanics and regulation of two of the most harmful market practices in the modern financial world: insider dealing and market manipulation, which together comprise the offence of market abuse. Avgouleas examines the UK and EC regimes from an interdisciplinary perspective, also making extensive and critical use of US case law. He emphasizes the economic analysis of anti-fraud manipulation regulations and their effects upon market welfare and explores the possible deterrent benefits of civil law remedies.
Emilios Avgouleas, Ross Cranston Principles of Banking Law (OUP, 0)
Emilios Avgouleas The Regulation of Investment Services in Europe under MiFiD: Implementation and Practice (Tottel, 2008)
Emilios Avgouleas, Jay Cullen 'Market Discipline and EU Corporate Governance Reform in the Banking Sector: Merits, Fallacies, and Cognitive Boundaries' (2014) Journal of Law and Society Symposium Edition Vol 41 pp28-50 [Download]
Abstract: Much contemporary analysis has concluded that the recent financial crisis and bank failures were, inter alia, the result of a breakdown in corporate governance regimes and market discipline. New EU regulations strongly advocate market-based remedies such as tighter investor monitoring and greater control over executives' remuneration, in order to safeguard financial stability. We argue that this approach largely ignores three very important aspects of modern financial markets that cannot be constrained through market discipline: (a) socio-psychological phenomena; (b) the epistemological properties of financial market innovation; and (c) the inherent inability of market participants to predict uncertain risk correlations. Therefore, this article argues that excessive EU focus on corporate governance reforms, as a means to improve financial stability, detracts attention from much more significant concerns, chiefly the issue of optimal bank structure.
Emilios Avgouleas 'Effective Governance of Global Financial Markets: An Evolutionary Plan for Reform' (2013) Global Policy Special Issue Economic Policy 74-84 [Download]
Abstract: Two questions remain widely open when it comes to global financial markets. First, what is the raison d' etre of open global markets? Second, is it possible to foster open global markets without an International governance structure assigned the task of supervising them?Post-crisis regulatory reform presents an acute paradox. While the content of regulation is changing rapidly and in encouraging ways, the reform of governance structures is painfully slow. There is no formal governance structure dealing with cross-border supervision of big financial institutions. In addition, there is no crystalized institutional capacity at the International level dealing with cross-border crises and the resolution of global financial institutions. Other areas of concern are the global supervision of systemic risk, especially of risk originating in the opaque shadow banking markets, and the absence of a reliable finance research watchdog dealing with the production of regulatory standards. This article outlines an International governance framework to deal effectively with these concerns. Adoption of the proposed plan would lead to breaking down the territorial link in the supervision of systemic risk and of certain kinds of financial institution, without causing intolerable loss of sovereignty. In addition, the proposed structure is based on a set of explicit values. These can provide a strong signal to global markets that they ought to shift focus from speculation to development.
Emilios Avgouleas, Charles Goodhart, Dirk Schoenmaker 'Bank Resolution Plans as a Catalyst for Global Financial Reform' (2013) Journal of Financial Stability 210-218 Vol 9
Abstract: Bank Resolution Plans (Living Wills) should help with the resolution of systemically important financial institutions (SIFIs) in distress. They should be used to clarify and simplify the legal structure and make it commensurate with the functional business lines of the institution. Living Wills could also prove the right regulatory instrument to achieve two further innovations in the resolution of SIFIs with cross-border presence. First, they could incorporate burden sharing arrangements between countries enabling burden sharing on an institution by institution basis. However, there would remain problems arising from the incompatibility of the laws governing cross-border bank insolvencies. Many countries are currently introducing special laws covering the resolution of SIFIs. This creates a window of opportunity to use Living Wills to introduce a second innovation: a consistent legal regime for the resolution of SIFIs across the G20 countries. http://dx.doi.org/10.1016/j.jfs.2011.12.002
Emilios Avgouleas 'Rationales and Designs to Implement an Institutional Big Bang in the Governance of Global Finance' (2013) Seattle University Law Review IV Berle Symposium Vol 36 321-390 [Download]
Abstract: The colossal challenges facing International finance pertain to both its governance system and its dual utility and speculative functions, which have become ever more intertwined with the advent of financial innovation. In the aftermath of the Global Financial Crisis (GFC) a number of significant reforms are under way to address the second issue, including additional capital and liquidity requirements for banks, measures to battle interconnectedness in the financial sector, new resolution regimes, which would allow banks to fail more easily, and more strict frameworks for bank supervision and monitoring of systemic risk. Yet limited progress has been made with respect to governance structures, which, thus, will be the main focus of present analysis. In this article I provide an outline of a proposal for a new model of governance for global financial markets in order to address most of the above challenges in a way that would be more effective than the pre-existing regime or the architecture emerging as a result of the GFC. http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2158133
Emilios Avgouleas 'A New Framework for the Global Regulation of Short Sales: Why Prohibition is Inefficient and Disclosure Insufficient' (2010) Stanford Journal of Law, Business & Finance 15 376-425
Abstract: Short selling has long been regarded as aggressive speculation that destabilizes financial markets, raising concerns about their moral foundations. This view gathered unstoppable force in September 2008 when short sales were seen as the principal cause of precipitous falls in the market price of financial sector stocks. As a result, most developed market regulators declared a ban on short sales in financial sector stocks. However, many empirical studies indicate that short sales are, in fact, a beneficial source of market efficiency. This view is confirmed by studies on the September 2008 ban in the US and the UK, which show that the prohibition did not yield any concrete welfare benefits, especially in terms of reduction of price volatility. On the contrary, it had an adverse impact on liquidity. The market abuse rationale, offered as the main justification for the September 2008 ban, is also unconvincing. Furthermore, US and European regulatory order banning short-sales revealed how disparate are the regimes governing cross-border securities trading. This article argues that the best way to regulate short sales is through a dual strategy of disclosure and short trading halts, rather than a prohibition or an uptick rule. The short trading halts should be based on a sophisticated circuit breaker system that is focused on market conditions and preserves the proper function of the price formation mechanism. Disclosure and short trading halts should be complemented by a strict settlement regime, as recommended by IOSCO. The FSA's and the SEC's proposals are incomplete. Also IOSCO's principles are so high level that they cannot close the gaps. Therefore, the endorsement of the suggested combination of disclosure and sophisticated circuit breaker system can serve three important objectives. First, it would preserve liquidity enhancing short sales and the valuable information that these trades carry. Second, it would check downward price pressures due to herding and market irrationality. Third, it would lead to rather compatible national regulatory regimes laying down the foundations of a new global framework for the regulation of short sales.
Emilios Avgouleas, Stavros Degiannakis 'Trade Transparency and Trading Volume: The Impact of the Financial Instruments Markets Directive on the Trading Volume of EU Equity Markets' (2009) International Journal of Financial Markets and Derivatives 1 96-123
Abstract: The EC Directive on financial instruments markets 2004 (MiFID) has introduced a number of order and trade publication obligations imposed on organised exchanges, alternative trading systems (ATS), and the class of broker dealers that execute transactions in shares internally. This article investigates the impact of MiFID's trade transparency rules on the trading volume of EU equity markets in a forward-looking mode. We use data extracted from the closest possible precedent and examine trading volume levels before and after trading in FTSE100 stocks on the London Stock Exchange (LSE) shifted from the quote-driven Stock Exchange Automatic Quotation System (SEAQ) to the order-driven securities electronic trading service (SETS). This change resulted in significantly increased transparency standards. Trading volume is measured on the basis of three criteria: volume-based turnover, value-based turnover and turnover ratio. No evidence is found indicating that higher transparency standards lead per se to higher levels of trading volume. Therefore, the impact of MiFID's transparency rules on trading volume in EU equity markets should become a matter of further study following their implementation.
Emilios Avgouleas 'Banking Supervision and the Special Resolution Regime of the Banking Act 2009: The Unfinished Reform' (2009) Capital Markets Law Journal 4(2) 201-35
Abstract: One of the fundamental rationales underpinning banking regulation and justifying the costs it entails is the prevention of banking failures and associated depositor runs. This is exactly what the UK regulators could not prevent during the Northern Rock crisis. Apart from the much discussed regulatory failures, the Northern Rock crisis also exposed the absence of an effective legal system dealing with failing banks. The Banking Act 2009 introduces a number of important and far reaching reforms, including a Special Resolution Regime (SRR) for failing banks. The reforms address several of the identified regulatory loopholes. Thus, the Act constitutes a significant improvement over the previous regime. Yet the Act does not seek to reform banking supervision arrangements, even though these have become the subject of considerable criticism. This article argues that, in addition to other reasons, the effective operation of the SRR requires the reform of the institutional structures of the UK system of banking supervision. Otherwise the serious governance challenges and distributional issues the SRR creates may seriously undermine the standing of the SRR authorities, namely, the Treasury, the FSA, and the Bank of England, and have an adverse impact on the effectiveness of the new regime.
Emilios Avgouleas 'The Global Financial Crisis, Behavioural Finance and Financial Regulation: In Search of a New Orthodoxy' (2009) Journal of Corporate Law Studies 9 23-59
Abstract: The global financial crisis brought the world banking system to the brink of collapse. The continuing operation of financial markets became possible only after the extensive and costly public rescues of some very big banks. It also brought into sharp focus the inadequacies of the contemporary model of financial regulation both at the national and the global level. This article argues that some of the measures endorsed in the G20 Summit for the revamping of national and global financial regulation, such as increased disclosure and a stronger capital base, and others targeting the enhancement of market discipline will prove less effective than anticipated. The reason for that is that they largely ignore the behavioural elements of the crisis. Instead, what is required is a radical rethinking of the contemporary model of national and global financial regulation. This article suggests a set of far-reaching reforms for the overhaul of the regulatory framework governing the licensing and supervision of banking institutions. It also proposes the establishment of a global licensing and supervisory regime for transnational investment funds with systemic importance, eliminating most shadow banking operators. The catastrophic consequences of the crisis and the findings of behavioural finance provide solid support for these proposals.
Emilios Avgouleas 'The Global Financial Crisis and the Disclosure Paradigm in European Financial Regulation: The Case for Reform' (2009) European Company and Financial Law Review 6 440-75
Abstract: The global financial crisis has exposed the many limits of disclosure as an effective regulatory tool in financial markets. First, the famed disciplining power of the market failed to constrain disastrous risk taking by banks. Second, most of the risks that led to the creation of the 2008 catastrophe were often fully disclosed but the markets failed to understand them. In the case of banks, disclosure-based market discipline failed mainly because of the implicit government guarantee. In the case of capital markets, the reasons for disclosure's failure were product complexity and the impact of socio-psychological factors. Yet much of European Financial Regulation is based on the disclosure paradigm to remedy market failure, discipline market actors, improve investor/consumer choice, and prevent abuse. The EU needs to reexamine the role of disclosure in two contexts: prudential regulation of banks and retail investor protection. EU policy-makers should use empirical and experimental studies before any reform of the investor protection framework. Insertion of default options in a variety of financial contracts may be a necessary supplement to disclosure for retail investors. Furthermore, an independent EU financial products committee would be a better regulatory protection strategy than reliance on investor choice assisted by enhanced disclosure.
Emilios Avgouleas 'International Financial Regulation, Access to Finance, Systemic Stability, and Development' (2008) LAWASIA Journal 62-76
Abstract: Global financial markets are subject to a complex web of soft law rules and standards called International Financial Regulation. The main rationales/objectives of International Financial Regulation revolve around the protection of investors and depositors and the safeguarding of financial system stability. In recent months International Financial Regulation has come under attack for its lack of proper structures and flawed rules, which have been held to be among the main causes of the global financial crisis. In the aftermath of the Washington Financial Summit of November 2008, significant reforms are under way. In this context, this article argues that International Financial Regulation must undergo a major transformation in terms of means and objectives. The policy objectives of International Financial Regulation must be widened to reflect the impact of financial sector development and access to finance on economic growth and poverty eradication. As part of the transformation of its means (institutional structures and rules) the article proposes the establishment of a global licensing scheme for international investment funds, whereby licensed funds would be obliged to pay a global development tax/fee. It also proposes, as part of the wider effort to reform Basel Capital Adequacy Standards, in the aftermath of the global financial crisis, the introduction of a new asset class for private development finance credits. Implementation of these proposals would enable International Financial Regulation to both strengthen the global financial stability framework and facilitate access to finance in poor and very poor countries fostering economic development and creating a more stable world.
Emilios Avgouleas 'Critical Evaluation of the New EC Financial Market Regulation: Peaks and Troughs in the Road Ahead' (2005) Transnational Lawyer 18 179-228
Emilios Avgouleas 'The New EC Financial Markets Legislation and the Emerging Regime for Capital Markets' (2004) Yearbook of European Law 321 -61
Emilios Avgouleas 'Financial Market Regulation and the New Market Landscape: In Search of A New Regulatory Framework for Market Abuse' (2000) International and Comparative Corporate Law Journal 2 9-118
Emilios Avgouleas 'The Harmonisation of Rules of Conduct in EU Financial Markets: Economic Analysis, Subsidiarity and Investor Protection' (2000) European Law Journal 6 72-92
Emilios Avgouleas 'Market Accountability and Pre- and Post-trade Transparency: The Case for the Reform of the EU Regulatory Framework: Parts 1 & 2' (1998) Company Lawyer 19 162-70 202-10
Emilios Avgouleas, Douglas Arner, Uzma Ashraf 'Regional Financial Arrangements: Lessons from the Eurozone Crisis for East Asia' in Douglas Arner, Uzma Ashraff (eds) Financial Stability in Asia (Asian Development Bank Institute and Edward Elgar Publishing, 2014) Vol. II
Abstract: Financial integration in East Asia has been building steadily over the past two decades. In order to support this process, countries in the region have undertaken a range of initiatives focusing on financial market development and stability. Prior to the 2008 global financial crisis and the Eurozone debt crisis, the European Union frequently served as a model for East Asian financial integration. In the wake of the Eurozone financial crisis, this paper argues that lessons drawn from the EU financial integration experience remain important for East Asia. To place this argument in context the paper reviews the causes of the Eurozone crisis. In particular, it highlights the challenges raised by integrated supra-national banking markets in the absence of suitable institutions to absorb financial stability shocks. Based on this discussion the paper presents suggestions for future development of East Asian regional financial arrangements as they relate to both market development and crisis prevention and resolution in an environment of continuous financial liberalization within the ASEAN Economic Community (AEC) and ASEAN+3.
Emilios Avgouleas, Douglas Arner 'The Broken Glass of European Integration: Origins and Remedies of the Eurozone Crisis' in C.L. Lim & Bryan Mercurio (eds) International Economic Law after the Crisis: A Tale of Fragmented Disciplines (Cambridge University Press, 2014) Chapter 4
Abstract: Following decades of effort to build a single financial market, the European Union (EU), as a supra-national organization and almost all of its member countries lacked proper resolution mechanisms in the event of a financial crisis. Thus, with the advent of the Global Financial Crisis (GFC) the single market faced the prospect of widespread bank failures and near collapse of national financial systems. Today, in the context of the Eurozone financial crisis, the EU is at a critical crossroads. It has to decide whether the road to recovery runs through closer integration of financial policies and of bank supervision and resolution, or whether to take the path of fragmentation with a gradual return to controlled forms of protectionism in the pursuit of narrow national interest, although the latter is bound to endanger the single market. The policy dilemmas facing the EU and contemporary institution building within the Eurozone offer us a looking glass into the future of both global and regional financial integration.
Emilios Avgouleas 'Breaking Up Mega-Banks: A New Regulatory Model for the Separation of Commercial Banking from Investment Banking' in Panagiotis Delimatsis and Nils Herger (eds) Financial Regulation at the Crossroads: Implications for Supervision, Institutional Design and Trade (Kluwer Law International, 2011) 179-210
Emilios Avgouleas 'Short Sales Regulation in Seasoned Equity Offerings: What Are the Issues?' in Dan Prentice and Arad Reisberg (eds) Corporate Finance Law in the UK and EU (OUP, 2011) 117-38
Emilios Avgouleas 'The Vexed Issue of Short Sales Regulation and the Global Financial Crisis' in Kern Alexander and Niamh Maloney (eds) Law Reform and Financial Markets (Edward Elgar Publishing, 2011) 71-110
Emilios Avgouleas 'The Behavioural Aspects of the Global Financial Crisis and Regulatory Reform' in Robert Kolb (eds) Lessons from the Financial Crisis: Causes, Consequences, and Our Economic Future (John Wiley & Sons, 2010) 391-400
Emilios Avgouleas 'What Future for Disclosure as a Regulatory Technique?: Lessons from Behavioural Decision Theory and the Global Financial Crisis' in Iain G MacNeil and Justin OBrien (eds) The Future of Financial Regulation (Hart, 2010) 211-31
Emilios Avgouleas 'General Editor's Introduction: An Overview of the MiFID Regime for the Regulation of Financial Services and Markets' in Emilios Avgouleas The Regulation of Investment Services in Europe under MiFiD: Implementation and Practice (Tottel, 2008)
Emilios Avgouleas 'Reforming Investor Protection Regulation: The Impact of Cognitive Biases' in Michael Faure and Frank Stephen (eds) Essays in the Law and Economics of Regulation: In Honour of Anthony Ogus (Intersentia, 2008) 143-66
Emilios AvgouleasDouglas Arner, 'The Eurozone Debt Crisis and the European Banking Union: A Cautionary Tale of Failure and Reform', CLEER Working Papers 2013/6 (Center for the Law of EU External Relations, Asser Institute, 2013) [Download]
Abstract: The 2008 global financial crisis spread to most of the developed economies, including those of the European Union. Unfortunately, despite decades of effort to build a Single Financial Market, almost all EU jurisdictions lacked proper crisis resolution mechanisms, especially with respect to the cross-border dimensions of a global crisis. This led to a threat of widespread bank failures in EU countries and near collapse of their financial systems. Today, in the context of the Eurozone financial crisis, the EU is at a critical crossroads. It has to decide whether the road to recovery runs through closer integration of financial policies and of bank supervision and resolution, or whether to take the path of fragmentation with a gradual return to controlled forms of protectionism in the pursuit of narrow national interest, although the latter is bound to endanger the single market. Therefore, the policy dilemmas facing the EU and contemporary institution building within the Eurozone provide a key window into the future of both global and regional financial integration.
Emilios Avgouleas 'Rationales and Designs to Implement an Institutional Big Bang in the Governance of Global Finance', School of Law Working Paper Series, ssrn.2158133 (SSRN, 2012) [Download]
Abstract: The colossal challenges facing International finance pertain to both its governance system and its dual utility and speculative functions, which have become ever more intertwined with the advent of financial innovation. In the aftermath of the Global Financial Crisis (GFC) a number of significant reforms are under way to address the second issue, including additional capital and liquidity requirements for banks, measures to battle interconnectedness in the financial sector, new resolution regimes, which would allow banks to fail more easily, and more strict frameworks for bank supervision and monitoring of systemic risk. Yet limited progress has been made with respect to governance structures, which, thus, will be the main focus of present analysis. In this article I provide an outline of a proposal for a new model of governance for global financial markets in order to address most of the above challenges in a way that would be more effective than the pre-existing regime or the architecture emerging as a result of the GFC.
Emilios Avgouleas 'Market Discipline and Corporate Governance in the EU Banking Sector: Intellectual Fallacies, Cognitive Boundaries, and Groupthink', School of Law Working Paper Series (SSRN, 2012) [Download]
Abstract: Much contemporary analysis has concluded that the recent financial crisis and bank failures were, inter alia, the result of a breakdown in corporate governance regimes and market discipline. Reform of corporate governance structures and remuneration incentives is at the heart of regulatory reform both in the EU, and internationally. New regulations strongly advocate tighter investor monitoring and greater control over executives' remuneration as market based remedies to the woes of the financial sector, which will safeguard future financial stability. Aside from the markets' tendency to be short-termist, which puts an obvious limitation to this remedy, the biggest shortcoming of this approach is that it largely ignores three very important aspects of modern financial markets that cannot be contained through market discipline: (a) the interaction between socio-psychological phenomena, such as irrational exuberance, herding and panic induced contagion, (b) the epistemological properties of financial market innovation, which can result in complex structures that stretch to a breaking point the markets' and individuals' limited capacity to measure the risks involved in opaque institutional structures and markets, (c) inherent inability to predict the uncertain risk correlations that risky products, financial market, interconnectedness, and too-big-to-fail institution behaviour can bring about. Furthermore, even rationally and well-managed financial institutions can be a threat to the stability of the financial system. Therefore, this paper argues that recent EU regulatory reform to corporate governance, as a means to improve financial stability is a large-scale intellectual fallacy. Absent EU-wide structural reform to control risk-taking in large and complex financial institutions, the stability of the EU banking sector will remain compromised. Smaller and less interconnected banks will both improve bank corporate governance and create a safer and more stable financial sector.
Papers and Presentations
Emilios Avgouleas 'Gaps in Post-Crisis Financial Reforms' presented at 22nd Annual Hyman Minsky Conference: "Building a Financial Structure for a More Stable and Equitable Economy, Ford Foundation, New York City, 2013 [Download]
Emilios Avgouleas, James Cullen 'Bank Capital Structure, Leverage, and Executive Compensation' presented at Berkeley International Financial Regulation Workshop, Berkeley Law School, 2013
Abstract: High leverage levels led to virtually limitless expansion of bank asset size, which maximized, in the short- to medium term, banks' return on equity. In the absence of regulatory controls on leverage, all it takes to assume excessive risks, even for benign senior bank managers, is to imitate competitor business strategies and herd. Therefore, while executive greed has been a major factor behind bank short-termism and excessive risk-taking, the caricature of the villainous banker betting the bank to increase the value of her stock options might, to a certain extent and in certain cases, be more fiction than part of real life. High leverage/high risk asset books might have, instead, been built due to herding caused by peer pressure, as competitor banks maximized shareholder returns through excessive use of cheap debt. If that is the case, then contemporary reforms that have given so much attention to an issue of secondary importance (executive compensation), instead of one of cardinal importance (leverage), are bound to produce, in the long-term, sub-optimal results, notwithstanding the conspicuous political gains of such a strategy.
Emilios Avgouleas 'European Banking on the Bumpy Road to Recovery' presented at Global Business Symposium - 'Whither Europe', Judge Business School, University of Cambridge, 2013
Abstract: Presented at Business Leaders' symposium: 'Whither Europe?, 21 June 2013, Cambridge Judge Business School, University of Cambridge
Emilios Avgouleas ''State Intervention and Anglo-American Bank Regulation', Opening Speech in' presented at 34th Annual Congress, 'Legal Order and Comparative Law in the Financial Crisis (34 Tagung fur Rechtsvergeleichung, 'Recht und Rechtsvergleichung in der Finanzcrise'), University of Marburg, 12-14 September 2013, 2013 [Download]
Emilios Avgouleas ''Cross-border Bank Restructuring and Resolution'' presented at International Bar Association, Annual Conference, Banking and Insolvency Law Sections Joint Session on Cross-border Bank Resolution, Boston 6-12,10, 2013, 2013 [Download]
Emilios Avgouleas 'Beyond the Banking Union: The Possible and Desirable Role of the ECB in Resolving the Eurozone Banking Crisis' presented at The Eurozone Crisis, Greece, and the Experience of Austerity, Levy Economics Institute and Ford Foundation, Athens, 7-8 November 2013, 2013 [Download]
Abstract: The key in the resolution of the Eurozone crisis is cleaning up European banks' balance sheets from bad loans rather than just recapitalizing them. This was the key driver in the recovery of US banks. However, the Eurozone lacks a common treasury that could offer the a fiscal backstop. At the same time, the ESM offers little hope as the bail in is, in fact, a controversial recapitalization method and its resources are insufficient. Premised on these assumptions this paper explains the shortcomings of the bail in strategy in recapitalizing Eurozone banks. In the same context the paper explores the possibility of extending the ECB's current role as market maker of last resort to operate a 'Euro-TARP' without violating the no bailout and monetary financing prohibitions in the EU Treaty. The paper argues that an ECB operated investment vehicle, utilising structured finance techniques could relieve eurozone banks from their toxic assets without unduly exacerbating moral hazard. The major advantages and disadvantages of such a proposal are explored. It is also explained that since 2008 the US Federal Reserve system extended credit, in the form of structured investment, even to non-bank actors, that were falling outside the Federal Reserve's accepted remit of provider of emergency financing to banks as a lender of last resort. This development has been rather controversial and was severely criticised. But it has not yet resulted in losses for the Federal Reserve system, providing further credence to proposals for a more active ECB involvement in a properly structured Euro-TARP.
Emilios Avgouleas 'Regional Financial Arrangements: Lessons from the Eurozone for East Asian Regional Institutions and Infrastructure' presented at Annual Financial Stability conference, Asian Development Bank and Korean Financial Supervisory Service, 2 July 2013, Seoul, South Korea, 2013
Abstract: Financial integration in East Asia has been building steadily over the past two decades. In order to support this process, officials in the region have undertaken a range of initiatives. These include, in particular, the Chiang Mai Initiative Multilateralisation (CMIM), the Executives' Meeting of East Asia Pacific Central Banks (EMEAP), regional initiatives of international organizations such as the Bank for International Settlements (BIS) and Financial Stability Board (FSB), and aspects of ASEAN, the ASEAN Economic Community (AEC) and ASEAN+3. Prior to the global financial crisis (GFC) and the Eurozone debt crisis, the European Union had served as a model for East Asian financial integration. The lessons learnt by the failure of EU institutions to deal first with the consequences of the GFC and subsequently with the Eurozone debt crisis are also useful and, in part, relevant to the East Asian financial integration process. This paper reviews the causes of the Eurozone financial crisis and draws parallels with the weak institutional infrastructures underpinning East Asian financial arrangements. The paper focuses on two areas of great concern: (a) crisis prevention and (b) crisis resolution. In particular, it highlights the challenges raised by integrated supra-national banking markets in the absence of suitable institutions to absorb financial stability shocks. Based on this discussion the paper will present suggestions for future development of East Asian regional financial arrangements as they relate to crisis prevention and resolution. Finally, the paper links the financial stability debate with the more general issues of financial liberalization and free movement of capital, trade in financial services, and freedom of establishment in the context of the AEC and ASEAN+3.
Emilios Avgouleas 'How a New Governance Model for Transnational Finance Could Control the Forces of Doom Looming Over the Global Economy' presented at Durham Castle Lecture Series - Global Issues - Global Leaders, Durham Castle, 2013 [Download]
Abstract: n spite strong regional and national resistance, establishment of new International institutions as part of an effective governance model for global finance could lead to effective controls on the shadow banking sector, averting a return to financial protectionism. At the same time, a strong governance system for global financial markets could effectively steer international finance towards welfare enhancing goals.
Emilios Avgouleas 'Why and How Banks Became Too-big-to-Fail: Transactional Banking, Leverage and Financial Innovation' presented at Reconceptualizing Global Finance and its Regulation, Hong Kong University, UNSW, University of Edinburgh 13-14 December 2013, 2013 [Download]
Abstract: This paper explores why and how banks became too-big-to-fail, provides an overview of any economies of scale and scope that can be found in building bank size and conglomeration and concludes that the real reason was ability to build leverage cheaply and not the famed economies. On the contrary size and conglomeration create diseconomies of scope and any gains from diversification of income from building diverse business lines is set off by the modern trend towards homogeneneization. The paper argues for a new model of structural reform that re-conceptualizes finance and not merely ring-fences commercial banking operations like Vickers or shlelds banks from capital markets' risks like the Volcker Rule.
Emilios Avgouleas, J Cullen 'Market Discipline and Corporate Governance in the EU Banking Sector: Intellectual Fallacies, Cognitive Boundaries, and Groupthink' presented at Law and Society Research Workshop: 'Post-crisis Trajectories of European Corporate Governance: Dealing with the Present and Shaping the Future', QMUL and the Leeds University Center for Business Law, 2012
Emilios Avgouleas 'Why Global Finance Needs an Institutional Big Bang? How it Can be Achieved?' presented at Adolf Berle Center, 4th International Symposium, 'Rethinking Financial/Securities Markets', University College London, Faculty of Laws and University of Seattle, 2012
Emilios Avgouleas 'Systematic Governance Failures, Debt, and the Greek Crisis' presented at Debt, Sovereignty and Civil Society (25 Apr 2012), Stavros Niarchos Foundation Center at Simon Fraser University and St Antony's College, University of Oxford, Vancouver, 2012
Emilios Avgouleas 'Is there a case for a more standardised approach to sovereign debt restructuring? What is the role for the CDS market?' presented at Financial Markets Law Committee and Association Europeenne pour Le Droit Bancaire et Financier Sovereign Debt Conference (2 Feb 2012), Bank of England, 2012
Emilios Avgouleas 'European crisis-management and resolution framework: A legal perspective' presented at Recovery and Resolution Plans (6-7 Feb.), London, 2012
Emilios Avgouleas 'Bank Structure, Regulation and Competition' presented at Financial Markets Group and the International Centre for Financial Regulation (25 Nov), LSE, 2011
Abstract: conference co-organizer, moderator, and discussant
Emilios Avgouleas 'The Reform of the too big to fail bank' presented at 10th biennial conference, Deutsche Bundesbank (28-31 July), Frankfurt Am Main, 2010
Emilios Avgouleas 'A new regulatory model for the institutional separation of casino from utility banking' presented at 7th EUROFRAME Conference on Economic Policy Issues in the European Union (11 June), Amsterdam, 2010
Emilios Avgouleas 'Living Wills as a Catalyst of Action' presented at International Financial and Monetary Law Conference (3-4 June), Benjamin Cardozo School of Law, New York, 2010
Emilios Avgouleas 'The Regulation of Short Sales and Seasoned Equity Offerings' presented at Corporate Finance Law: UK and EU Perspectives (28-9 April), UCL Centre for Commercial Law, 2010
Emilios Avgouleas 'A New model of Banking Regulation' presented at New Directions and Challenges in the Regulation of Financial Services (25-6 June), World Trade Institute, University of Berne, Switzerland, 2009
Emilios Avgouleas 'The Vexed Issue of Short Sales Regulation: Why A Ban is Inefficient and Disclosure Insufficient?' presented at W.G. Hart Legal Workshop 2009, 'Law Reform and Financial Markets: Institutions and Governance' (21-3 June), Institute of Advanced Legal Studies, London, 2009
Emilios Avgouleas 'The Limits of Disclosure as a Regulatory Technique and European Financial Regulation' presented at 6th EUROFRAME Conference on Economic Policy Issues in the European Union (12 June), British Academy, London, 2009
Abstract: 'The Limits of Disclosure as a Regulatory Technique and European Financial Regulation', National Institute of Economic and Social Research (NIESR) and European Forecasting Research Association for Macro-economy (EUROFRAME), 6th EUROFRAME Conference on Economic Policy Issues in the European Union, British Academy, London, 12 June 2009.
Emilios Avgouleas 'What Future for Disclosure as a Regulatory Technique? Lessons from the Global Financial Crisis and Beyond' presented at ESRC World Economy and Finance Programme and the University of Glasgow Conference: The Future of Financial Regulation' (30-1 March), Glasgow, 2009
Emilios Avgouleas 'Developments in the EU Law of market abuse and the ban on short sales' presented at Market Abuse in the Financial Sector (22-23 Jan.), London, 2009
Emilios Avgouleas 'International Financial Regulation, Access to Finance, Systemic Stability, and Development' presented at Society of International Economic Law (SIEL) Conference (15-17 July), Geneva, 2008
Company and Commercial Law
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- Ms Laura Macgregor
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- Professor Doreen McBarnet
- Ms Lorna Richardson
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European Law, Policy and Institutions
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- Professor Sir David Edward
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