The ABC of Financial Reform




Arbitrage

A specialised form of trading which exploits the differences in prices between markets to make a profit

Basel           


Waterfront at Basel

  

Switzerland's third largest city and home to the Basel Committee, architects of the Basel III banking reform measures, which aim to strengthen regulation, supervision and risk management in the banking sector

CRD

Capital Requirements Directive; a legislative package by the European Commission, providing a framework for the implementation of  Basel reform

Dodd-Frank

A US federal law passed in 2010, to implement financial regulatory reform in response to the recession of the late 2000s

EBA

The European Banking Authority; the regulatory agency of the European Union

FSB 

Financial Stability Board; international coordinator of  financial authorities and standard setting bodies

G10

Group of ten economically powerful member nations of the International Monetary Fund.  Actually there are eleven of them now...

Hedge Fund

A portfolio of managed investments designed to yield a high return

ICB

Independent Commission on Banking.  An independent body tasked with investigating possible reforms for promoting financial stability and competition, and to make recommendations to the British Government for changes in the UK banking sector

Sir John Vickers

Chairman the Independent Commission on Banking

Jerome Kerviel and Kweku Adoboli

Rogue traders who wreaked havoc at the Societe General and UBS banks, losing millions of euros in unauthorised deals

LCR

Liquidity Coverage Ratio; a standard set up by the Basel Committee defining how much liquidity a financial institution must hold

MiFID
The Markets in Financial Instruments Directive, a European law that provides harmonised regulation for investment services across the 30 member states of the European Economic Area

NSFR
Another Basel Committee standard, the Net Stable Funding Ratio seeks to calculate the proportion of a bank's long term assets which should be funded by long term, stable funding.

Obama

US President and chief architect and signatory of the US Wall Street Reform Act

Pay it Back Act
A precursor of the Wall Street Reform Act which never actually passed into US law.  The idea was to reduce the national debt by applying recaptured taxpayer investments
QE, Quantitative Easing

An attempt to kick-start a flagging economy with an injection of cash from the central bank

Ring-Fencing
Big idea from the ICB, designed to protect innocent account holders from the disastrous effects of 'casino banking' by forcing the banks to conduct any risky investment activity completely separately from retail banking

Systemically Important
Describes the world's largest, richest and most powerful banks whose survival is considered crucial to the global economy

Tier1 Capital
The measure of a bank's liquidity, as defined by the Basel Committee, and used in the calculation of LCR

UBS
Long-established global financial institution which was rocked by the depradations of rogue trader Kweku Adoboli earlier this year

Volcker Rule
Part of the Dodd-Frank act restricting US banks from making cerain types of speculative trades which do not benefit their customers

Wall Street Reform and Consumer Protection Act
AKA Dodd-Frank, President Obama's financial reform bill of 2010

OXley-Sarbanes
Federal law in the US, passed in 2002 after the Enron scandal to try and prevent future similar economic disasters. Aka Sarbox or SOX

Yoyo Economy
Uncertain economic times, ie up and down like a yoyo

 Zillion
An extremely large but unspecified number, like the annual bonuses paid to certain employees of Barclays earlier this year, for example