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We examine whether the uncertainty related to environmental, social, and governance (ESG) regulation developments is reflected in asset prices. We proxy the sensitivity of firms to ESG regulation uncertainty by the disparity across the components of their ESG ratings. Firms with high ESG disparity have a higher option-implied cost of protection against downside tail risk. The impact of the misalignment across the different dimensions of the ESG score is distinct from that of ESG score level itself. Aggregate downside risk bears a negative price for firms with low ESG disparity.
Many consumers care about climate change and other externalities associated with their purchases. We analyze the behavior and market effects of such “socially responsible consumers” in three parts. First, we develop a flexible theoretical framework to study competitive equilibria with rational consequentialist consumers. In violation of price taking, equilibrium feedback non-trivially dampens a consumer’s mitigation efforts, undermining responsible behavior. This leads to a new type of market failure, where even consumers who fully “internalize the externality” overconsume externality-generating goods. At the same time, socially responsible consumers change the relative effectiveness of taxes, caps, and other policies in lowering the externality. Second, since consumer beliefs about and preferences over dampening play a crucial role in our framework, we investigate them empirically via a tailored survey. Consistent with our model, consumers are predominantly consequentialist, and on average believe in dampening. Inconsistent with our model, however, many consumers fail to anticipate dampening. Third, therefore, we analyze how such “naive” consumers modify our theoretical conclusions. Naive consumers behave more responsibly than rational consumers in a single-good economy, but may behave less responsibly in a multi-good economy with cross-market spillovers. A mix of naive and rational consumers may yield the worst outcomes.
Cryptocurrencies provide a unique opportunity to identify how derivatives impact spot markets. They are fully fungible, trade across multiple spot exchanges at different prices, and futures contracts were selectively introduced on bitcoin (BTC) exchange rates against the USD in December 2017. Following the futures introduction, we find a significantly greater increase in cross-exchange price synchronicity for BTC--USD relative to other exchange rate pairs, as demonstrated by an increase in price correlations and a reduction in arbitrage opportunities and volatility. We also find support for an increase in price efficiency, market quality, and liquidity. The evidence suggests that futures contracts allowed investors to circumvent trading frictions associated with short sale constraints, arbitrage risk associated with block confirmation time, and market segmentation. Overall, our analysis supports the view that the introduction of BTC--USD futures was beneficial to the bitcoin spot market by making the underlying prices more informative.
Identification and regulation of tomato Serine/Arginine-rich proteins under high temperatures
(2021)
Alternative splicing is an important mechanism for the regulation of gene expression in eukaryotes during development, cell differentiation or stress response. Alterations in the splicing profiles of genes under high temperatures that cause heat stress (HS) can impact the maintenance of cellular homeostasis and thermotolerance. Consequently, information on factors involved in HS-sensitive alternative splicing is required to formulate the principles of HS response. Serine/arginine-rich (SR) proteins have a central role in alternative splicing. We aimed for the identification and characterization of SR-coding genes in tomato (Solanum lycopersicum), a plant extensively used in HS studies. We identified 17 canonical SR and two SR-like genes. Several SR-coding genes show differential expression and altered splicing profiles in different organs as well as in response to HS. The transcriptional induction of five SR and one SR-like genes is partially dependent on the master regulator of HS response, HS transcription factor HsfA1a. Cis-elements in the promoters of these SR genes were predicted, which can be putatively recognized by HS-induced transcription factors. Further, transiently expressed SRs show reduced or steady-state protein levels in response to HS. Thus, the levels of SRs under HS are regulated by changes in transcription, alternative splicing and protein stability. We propose that the accumulation or reduction of SRs under HS can impact temperature-sensitive alternative splicing.
The use of evidence and economic analysis in policymaking is on the rise, and accounting standard setting and financial regulation are no exception. This article discusses the promise of evidence-based policymaking in accounting and financial markets as well as the challenges and opportunities for research supporting this endeavor. In principle, using sound theory and robust empirical evidence should lead to better policies and regulations. But despite its obvious appeal and substantial promise, evidence-based policymaking is easier demanded than done. It faces many challenges related to the difficulty of providing relevant causal evidence, lack of data, the reliability of published research, and the transmission of research findings. Overcoming these challenges requires substantial infrastructure investments for generating and disseminating relevant research. To illustrate this point, I draw parallels to the rise of evidence-based medicine. The article provides several concrete suggestions for the research process and the aggregation of research findings if scientific evidence is to inform policymaking. I discuss how policymakers can foster and support policy-relevant research, chiefly by providing and generating data. The article also points to potential pitfalls when research becomes increasingly policy-oriented.
While the debate about the needs and merits of cryptocurrency regulation is ongoing, the unprecedented price hikes of cryptocurrencies towards the end of 2017 triggered a somewhat unexpected sort of regulation in the form of public statements by governments and financial supervisors. It kicked in rather quickly and turned out to be much more effective than imagined. These interventions can be identified as one of the main factors that drove asset prices down, thereby preventing destabilizing bubbles. The experience of the supervisory response to the cryptocurrency bubble of the past months keeps important insights for any prospective regulation of cryptocurrencies. First, public statements are a highly effective regulatory tool in the short term as they manage market expectations, a fact which is well-known as forward guidance in monetary policy. So far, the legal framework in the EU takes insufficient account of the regulatory role of public statements. Second, regulation needs to keep up with the incredible speed of fintech innovations. Some regulators addressed the challenge by adopting a ‘sandbox’ approach. However, the ‘sandbox’ approach clearly calls for international cooperation. To achieve a balance between safety and innovation, international cooperation should emulate the experimental character of sandboxes. One could conceive of a ‘sandbox for regulators’, an arrangement which would facilitate the exchange of information on regulatory initiatives among authorities but also the coordination of communication and forward guidance.
This policy letter provides evidence for the crucial importance of the initial regulatory treatment for the further development of financial innovations by exploring the emergence and initial legal framing of off-balance-sheet leasing in Germany. Due to a missing legal framework, lease contracts occurred as an innovative social practice of off-balance-sheet financing. However, this lacking legal framing impeded the development of this financial innovation as it also created legal uncertainties. This was about to change after the initial legal framing of leasing in the 1970’s which eliminated those legal uncertainties and off-balance-sheet leasing entered into a stunning period of growth while laying the foundation of a regulatory resiliency against efforts that seek to abandon the off-balance-sheet treatment of leases. As the initial legal framing is crucial for the further development of a financial innovation, we propose the French approach for the initial vindication of new financial products in which the principles-based rules are aligned with the capabilities of regulators to intervene, even when a financial innovation complies with the letter of the law. In this way, regulators could regulate the frontier of financial innovations and weed out those which are entirely or mainly driven by regulatory arbitrage considerations while maintaining the beneficial elements of those products.
Mannitol is the major compatible solute, next to glutamate, synthesized by the opportunistic human pathogen Acinetobacter baumannii under low water activities. The key enzyme for mannitol biosynthesis, MtlD, was identified. MtlD is highly similar to the bifunctional mannitol‐1‐phosphate dehydrogenase/phosphatase from Acinetobacter baylyi. After deletion of the mtlD gene from A. baumannii ATCC 19606T cells no longer accumulated mannitol and growth was completely impaired at high salt. Addition of glycine betaine restored growth, demonstrating that mannitol is an important compatible solute in the human pathogen. MtlD was heterologously produced and purified. Enzyme activity was strictly salt dependent. Highest stimulation was reached at 600 mmol/L NaCl. Addition of different sodium as well as potassium salts restored activity, with highest stimulations up to 41 U/mg protein by sodium glutamate. In contrast, an increase in osmolarity by addition of sugars did not restore activity. Regulation of mannitol synthesis was also assayed at the transcriptional level. Reporter gene assays revealed that expression of mtlD is strongly dependent on high osmolarity, not discriminating between different salts or sugars. The presence of glycine betaine or its precursor choline repressed promoter activation. These data indicate a dual regulation of mannitol production in A. baumannii, at the transcriptional and the enzymatic level, depending on high osmolarity.
This paper applies the theory of structured finance to the regulation of asset backed securities. We find the current regulation in Europe (Article 405 of the CRR) and the US (Section D of Dodd-Frank Act) to be severely flawed with respect to its key intention: the imposition of a strict loss retention requirement. While nominal retention is always 5%, the true level of loss retention varies across available retention options between zero loss retention and full loss retention at the extreme ends. Based on a standard model of structured finance transactions, we propose a new risk retention metric RM measuring the level of an issuer’s skin-in-the-game. The new metric could help to achieve a better implementation of CRR/CRD-IV and DFA, by making disclosure of the RM-number compulsory for all ABS transactions. There are also implications for the operation of rating agencies. On a general level, the RM metric will be instrumental in achieving simplicity and transparency in securitizations (STS).
In a field study with more than 1.500 customers of an online-broker we test what happens when investors receive repeated feedback on their investment success in a monthly securities account report. The reports show investors’ last year’s returns, costs, their current level of risk and their portfolio diversification. We find that receiving a report results in investors trading less, diversifying more and having higher risk-adjusted returns. Results are robust to controlling for potential play money accounts and changes in report designs. We also find that investors who are less likely to subscribe equally benefit from the report.
This Paper gives an overview of the German banking system and current challenges it is facing. It starts with an overview of the so-called ‘Three-Pillar-Banking-System’ and a detailed description of the current structure of the banking system in Germany. A brief comparison of the banking system in Germany with the ones in other European countries points out its uniqueness. The consequences of the financial crisis of 2007/2008 and further challenges for the German banking system are discussed, as well as the the ongoing debate around the question whether the strong government involvement should be sustained.
Investors and insurance policyholders are often confronted with complex products and providers' opaque organisational structures. At the same time, the possibility that their claims will not be honoured often poses an existential risk. Financial regulation therefore aims at putting in place a financial services framework that will safeguard market processes whilst also protecting consumers. However, benefits of regulation are accompanied by certain risks, as can be exemplified with the case of insurance regulation.
Financial innovation is, as usual, faster than regulation. New forms of speculation and intermediation are rapidly emerging. Largely as a result of the evaporation of trust in financial intermediation, an exponentially increasing role is being played by the so-called peer to peer intermediation. The most prominent example at the moment is Bitcoin.
If one expects that shocks in these markets could destabilize also traditional financial markets, then it will be necessary to extend regulatory measures also to these innovations.
This paper explores consequences of consumer education on prices and welfare in retail financial markets when some consumers are naive about shrouded add-on prices and firms try to exploit it. Allowing for different information and pricing strategies we show that education is unlikely to push firms to disclose prices towards all consumers, which would be socially efficient. Instead, price discrimination emerges as a new equilibrium. Further, due to a feedback on prices, education that is good for consumers who become sophisticated may be bad for consumers who stay naive and even for the group of all consumers as a whole
The European Commission recently put forward a proposal for a regulation to amend and strengthen the 2009 version of the EU's rules on the regulation of credit rating agencies ("CRA3"). Among other things, Art. 35a of the draft proposal introduces strict liability for rating agencies. This liability proposal is at odds with the aim to strengthen competition in the rating sector and could have a chilling effect on capital markets. The paper analyses existing rules on civil liability of rating agencies under different legal systems. Subsequently, the provision under Art. 35a of the Draft Proposal is examinded more closely. Suggestions on possible improvemts of the proposal are made.
Regulation of dissimilatory sulfur oxidation in the purple sulfur bacterium Allochromatium vinosum
(2011)
In the purple sulfur bacterium Allochromatium vinosum, thiosulfate oxidation is strictly dependent on the presence of three periplasmic Sox proteins encoded by the soxBXAK and soxYZ genes. It is also well documented that proteins encoded in the dissimilatory sulfite reductase (dsr) operon, dsrABEFHCMKLJOPNRS, are essential for the oxidation of sulfur that is stored intracellularly as an obligatory intermediate during the oxidation of thiosulfate and sulfide. Until recently, detailed knowledge about the regulation of the sox genes was not available. We started to fill this gap and show that these genes are expressed on a low constitutive level in A. vinosum in the absence of reduced sulfur compounds. Thiosulfate and possibly sulfide lead to an induction of sox gene transcription. Additional translational regulation was not apparent. Regulation of soxXAK is probably performed by a two-component system consisting of a multi-sensor histidine kinase and a regulator with proposed di-guanylate cyclase activity. Previous work already provided some information about regulation of the dsr genes encoding the second important sulfur-oxidizing enzyme system in the purple sulfur bacterium. The expression of most dsr genes was found to be at a low basal level in the absence of reduced sulfur compounds and enhanced in the presence of sulfide. In the present work, we focused on the role of DsrS, a protein encoded by the last gene of the dsr locus in A. vinosum. Transcriptional and translational gene fusion experiments suggest a participation of DsrS in the post-transcriptional control of the dsr operon. Characterization of an A. vinosum ΔdsrS mutant showed that the monomeric cytoplasmic 41.1-kDa protein DsrS is important though not essential for the oxidation of sulfur stored in the intracellular sulfur globules.
The European Commission's Green Paper "Audit Policy: Lessons from the Crisis" raises 38 questions regarding how the audit function could be enhanced in order to contribute to increased financial stability. The authors comment on these 38 questions, arguing that the general level of audit quality can be enhanced by extending the duties of care and by tightening the regulations on liability.
5-Lipoxygenase (5-LO) katalysiert die ersten beiden Schritte in der Biosynthese der Leukotriene, die an Reaktionen des Immunsystems beteiligt sind. Die 5-LO-Aktivität wird durch verschiedene Faktoren wie Ca2+, Phospholipide und den zellulären Redoxstatus beeinflusst. Die 5-LO besteht aus einer katalytischen und einer N-terminalen, C2-ähnlichen Domäne. Durch Oxidation des Eisens im aktiven Zentrum zur Fe3+-Form wird das Enzym aktiv. Die C2-ähnliche Domäne bindet Ca2+ und PC und ist für die Membranbindung der 5-LO verantwortlich. In der vorliegenden Arbeit wurde die Aktivierung der 5-LO durch das Diacylglycerid OAG untersucht. Bekannt war die Stimulation der Agonist-induzierten 5-LO-Aktivität in intakten Zellen durch OAG, die nicht auf den bekannten Aktivierungswegen wie Translokation, Phosphorylierung oder Ca2+-Mobilisierung beruht. Hier kann nun die direkte Aktivierung des 5-LO-Enzyms durch OAG in vitro gezeigt werden. Untersucht man den Einfluss von OAG auf die 5-LO-Aktivität in Anwesenheit von 1 mM Ca2+, lässt sich weder an Homogenat, S100 noch am partiell aufgereinigten Enzym aus PMNL ein Effekt beobachten. Entfernt man dagegen Ca2+ aus den Versuchsansätzen, induziert OAG (30 µM) bei Substratkonzentrationen unter 20 µM AA die 5-LO-Aktivität im S100 und am partiell aufgereinigten Enzym. Auch andere Glyceride wie DOG, OG und EAG aktivieren die 5-LO, nicht jedoch SAG. OAG stabilisiert die 5-LO-Aktivität vor der Hemmung durch die Glutathionperoxidase (GPx), dies vermögen ebenfalls andere Glyceride. Damit ähnelt der Einfluss von OAG auf die 5-LO dem bereits bekannten Effekt von Ca2+: es ist in der Lage, vor allem bei niedrigen Substratkonzentrationen die 5-LO-Produktmenge direkt zu erhöhen und kann die 5-LO-Aktivität gegen den inhibitorischen Effekt der Glutathionperoxidase (GPx) stabilisieren. Ähnlich wie Ca2+ scheint OAG die Affinität der 5-LO für das Substrat AA zu erhöhen und das Bedürfnis für aktivierende Hydroperoxide zu erniedrigen. Durch Untersuchungen im Rahmen dieser Arbeit kann eine Beteiligung der Ca2+-Bindungsstelle an der Interaktion zwischen 5-LO und OAG ausgeschlossen werden, da OAG auch an der loop2 mut-5LO die Aktivität zu steigern vermag. Der Anstieg der 5-LO-Produktbildung durch OAG in S100 und am partiell aufgereinigten 5-LO-Enzym lässt sich durch die Zugabe von PC und anderen Phospholipiden unterbinden. Damit erklärt sich gleichzeitig, weshalb OAG am Homogenat aus PMNL keine Effekte zeigt, da hier noch Zellmembran-Bestandteile enthalten sind. Der OAG-Effekt wird wohl über die drei Tryptophan-Reste Trp-13,-75 und -102 der Phospholipid-Bindungsstelle auf der C2-ähnlichen Domäne der 5-LO vermittelt. Dies zeigen auch Untersuchungen an der 3W mut-5LO, bei der die drei Tryptophan-Reste zu Alanin-Resten mutiert sind. Die Aktivität dieser Mutante lässt sich durch OAG unter den bereits beschriebenen Versuchsbedingungen nicht steigern. Ein weiterer Hinweis auf die Phospholipid-Bindungsstelle ist die Interaktion zwischen OAG und dem 5-LO-Inhibitor Hyperforin. Hyperforin selbst hemmt die 5-LO über diese Bindungsstelle, durch OAG wird der IC50-Wert von Hyperforin deutlich erhöht. Im Rahmen dieser Arbeit wurde ein Lipid Protein Overlay Assay für 5-LO ausgearbeitet, ein direkter Nachweis der Bindung zwischen OAG und 5-LO ist aber bisher nicht gelungen. OAG steigert nicht die Aktivität des 5-LO-Enzyms aus serumfrei kultivierten MM6-Zellen, BL41-E95-A Zellen und transfizierten HeLa-Zellen, auch die Produktmenge der Sojabohnen-LO kann nicht durch OAG beeinflusst werden. Untersucht man die Interaktion von OAG mit aufgereinigter regulatorischer Domäne (MBP-Fusionsprotein, MBP-5LO1-128), so zeigt sich eine weitere Steigerung der durch OAG-induzierten 5-LO-Aktivität, obwohl MBP-5LO1-128 bei höheren Konzentrationen eine Hemmung der 5-LO-Aktivität durch Reduktion der gebildeten 5-HPETE verursacht. Diese Ergebnisse lassen sich damit erklären, dass OAG das Bedürfnis der 5-LO für Hydroperoxide senkt und damit geringere Mengen an 5-HPETE zur Aktivierung der 5-LO ausreichen. Betrachtet man das 5-HETE/5-HPETE-Verhältnis, führt die Zugabe OAG in Abwesenheit von Ca2+ und bei 10 µg MBP-5LO1-128 zu einer geringen Abnahme des 5-HETE-Anteils. Im zweiten Teil der Arbeit wurden neue 5-LO-Inhibitoren identifiziert. Aus der Reihe der Pirinixinsäure-Derivate konnte durch entsprechende Modifikationen der potente 5-LO-Inhibitor LP 119 mit einem IC50-Wert von 0,6 µM in intakten PMNL-Zellen identifiziert werden. Durch systematisches Durchsuchen virtueller Datenbanken konnten mindestens zwei Substanzen gefunden werden, die sowohl an intakten Zellen wie auch am partiell aufgereinigten Enzym die 5-LO-Aktivität hemmen, weitere Untersuchungen ergaben, dass es sich wohl zumindest bei einer Strukturklasse um einen direkten 5-LO-Inhibitor handelt.
This article presents an overview of the contemporary German insurance market, its structure, players, and development trends. First, brief information about the history of the insurance industry in Germany is provided. Second, the contemporary market is analyzed in terms of its legal and economic structure, with statistics on the number of companies, insurance density and penetration, the role of insurers in the capital markets, premiums split, and main market players and their market shares. Furthermore, the three biggest insurance lines—life, health, and property and casualty—are considered in more detail, such as product range, country specifics, and insurance and investment results. A section on regulation outlines its implementation in the insurance sector, offering information on the underlying legislative basis, supervisory body, technical procedures, expected developments, and sources of more detailed information.
Despite a lot of re-structuring and many innovations in recent years, the securities transaction industry in the European Union is still a highly inefficient and inconsistently configured system for cross-border transactions. This paper analyzes the functions performed, the institutions involved and the parameters concerned that shape market and ownership structure in the industry. Of particular interest are microeconomic incentives of the main players that can be in contradiction to social welfare. We develop a framework and analyze three consistent systems for the securities transaction industry in the EU that offer superior efficiency than the current, inefficient arrangement. Some policy advice is given to select the 'best' system for the Single European Financial Market.
Efficient systems for the securities transaction industry : a framework for the European Union
(2003)
This paper provides a framework for the securities transaction industry in the EU to understand the functions performed, the institutions involved and the parameters concerned that shape market and ownership structure. Of particular interest are microeconomic incentives of the industry players that can be in contradiction to social welfare. We evaluate the three functions and the strategic parameters - the boundary decision, the communication standard employed and the governance implemented - along the lines of three efficiency concepts. By structuring the main factors that influence these concepts and by describing the underlying trade-offs among them, we provide insight into a highly complex industry. Applying our framework, the paper describes and analyzes three consistent systems for the securities transaction industry. We point out that one of the systems, denoted as 'contestable monopolies', demonstrates a superior overall efficiency while it might be the most sensitive in terms of configuration accuracy and thus difficult to achieve and sustain.