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In capital markets, digitisation and cloud technology have catalysed opportunities for AI by enabling firms to collect, store and analyse larger datasets from a variety of internal sources than ever before. The past year brought greater regulatory activity around AI in the UK, EU and US than in any prior year, although regulatory regimes remain disparate. When considering legal issues that arise from use of AI, facets of multiple legal fields are relevant, albeit differing between jurisdictions, such as intellectual property rights frameworks and contractual areas such as data ownership, data rights, risk and liability allocation and compliance responsibilities. In this paper, the key legal considerations and recent regulatory developments are categorised into four actionable, international themes: (i) due diligence of data as an asset; (ii) effective organisational ongoing controls; (iii) intellectual property management; and (iv) third party contract and risk management. With so much in flux, we find that the best approach for now is to consider such themes and ensure robust governance, transparency and explainability of each of the AI systems, human oversight of the AI and contractual arrangements with third party providers. Perhaps ironically, 'getting AI right' is currently, to a large extent, more an art of human judgement than any formulaic compliance with rules. [ABSTRACT FROM AUTHOR]

Using unique transactions data for individual high-frequency trading (HFT) firms in the U.K. equity market, we examine the extent to which the trading activity of individual HFT firms is correlated with each other and the impact on price efficiency. We find that HFT order flow, net positions, and total volume exhibit significantly higher commonality than those of a comparison group of investment banks. However, intraday HFT order flow commonality is associated with a permanent price impact, suggesting that commonality in HFT activity is information based and so does not generally contribute to undue price pressure and price dislocations. [ABSTRACT FROM PUBLISHER]

In March 2015, the UK applied to become a founder member of the Chinese-led Asian Infrastructure Investment Bank (AIIB) despite objections from the Foreign Office and Washington, DC, and ahead of other major western countries although they were to follow quickly. What explains the British decision? The paper argues that the underlying long-run reasons included shifting perceptions of American and Chinese power, economic imperatives, the institutional opportunities offered to pursue "venue-shopping" strategies within the British state, and widespread ambivalence about UK policy towards China. Furthermore, although analyses often eschew "snapshot" perspectives, short-run perceptions that the UK could, by joining the AIIB at that point, gain a first mover advantage that would provide greater access to Chinese markets, secure contracts across Asia for British firms, and enable the City of London to win an even greater share of the offshore renminbi trade proved decisive. [ABSTRACT FROM AUTHOR]

One of the problems perceived to be at the heart of the global financial crisis was an amalgamation of various commercial and investment banking activities under one entity, as well as the interconnectedness of the banking entities with other financial institutions, investment funds, and the shadow banking system. This paper focuses on various measures that aim to structurally separate the banking entities and their core functions from riskier financial activities such as (proprietary) trading or investments in alternative investment funds. Although banking structural reforms in the EU, the UK, and the US have taken different forms, their common denominator is the separation of core banking functions from certain trading or securities market activities. Having reviewed the arguments for and against banking structural reforms and their varieties in major jurisdictions, including the EU, UK, US, France, and Germany, the paper argues that a more nuanced approach to introducing such measures at the EU level is warranted. Given the different market structures across the Atlantic and the lack of conclusive evidence of the beneficial impact of banking structural reforms, the paper concludes that the withdrawal of the banking structural reforms proposal by the European Commission has been a prudent move. It seems that in the absence of concrete evidence, experimenting with structural reforms at the Member-State level would be less costly and would provide for opportunities for learning from smaller experiments that could pave the way for a more optimal approach to banking structural reforms at the European level in the future. [ABSTRACT FROM AUTHOR]

Analyses of investment banks acting as advisers for merger and acquisition transactions in the United Kingdom during 1992-2001 are used to examine the relationship between structural holes in a firm's network and its performance. We argue that the firms need two types of information--about new business opportunities and partners' cooperativeness--to pursue, respectively, two types of performance goals: status accumulation and market performance. Open networks facilitate access to information about new business opportunities, but at the same time, open ego networks limit access to information about partners' cooperativeness. We find that there is a positive and reciprocal relationship between status accumulation and market performance. We also find that structural holes increase firms' status accumulation but also dampen their market performance. [ABSTRACT FROM AUTHOR]

The finance industry relies heavily on the risk modelling and analysis toolbox to assess the risk profiles of entities such as individual and corporate borrowers and investment vehicles. Such toolbox includes a variety of parametric and nonparametric methods for predicting risk class belonging. In this paper, we expand such toolbox by proposing an integrated framework for implementing a full classification analysis based on a reference point method, namely in-sample classification and out-of-sample classification. The empirical performance of the proposed reference point method-based classifier is tested on a UK data-set of bankrupt and nonbankrupt firms. Our findings conclude that the proposed classifier can deliver a very high predictive performance, which makes it a real contender in industry applications in banking and investment. Three main features of the proposed classifier drive its outstanding performance, namely its nonparametric nature, the design of our RPM score-based cut-off point procedure for in-sample classification, and the choice of a k-nearest neighbour as an out-of-sample classifier which is trained on the in-sample classification provided by the reference point method-based classifier. [ABSTRACT FROM AUTHOR]

Debates about the Global Financial Crisis of 2007 have pointed at institutional and individual-behavioural factors as its causes. Using the British Household Panel Survey, this article highlights marked differences in perceptions of societal and economic fairness among financial services employees in investment or management positions in the United Kingdom and the general working population at the brink of the Global Financial Crisis. Panel data analysis suggests that financial services and occupations did not necessarily attract employees with pro-market attitudes, but that employment in these institutions and occupations made it more likely that employees came to display these perceptions, contributing to the construction of a distinct attitudinal profile of finance employees. [ABSTRACT FROM AUTHOR]

The article analyses recent developments in the regulation of the institutional structure of banking groups in the European Union. It discusses the evolution of the universal banking model in Europe and how the global banking crisis of 2007-2009 has led to structural regulatory reforms of the European banking industry. Particular attention is paid to the British banking sector and to the United Kingdom's ring-fence banking legislation and structural regulatory reforms. The article analyses the EU Commission's proposed legislation to regulate the organisational structure of European banks and banking groups and compares it to structural reform legislation in Germany and France. It also analyses some of the main challenges concerning implementation of EU structural banking reforms and whether they can be effectively coordinated with existing bank supervisory and resolution practices. The article concludes by suggesting that the various limitations and prohibitions on bank trading activities in structural regulatory reforms will probably not lead to a reduction of harmful risk-taking in the financial sector, but to a shift of risk-taking away from the banking sector (where it can be monitored) to under-regulated areas of the financial system. [ABSTRACT FROM AUTHOR]

We are increasingly learning more about the contingencies and independent variables that shape the structural power of business and financial interests. This paper contributes to this research by analysing factors that led to weakening in the structural power of financial interests in the City of London in the aftermath of the 2007/2008 crisis. We focus on under-researched mediators of structural power dynamics, especially the context of action and the agency and ideas of state leaders. Prior to the crisis, closed regulatory policy and a prevailing discourse premised upon the notion of market efficiency, helped to reinforce the structural power of the UK banking and financial sector. After the crisis heightened politicisation, more assertive state leadership, and especially ideational revision, has increasingly challenged the power of the City. We illustrate this through an examination of the Independent Commission on Banking's proposals in relation to the ‘ring fencing’ of investment and retail banks. [ABSTRACT FROM PUBLISHER]

Purpose – The purpose of this paper is to explore how two kinds of UK-based media positioned investment banking as dirty work during the financial crisis, thereby engaging in moral enterprise (Becker, 1963) and contributing to the shaping of society's normative contours (Cohen, 1972). Design/methodology/approach – The authors employ rhetorical analysis to explore how newspaper editorials and an online blog portray investment banking as tainted between April 2008 and October 2009. Findings – These media sources construct the values and behaviours of investment bankers, rather than the tasks of their occupation, as morally tainted. Through specific rhetorical strategies the authors advance three key arguments: bankers are morally tainted because their wealth is excessive; because their wealth is not earned; and because they are selfish and materialist. Originality/value – In investigating media designations of investment banking as dirty work, the paper addresses two aspects of dirty work which are underexplored. First, it examines a high-prestige occupation and second, investigates the construction and attribution of taint to a previously untainted occupation. It makes two methodological contributions to the literature: contributing to the nascent interest in the media's construction of dirty work (e.g. Grandy and Mavin, 2012); and using rhetorical analysis to study the construction of taint. [ABSTRACT FROM AUTHOR]

This article presents the case for a state-owned British Investment Bank and discusses its institutional design and capitalisation on the basis of the experiences of the Nordic Investment Bank ( BIB). Current supply-side policies aimed at increasing investment in the infrastructure and small- and medium-sized enterprise ( SME) sectors are likely to fail because they neglect constraints and market failures on the demand side. In contrast, a commercially operated but mandate-driven public investment bank can mitigate market failures on both sides by not only supplying capital on favourable terms to financially viable projects but also stimulating demand through policy-signalling effects. A focus on offering additionality would be key to the BIB's success. In addition to the 'economic case' for the BIB, this article discusses the 'political case': how to make it interesting to a government bent on fiscal retrenchment. [ABSTRACT FROM AUTHOR]

This paper examines the role of business education in producing and legitimating gendered cultures of work in the City of London. By combining research on the gendered nature of service work with Bourdieu's identification of multiple forms of capital and the role of education credentials within this, the analysis shows how business education reproduces classed and gendered understandings of appropriate and desirable workplace personas in financial services. The analysis is based on original empirical research undertaken in London's investment banking sector comprising 90 semi-structured interviews and content analysis of business education courses offered to investment bankers. Empirically, the paper focuses attention on the comparatively neglected role of business education undertaken in the workplace in shaping the cultures of work in financial centers such as London. Theoretically, the analysis shows how work on the cultural capital associated with education credentials and their role in shaping workplace identities can be used to better understand the role of education in legitimating, reproducing and sustaining gendered cultures of work more generally. [ABSTRACT FROM PUBLISHER]

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In the lead-up to the peak of the financial bubble (and before the onset of the global financial crisis), property was regularly promoted as a ready-made alternative to private pensions. This paper explores the importance of owner-occupied housing for the retirement savings strategies of defined contribution (DC) pension plan members. Based upon a unique survey of over 2300 participants in the DC pension scheme of a London-based international bank, an assessment is made of the statistical significance of respondents’ socioeconomic status and risk preference in predicting the significance or otherwise of their home for retirement saving. Relatively few respondents indicated that they were likely to rely on their home. Those that indicated reliance were relatively older, higher-paid and married employees. The paper concludes with implications for understanding the connection between savings behaviour and housing before and after the global financial crisis. [ABSTRACT FROM PUBLISHER]

Alongside investment banks and bankers, architecture and architects should be blamed for the global economic crisis that hit cities in 2008. Risky financial speculations were driven by a real estate bubble that relied on the production of spectacular, expensive buildings by the architecture industry. Four years later, contemporary architecture (especially in Europe) still fails to engage with or promote socially aware, progressive urban thinking. The tradition of socially engaged architecture has almost vanished. That attitude is apparent only in remnant form - small initiatives focused on buildings rather than on the built environment as a whole. Our new cities of austerity require a reassessment of this attitude, and afresh generation of architects must be educated to address the challenges facing our urban environment. This article presents a theoretical framework of a new paradigm of radical architecture and radical architecture education, as a function of strong social and political positions taken by students. This framework is the current result of three years of work conducted at the M.Arch. programme at the University of Plymouth, United Kingdom, including projects from 2009 to 2012: one in Riga, Latvia, the second in Gdansk, Poland and the most recent in Zielona Gora, Poland. It will illustrate how architecture and urban design could become a tool for social and political change and a means to create liveable cities from the ruins of the neo-liberal model. [ABSTRACT FROM AUTHOR]

London goldsmith-bankers' development of paper credit-money in the seventeenth century ushered in the era of modern banking. This essay argues that this innovation of paper credit-money by goldsmith-bankers was the institutionalisation of the double-ownership scheme known as trust. This trust scheme was at the centre of the custom or morality that underlay the political struggle between the Crown, landowners, and the bourgeoisie in early modern England, the struggle from which goldsmith-banking and, later, joint-stock banking developed. This double ownership remains a central feature of the present banking system. Also during the financial boom of the late twentieth century, which ended in the present world financial crisis, the trust scheme was used extensively by many financial firms, such as mutual funds, pension funds, and asset-securitisation trusts. [ABSTRACT FROM AUTHOR]

Research on analyst bias typically identifies affiliation with reference to a subset of the mandates that could give rise to incentives for bias in a multifunction investment bank. This paper develops a new measure of affiliation based upon the UK practice of corporate broking. An advantage of this approach is that affiliation is no longer restricted to isolated equity issuance events as it is an ongoing activity. This research shows that prior US evidence regarding the 'Global Settlement' is robust to this new measure and application in the United Kingdom rather than solely the United States. The paper uses a hazard rate methodology focusing on the timeliness of revisions to address selection bias concerns. [ABSTRACT FROM AUTHOR]

The article offers information on Financial Services Authority (FSA), which proposed the Remuneration Code (the Code) guidance as well as the Prudential Regulation Authority (PRA). It mentions that the FSA published draft guidance documents to help firms comply with the Code. It states that the draft guidance documents include templates used by firms to document compliance and offer general guidance on the Code's aspects. It presents several draft guidance documents that the FSA published including Guaranteed Variable Remuneration, Retention Periods, and Remuneration Code. It states that the FSA and Bank of England published a paper on the PRA's approach in supervising investment firms and banks.

Purpose – The main aims of this paper are to determine the extent to which experienced traders in investment banks based in London are learning by informal methods, which methods are to the fore, and whether HRD staff are providing support for informal learning. It also seeks to find evidence that such investment banks were attempting to become learning organisations. Design/methodology/approach – Empirical research was conducted involving in-depth semi-structured interviews with experienced traders, line managers of traders, and HRD professionals involved in the training of traders in London based investment banks. Findings – Most of the ongoing learning conducted by traders was informal, and on-the-job in nature. This informal learning was ad hoc, poorly recorded, and limited in scope. Support of line managers to learning by their subordinate traders was patchy, with little accountability. HRD professionals were almost entirely concerned with organising formal training courses, and had little knowledge of, or involvement with, informal learning by traders. There was very little evidence of investment banks striving to become learning organisations. Research limitations/implications – The research study was limited to those investment banks willing to take part in the study, and by the banks selecting those to be interviewed. Practical implications – Investment banks have become a powerful component of the UK economy, and the ways in which their traders learn, or could learn, effectively in terms of competence improvement is key to the performance of these banks. Originality/value – Informal learning by traders in investment banks in the UK has been little researched to date. This paper addresses this inadequacy. [ABSTRACT FROM AUTHOR]

Backsourcing is motivated by opportunities arising from changes in the business situation, redefinition of the character of outsourced service declining in quality or due to the discovery of flaws in the contract. The situation of backsourcing clearly has major implications for an organization in terms of monetary investments, IS infrastructure and changes in employee requirements during and after the process. The paper considers a detailed analysis of two case studies of backsourcing reported from JP Morgan Chase (USA) and Sainsbury (UK). A major contribution of the paper is to identify important strategies to be followed in backsourcing projects to ensure efficient knowledge re-integration. [ABSTRACT FROM AUTHOR]

The UK Government has recently published a consultation paper on potential law reform for failing investment banks. The paper was prompted by the failure of Lehman Brothers and its repercussions. This article reviews the paper and highlights some of the key issues emerging which may form the focus of future law reform. [ABSTRACT FROM AUTHOR]

This study investigates characteristics that affect the relationship between firms' positions in a network of collaborative ties with other firms and their performance. Firms located in similarly structured networks rich in structural holes may obtain different performance results depending on their (1) capacity to absorb heterogeneous information, (2) ability to protect against partner noncooperation, and (3) bargaining power. In this paper, I argue that firms with a wide scope of experience have superior absorptive capacity for dealing with heterogeneous information; hence, such firms will be able to extract performance improvements from network positions rich in structural holes. Furthermore, firms with a high level of historic multimarket contact (MMC) with their partners are able to reduce the risks of partner noncooperation, hence augmenting their performance compared to firms in open networks that do not enjoy MMC with their own partners. Finally, firms of low centrality in the industry's network of alliances will extract performance benefits from enhancing bargaining power as a result of exploiting brokerage opportunities in open networks. These arguments are corroborated in a study of relationships formed among investment banks' advising on the merger and acquisition transactions in the United Kingdom between 1992 and 2001. [ABSTRACT FROM AUTHOR]