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GDPR and its effect on your business
| 24-10-2017 | treasuryXL |
GDPR (General Data Protection Regulation) is an EU directive concerning personal data of EU residents that is held by companies. It is intended to give EU residents more control over their personal data by dictating how that data is held by companies. Any data that could be used to determine the identity of an individual must comply with GDPR. Furthermore the definition of personal data has been expanded from the usual name and address information to including such things as IP addresses, cookie data, photographs, minutes from a meeting where people are named etc.
The law states that any company that stores or processes personal data about EU citizens within EU states must comply with GDPR. Main criteria for compliance include:
At first glance most small businesses would be exempt but, there is a provision in Article 30 that shows this is not completely true. The following explanation has been externally sourced:
The only time the articles allow concessions for organisations with fewer than 250 employees is in Article 30 – Records of processing activities. Most organisations will have to maintain a record of processing activities that contains the name and contact details of the controller, the reason for the processing, a description of the type of personal data or category being processed, how long the data will be kept before it will be deleted, and some other requirements.
Point 5 of Article 30 states that the requirements will not apply to an enterprise or an organisation employing fewer than 250 persons unless the processing it carries out is likely to result in a risk to the rights and freedoms of data subjects, the processing is not occasional, or the processing includes special categories. Therefore, a company that processes data on a regular basis or processes special category content such as racial, political or genetic (and others listed in Article 9) material, even if quite small, will not be excluded from this requirement.
Source: https://www.fsb.org.uk/first-voice/act-now-to-comply-with-new-gdpr-rules
Even sole traders hold data, not just of other companies (trading partners) but also of individuals. As a sole trader it is possible to think that the law does not apply to them, but a more prudent approach would be to review all data held. Data can be held in a myriad of locations:
Having discovered all the data the you hold on others, it is then necessary to design a method to protect that data. Just applying a password protection to your computer is not enough – additional security can be provided by encrypting data.
The rights of the individual are clearly defined by GDPR – these include:
The penalties for companies failing to comply with GDPR and failure to disclose data breaches include fines equivalent to 4% of global annual turnover for the preceding financial year or EUR 20 million, whichever is the greater.
What can you do to prepare for GDPR?
All companies that handle client data have a duty to protect that data. That means you need to locate, identify, control and delete data if so requested by the individual. Furthermore, individuals have the right to know how and why companies are using their personal data and if that data is shared with any third parties.
This means starting with a thorough examination to find and identify all third party data that you hold and why. This data then needs to be examined and protected. Data should be held at 1 primary source – ensure data is not duplicated. Clients need to be informed of the data you hold on them.
Whilst this is a considerable challenge, there is a potential advantage to be gained by clients knowing that you are complying which could lead to a rise in the trust they have in you and your organization.
Remember – you only have about 150 working days left to implement!!
Will the ECB taper off its Quantitative Easing programme?
| 23-10-2017 | Lionel Pavey |
On the 26th October the ECB will have their next meeting. One of the main topics will be regarding the current QE programme and a possible announcement over its extension into 2018. Currently the ECB has, after 2 ½ years of QE, purchased more than EUR 2 trillion of mainly Government bonds. At present their monthly purchases amount to roughly EUR 60 billion per month.
A poll organized by Reuters would seem to indicate that the monthly programme would be tapered down to EUR 30-50 billion per month and possibly last for another 6 to 12 months from the start of 2018. Inflation is expected to be around 1.5 per cent till at least the start of 2019 – below the ECB target of just below 2 per cent.
However, under the current rules that govern the QE progamme the upper limit on outstanding purchases is around EUR 2.5 trillion. Taking the existing monthly purchases through to the end of 2017, implies starting 2018 with a balance of at least EUR 2.2 trillion – leaving just EUR 300 billion of headroom for future purchases. If it cut monthly purchases in half, the scheme could be extend to the end of the 3rd quarter in 2018, but no further.
Can the ECB continue QE longer than expected?
The constraints imposed on QE mainly relate to the purchase of Government bonds – maximum 33 per cent of each countries outstanding debt and maximum 25 per cent of any bond issue. The provisions written into the Maastricht Treaty clearly state that the ECB may not finance member states. QE also purchases non-bank bonds (covered bonds, corporate bonds and asset backed securities) which are subject to different criteria – maximum of 70 per cent of any bond issue.
At present, the ECB only holds about 13 per cent of the eligible bonds leaving a large headroom for future possible purchases.
It is conceivable that the ECB could reduce its purchase of Government bonds and simultaneously increase its purchase of corporate bonds, thereby maintaining liquidity to its QE programme. The major drawback is that it would reduce the amount of freely tradable corporate bonds in circulation and have an effect on their price.
What does this mean for interest rates?
As long term debt instruments use Government bond yields as the basis for calculating their yield, when the ECB stops buying Government bonds, the yields on all other debt instruments will increase. At the moment the benchmark (German 10 year Government bonds) yield around 0.4 per cent per annum and the 10 year Interest Rate Swap yields around 0.9 per cent per annum. In 2014 (the year before QE started) German yields averaged 1.25 per cent even though they were in a downward trend the whole year. Assuming the yield spread between Government bonds and Interest Rate Swaps (IRS) remained constant, this implies 10 year IRS moving to at least 1.75 per cent. This would still be below the long term average since the inception of the EURO in 1999 that stands around 3.35 per cent, but a significant increase from the current level of 0.9 per cent.
What happens when the next crisis arrives?
The ECB is not the only central bank to use a form of QE. The Fed, Bank of England and Bank of Japan all have their own versions. When these countries also taper out their QE, naturally there will be a corresponding rise in interest rates. However, if a new financial crisis was suddenly to happen (not unthinkable at the moment) all 3 of these central banks can reapply QE to stimulate their economies. An additional increase to their balance sheets can be accommodated.
Unfortunately for the ECB the very criteria that now applies would make it impossible to restart QE. The ECB could not just increase its balance sheet – current criteria and regulation make that impossible. Any attempt to change the rules would be met by objections from national governments within the EU and legal action. The Bundesbank were very vocal in their objections to the implementation of QE in 2015 – those protests will not have softened by now.
This shows the constraints prevalent upon the EURO – monetary policy is the only tool that the ECB has at its disposal. One policy can not be used to fix all the problems present with the economies of all member states.
Lionel Pavey
Cash Management and Treasury Specialist
Voorlichtingsavond PGO Treasury Management & Corporate Finance
| 20-10-2017 | Robert Dekker |
Deze voorlichtingsavond is bedoeld voor geïnteresseerden die per 1 februari 2018 willen instromen. Dat kan, omdat wij de opleiding modulair georganiseerd hebben, dat ons in staat stelt 2 keer per jaar studenten te laten instromen namelijkper 1 september en per 1 februari.
Een ieder die geïnteresseerd is in de opleiding is van harte welkom om een indruk van de opleiding te krijgen en kennis te maken met de programmadirectie, docenten en (ex-)studenten.
De ontvangst is om 18.00 uur in de Foyer van de Agorazalen. Vanaf 18.30 uur vinden de voorlichtingsrondes plaats. Om 20.30 uur begint de voorlichting voor de opleiding Treasury Management & Corporate Finance. Na afloop is er gelegenheid om vragen te stellen.
Programma
18.00 uur > Ontvangst met koffie/thee en broodjes
18.30 uur > Voorlichtingsronde 1
19.30 uur > Voorlichtingsronde 2
20.30 uur > Voorlichtingsronde 3 – Treasury Management & Corporate Finance (RT)
Na afloop > Gelegenheid tot vragen stellen
Locatie
Vrije Universiteit Amsterdam, Agorazalen, De Boelelaan 1105 (hoofdgebouw, 3e etage)
Aanmelden en informatie
Wij weten graag vooraf op hoeveel mensen we kunnen rekenen. Aanmelden kan via VU PGO voorlichtingsavond
Voor vragen/contact
Nicole Lijs
Postgraduate opleiding Treasury Management & Corporate Finance
020-598 2171/ [email protected]
Robert Dekker – Program director postgraduate program treasury & corporate finance at the VU University
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