Speaker: Professor William J. Magnuson (Professor of Law, Texas A&M University School of Law)

Abstract: A remarkable transformation is taking place in our financial markets. The rise of machine learning algorithms and other artificial intelligence models has rapidly overtaken older methods of financial decisionmaking, and the consequences of the revolution are beginning to be felt across the capital markets ecosystem, from stock exchanges to derivatives markets to currency trading. These new technologies offer great promise, including more accurate prices, faster transactions and more efficient trading. But they also create risks. From flash crashes to insider trading algorithms to adversarial attacks, artificial intelligence presents a range of unique vulnerabilities that could lead to significant and wide-ranging harm to our financial system. Legal frameworks devised to structure and constrain financial institutions, in turn, are ill-equipped to deal with these harms because they were designed based on outdated assumptions about the structure of markets, as well as the nature of its primary actors. This Article offers the first comprehensive account of the economic, political and legal consequences of the rise of artificially intelligent markets. It demonstrates how the major driver of this shift has been the hedge fund industry, an opaque and lightly regulated sector of the financial ecosystem that has long been an early-adopter of financial technology. It concludes by proposing a series of escalating regulatory reforms that might better fit financial regulation to our new artificially intelligent markets.

William Magnuson is a professor at Texas A&M Law School, where he teaches corporate law. Prior to joining Texas A&M, he taught law at Harvard, worked as an associate in the mergers and acquisitions group of Sullivan & Cromwell, and served as a journalist in the Rome bureau of the Washington Post. He is the author of For Profit: A History of Corporations (Basic Books, 2022) and Blockchain Democracy: Technology, Law and the Rule of the Crowd (Cambridge University Press, 2020). His work has appeared in the Wall Street Journal, the Washington Post, the Financial Times, the L.A. Times, and Bloomberg. He holds a B.A. from Princeton University, a J.D. from Harvard Law School, and an M.A. from the University of Padua.

3CL runs the 3CL Travers Smith Lunchtime Seminar Series, featuring leading academics from the Faculty, and high-profile practitioners.

For more information see the Centre for Corporate and Commercial Law website:

http://www.3cl.law.cam.ac.uk/

Speaker: Dr Luca Sicignano (Lecturer in Business Law at the University of Naples L’Orientale)

Abstract: The effectiveness of corporate restructuring plans largely relies on solutions shared as widely as possible among relevant stakeholders. This explains the worldwide spread of procedures that presuppose a negotiation phase and the attainment of genuine agreements among all stakeholders involved, or at least among the majority of them. However, following Directive (EU) 2019/1023, the widespread introduction of cross-class cram-down mechanisms and more flexible value-allocation rules (the Relative Priority Rule), has profoundly altered the incentives that structure these negotiations. Through a comparative analysis of the main European systems, the paper shows that these tools - originally conceived to prevent opportunistic holdouts - often weaken the search for genuinely consensual solutions and encourage the formation of narrow negotiating coalitions that ultimately impose their preferred outcomes on dissenting creditors. This paper seeks to highlight the modern paradox (the so-called “imposed bargain”) represented by the spread of imposed plans and to investigate the motivations that are likely driving the growing reliance on non-consensual tools for resolving corporate distress.

Luca Sicignano is a Postdoctoral Research Fellow in Business Law at the University of Campania “Luigi Vanvitelli” and a Lecturer in Business Law at the University of Naples “L’Orientale”. He graduated from Luiss “Guido Carli” University in Rome in 2017, where he currently serves as a Teaching Assistant. In 2022, he obtained a Ph.D. in Business Law and was admitted to the Italian Bar following a judicial clerkship at the Public Prosecutor's Office of the Court of Appeal of Rome. He has held visiting research positions at the University of Cambridge, the University of Vienna, and the Max Planck Institute Luxembourg, and has undertaken repeated research stays at the Institute for Comparative Law of Heidelberg University. During the academic year 2023–2024, he served as a Lecturer at Heidelberg University, teaching Introduction to Italian Company Law. His research focuses on Business Law, with particular emphasis on corporate, financial and insolvency law. He has authored over 25 publications in Italian and international journals and has presented his research at conferences in Dublin and Dubrovnik. He serves on the editorial board of Banca, Borsa e Titoli di Credito and is a member of the European Law Institute (ELI) and the Young Scholars section of the European Society for Banking and Financial Law (AEDBF).

3CL runs the 3CL Travers Smith Lunchtime Seminar Series, featuring leading academics from the Faculty, and high-profile practitioners.

For more information see the Centre for Corporate and Commercial Law website:

http://www.3cl.law.cam.ac.uk/

Speaker: Professor Dirk Andreas Zetzsche (Professor of Financial Law, University of Luxembourg)

Abstract: Sustainability-oriented investors want to pay for impact, not compliance. We analyse the regulatory challenges and opportunities of impact investing. We find that advancing impact investing requires a departure from the EU Sustainable Finance Framework's (EUSFF) prevailing input-orientation and an adjustment of EU asset-management law towards an EU Impact Finance Framework.

In its current form, the EUSFF over-emphasises exclusion, using rule-based ex ante definitions of sustainable business (herein termed input). If a large share of global capital follows these rules, unsustainable firms’ capital costs will increase, furthering innovation of sustainable alternatives. However, the EUSFF alone cannot prevent global capital flows into unsustainable investments, and non-EU countries follow different approaches. Although the EUSFF encourages, in effect, the sale of unsustainable EU businesses to non-EU firms, its input orientation has not helped the planet: the same activities continue elsewhere, often under weaker environmental and social standards, leaving the planet worse off. Further, the EUSFF’s disregard for proven ex post impacts risks large-scale capital misallocation and “impact washing”. Worse, the input focus comes at the cost of investments paired with audited evidence of positive ESG impacts ex post.

We argue for shifting EU financial regulation from input to (proven) impact. Yet, rather than adding a new product category, we propose recognising positive impacts through five fine-tuned steps that simplify EU financial regulation, taking into account regulatory developments in the United Kingdom and Switzerland. These include abolishing the link between “do no significant harm” under the Taxonomy Regulation and the Sustainable Finance Disclosure Regulation, simplified reporting aligned with product materials and the emerging IFRS Disclosure Standards, introducing a new proportionality threshold for mid-sized AIFMs, and revising ESMA’s rules on fund names.

Professor Zetzsche is Professor of Financial Law at the University of Luxembourg where he has held the ADA Chair in Financial Law (inclusive finance) since March 2016 and functions as the Head of the Department of Law since 2024. He is also coordinator of the Faculty of Law, Economics and Finance's House of Sustainable Governance & Markets and Co-PI of the Future FinTech National Centre of Excellence in Research and Innovation.

Professor Zetzsche has published more than 400 publications on inclusive and sustainable finance, corporate governance, FinTech and RegTech, and collective investment schemes. He has spoken at most of the leading universities globally and has advised many of the major regulators, eg the FSB, the BIS, the Basel Committee, the European Commission, the European Parliament, ESMA, EBA, the ESRB and the US SEC. In February 2023, he made the case for financial inclusion at the United Nations Social Commission, and spoke on inclusive and sustainable finance at COP27, 28, 29 and 30.

Professor Zetzsche's paper Towards an EU Impact Investing Framework is available on SSRN.

3CL runs the 3CL Travers Smith Lunchtime Seminar Series, featuring leading academics from the Faculty, and high-profile practitioners.

For more information see the Centre for Corporate and Commercial Law website:

http://www.3cl.law.cam.ac.uk/