The Impact of the New Wave of Financial Regulation for European Energy Markets

Energy Policy 47 (2012) 468–477 Contents lists available at SciVerse ScienceDirect Energy Policy journal homepage: www. elsevier. com/locate/enpol The impact of the new wave of ? nancial regulation for European energy markets Luuk Nijman n School of Public Policy, University College London, London, WC1H 9QU, UK H I G H L I G H T S c c c c c The European Commission has put forward a set of ? nancial legislation to stabilize both ? nancial markets and energy prices. This article assesses the impact of this ? ancial regulation on energy markets. It shows that the theoretical and empirical effects of key elements in this legislation are ambiguous. It argues that, if enacted, particular market parties such as energy companies should not be exempted. It concludes that this set of legislation will not necessarily bring about the effects the Commission desires. a r t i c l e i n f o Article history: Received 9 November 2011 Accepted 14 May 2012 Available online 31 May 2012 Keywords: F inancial legislation Regulation European Union a b s t r a c tAs the ? nancial and physical markets for energy have increasingly become intertwined, energy trade is also covered by ? nancial legislation. The European Commission wishes to strengthen this ? nancial regulation of energy trade. It has put forward a set of regulatory proposals aimed at stabilizing ? nancial markets and limiting volatility of energy prices. The most noteworthy are EMIR, MAD, REMIT and the revised MiFID. Key elements are transparency, new trading venues, central clearing obligations and mandatory transaction reporting.This article evaluates the likely outcomes for energy markets, given the new incentives for market parties. It argues that although there is no ground to exempt particular energy market participants such as energy companies from ? nancial legislation, increased regulation will not necessarily bring about the effects the Commission desires. The causal link between derivatives trading and volat ility of energy prices is not known precisely and many of the economic effects of the proposed legislation are theoretically and empirically ambiguous. Moreover, potentially con? cting instruments and objectives risk policy inconsistency. & 2012 Elsevier Ltd. All rights reserved. 1. Introduction1 The volatility of energy prices in recent years has generated political pressure to put these price movements under control. Simultaneously, in the aftermath of the ? nancial crisis, the European Commission has set itself an ambitious regulatory reform agenda for the ? nancial markets. This includes both a strengthening of existing ? nancial regulation, as well as several new proposals. As the ? nancial and physical markets have become intertwined – EU legislation de? es many energy contracts as ‘? nancial instruments’ – regulation in ? nancial markets will affect energy markets too. Tel. : ? 447833025035. E-mail address: l. nijman. [email  protected] ac. uk 1 T he author would like to thank the two anonymous reviewers for their time and useful comments that contributed to this paper, as well as Jerry de Leeuw and dr. Geert Reuten who were willing to share their expertise on the subject during the research phase. 0301-4215/$ – see front matter & 2012 Elsevier Ltd. All rights reserved. http://dx. doi. org/10. 1016/j. enpol. 2012. 05. 030 nRecognizing this interdependence of ? nancial and energy markets, the proposed set of ? nancial legislation has two objectives. First, it wishes to reduce systemic risk in ? nancial markets and avert some of the domino effects that unfolded in the recent crisis. Second, as this ? nancial legislation also covers trade in commodity derivatives, it seeks to curb volatility of energy prices. The proposed regulatory package contains a number of requirements for market participants. These range from transaction reporting obligations and enhanced transparency to compulsory central clearing.Such requirements pose new incentives for market parties in their trading activities. In turn, the way they react to these incentives affects market outcomes. Because this ? nancial legislation will cover energy trade as well, it is likely to have signi? cant consequences for energy markets. This article addresses the question whether, in light of the potential implications for energy markets, the proposed changes to ? nancial legislation will have the effects the European Commission desires. L. Nijman / Energy Policy 47 (2012) 468–477 469 This question derives its relevance from three aspects.First, the academic literature has generally focussed on the appropriate regulatory design for speci? c markets, for instance in relation to the liberalization of European energy markets or the stability of ? nancial markets. As also noted by Diaz-Rainey et al. (2011), little research has been done regarding cross-market effects of ? nancial regulation on energy markets. Now that the line between the tr aditional ? nancial and energy markets has become blurred, the link between the two deserves more attention. Second, it may prove useful not just to point out which aspects of energy trading may come under ? ancial regulation, but to take the analysis one step further and examine how participants in the energy markets are likely to react to the incentives this new legislation offers them. The success of regulation hinges on how market participants adapt their behaviour to it, not just the substance of the legislation itself. Third, to the extent that these proposals are motivated by electoral calls for a strong response to ? nancial instability and energy price volatility, whether or not they will actually bring this about may have political rami? cations as well.Methodologically, the research question will be addressed as follows. As a ? rst step, the legislative proposals, regulations and directives in question will be analysed to sketch the proposed legal framework and distil the most relevant aspects for energy trading parties. Second, the economic literature is drawn upon to assess the theoretical and empirical consequences for market conditions of these regulatory changes. As the aim of the article is to invoke a number of potential market effects to be evaluated empirically in later work, no particular model or theoretical framework is employed at this point.Although in this article the focus will be on energy, with the utilities serving the retail markets for electricity and natural gas as the main concern, the intertwining of the physical and ? nancial markets has also involved other types of commodities too. 2 The new ? nancial legislation aims to step up regulation of trading in commodity derivatives as a whole. Some of the conclusions therefore also apply to the markets for other commodities than energy. This article will proceed as follows. Section two will illustrate the intertwinement of physical and ? nancial markets and the rationale to step u p regulation.The third section will outline the recent wave of (? nancial) legislation that would apply to energy markets. Section four will point out how key elements in this legislation will affect market participants and how their reactions could in turn impact market outcomes. The subsequent section will assess whether these outcomes are in line with the objectives set out by the Commission. In other words, is the proposed regulatory package the appropriate instrument to achieve the Commission’s goals? A ? nal section concludes. 2. 1. Energy price uncertainty Energy prices are highly volatile and dif? ult to model. This creates substantial price risk for market parties, especially for those in the retail markets (Pilipovic, 2007). Price uncertainty has several origins, depending on the energy product. For electricity, chief among the physical characteristics that create extreme volatility is limited storability. Demand has to match supply at all times, which can even crea te negative prices. Moreover, electricity and natural gas depend on a transmission network to link supplier and consumer. Apart from capacity constraints, the geographical separation of networks leads to substantial price disparities.For the energy markets in general, price drivers are manifold – ranging from single events like political turmoil or a power outage to general policy changes – and dif? cult to model. Finally, long-run factors, like future availability of reserves, show little or no correlation with shortterm price drivers such as sudden supply disruptions or spikes in demand (Kiesel et al. , 2009). As an illustration of the price volatility this results in, it is estimated that whereas daily price volatility of treasuries and stocks is around 0. 5–1. %, it is 1. 5–4% for crude oil and natural gas and 30% for electricity (Weron, 2001, 4). Typical spot prices for electricity vary from h25/MW h to h80/MW h within a trading day (EEX, 2011). The unpredictability of prices creates risk for parties with positions in energy contracts. Therefore, certain contracts, ‘derivatives’, are used by market participants to make this uncertainty more manageable. A derivative can be de? ned as ‘‘a risk transfer agreement, the value of which is derived from the value of an underlying asset’’ (ISDA, 2011).An energy derivative does two things (Macey, 1996). First, it transforms uncertainty about energy prices into calculable risk. Second, it transfers this risk to a counterparty that has a comparative advantage in bearing it because of an open position or a different risk appetite. 2. 2. Types of derivatives and trading purposes Derivatives exist in many different forms, but they can be headed under three general types: forwards/futures, swaps and options. Essentially, each type reduces price risk by setting a future transaction of energy at a price that is known in advance. Although the underlying prod uct (where the derivative derives its value from) can be virtually anything, energy market parties most frequently trade natural gas, electricity, oil, coal and increasingly emission rights. Two further distinctions deserve attention: the way of settlement and the trading place. Settlement can either take place in cash, whereby the net value of the contract at the time of settlement is exchanged, or physically by delivering the energy. Derivatives can either be traded on an organized exchange or bilaterally, ‘‘over the counter’’ (OTC).Exchange-traded derivatives are standardized, prices on these regulated markets are transparent and trade takes place anonymously. In contrast, OTC-contracts 3 A forward contract is the agreement to buy or sell a predetermined amount of energy, at a speci? ed price (the ‘‘forward price’’) at a certain date in the future. Futures are basically identical to forwards. The difference often encountered in the literature is that unlike forwards, futures are standardized, exchange-traded, ‘marked to market’ on a daily basis and involve smaller delivery quantities. However, forwards sometimes exhibit one or more of hese aspects too, which makes the distinction rather arbitrary. A swap is a transaction whereby parties agree to exchange one thing for the other: a ? oating price for a ? xed price, without actually exchanging the assets that generate these prices. An option is a contract that gives the buyer the right, but not the obligation, to buy (a ‘‘call’’ option) or to sell (a ‘‘put’’ option) a set quantity of energy at a predetermined ‘‘strike’’ price, at (or before) a certain date in the future. 2. Intertwinement of physical and ? nancial markets This section will ? st deal with the aspects of energy prices that led to the creation of certain ? nancial instruments, called derivatives. It will then illustrate how physical and ? nancial markets have become intertwined. It ? nishes with a discussion about the potential risks of energy derivatives trading, which motivate the current push for regulation. 2 European legislation (Art. 2 (1) COM (2006) 1287) de? nes commodities as ‘‘any goods of a fungible nature that are capable of being delivered, including metals and their ores and alloys, agricultural products, and energy such as electricity. ’ 470 L. Nijman / Energy Policy 47 (2012) 468–477 can be speci? cally tailored to participants’ needs, contract speci? cations are not publicly disclosed and participants know their counterparties. 2. 3. The intertwinement of physical and ? nancial markets The use of derivatives has resulted in an intertwinement of physical and ? nancial markets. Two trends lie at the root of this. The ? rst concerns the nature of the trade in energy and commodities. This now predominantly takes place in cash rather than physically.An illustration is the fact that the increase in derivatives trading outpaces the growth in production and consumption by far (Basu and Gavin, 2011). 4 This ‘? nancialisation’ of commodity markets (IMF, 2008, 83) is re? ected in the EU’s de? nition of a ? nancial instrument: Options, futures, swaps, forward rate agreements and any other derivative contracts relating to commodities that must be settled in cash or may be settled in cash at the option of one of the parties (EC, 2011d, 168). The Commission reasoned that commodity derivatives (spot contracts are not considered ? ancial instruments) are ‘‘traded in such a manner as to give rise to regulatory issues comparable to traditional ? nancial instruments’’ (EC, 2004). A second trend relates to the market participants. Not just energy companies trade energy and commodities, also institutions traditionally belonging to the ? nancial services sector such as (investment) banks, pension funds and hedge funds are taking large positions in energy and other commodities markets. Worldwide, institutional investors’ holdings of commodity products increased from h13bn. n 2003 to h170–205bn. in 2008 (EC, 2011a, 2). A similar growth can be observed in investment banks’ physical assets portfolios (Perryman, 2010). Factor that contributed to this development were the lowinterest rate environment in capital and equity markets that spurred a ‘search for yield’ and structural changes in ? nancial markets that allowed institutions to increase their leverage, freeing up liquidity (DNB, 2007; Oliver Wyman, 2006; DNB, 2011). The ? nancialisation of commodity trading and the advent of new participants boosted trading volumes. As Fig. shows, in the period 2003–2008 the notional amount (the value of the underlying products) of outstanding commodity derivatives worldwide in the OTC markets grew twelvefold to $13. 2 trillion. Gross market value (the value of the contracts themselves, what is actually exchanged) in the OTC markets grew more than twentyfold during the same period. Although expanding less than this OTC trade, on regulated exchanges the notional amount of commodity derivatives trading roughly doubled in 2003–2008. Within the broader class of commodities, exact data for energy derivatives are dif? ult to obtain. The reason for this is that until recently most trade – 85% according to some estimates – took place outside of regulated exchanges, in the less transparent OTC markets (The City UK, 2011). This opacity forms one of the motivations to enhance regulatory oversight. For regulated exchanges, where precise numbers for energy are accessible, a similar expansion can be witnessed. The volume of power traded on European exchanges doubled over the period described above, while natural gas trading quadrupled (IEA, 2009; EGL, 2011). During the ? nancial crisis in 2008, a signi? ant shif t occurred away from OTC trade to regulated exchanges as a result of tighter regulation and a ‘? ight for quality’ to less risky trading. While the worldwide notional value of OTC commodity derivatives fell by 4 Global oil consumption is only 6% of the volume of oil being traded daily on the major exchanges in the form of derivatives. In the Dutch electricity market for instance, the volume of OTC-traded forward contracts represents more than 500% of actual electricity consumption (EC, 2007). more than three quarters, on exchanges it grew by 123% (Perryman, 2010). 2. 4. Bene? s and risks of derivatives trading Trading energy derivatives involves bene? ts as well as costs for market participants and society as a whole. The main bene? t is that the use of derivatives offers a risk management tool to hedge a portfolio (Pilipovic, 2007). The need to hedge the price risk created by energy price volatility has become more pressing in the decades since the 1970s oil shocks (Br unet and Shafe, 2007). The deregulation of natural gas and electricity markets made prices less stable, as they were no longer set by regulators but allowed to ? uctuate with market conditions.Financial institutions may purchase energy derivatives to hedge in? ation risk or price changes of other assets. Sharing or redistributing risks has obvious macroeconomic bene? ts. A second purpose of derivatives trading is to bene? t from arbitrage opportunities that stem from price differences for equivalent assets. In theory, exploiting arbitrage opportunities eliminates them so it facilitates price ? nding for energy products. Third, trading derivatives offers a more ef? cient means of speculation than trading the physical product. Speculation theoretically adds to market liquidity and contributes to price discovery.It should be noted that the line between speculation, hedging and arbitrage is often blurred (Hickey, 2011). However, the trade in derivatives entails serious risks at various levels, which warrants government regulation. The role played by derivatives in the buildup and escalation of the 2008  ? nancial crisis underscores this (Larosiere, 2009). The most straightforward risk is counterparty credit risk, the risk of another party defaulting and not being able to ful? ll its contract obligations. Especially in the less transparent OTC markets, it can be dif? cult to evaluate the counterparty’s creditworthiness.In an interconnected market, a default can have detrimental effects not only for the parties involved in a transaction, but also for the market as a whole. This systemic risk is enhanced by the fact that derivatives enable traders to greatly leverage their positions (Partnoy, 1997). In an opaque interconnected market, where parties cannot assess their precise exposure to one another, a default can lead to ‘? re sales’ when trust disappears. Such herding behaviour can cause a sudden dry-up of liquidity. In the energy markets, apar t from the ? nancial implications, this may have knock-on effects for the physical supply of energy too.The California power crises in 2000 and 2001 illustrated the potential consequences of poorly regulated energy derivatives trading (Brunet and Shafe, 2007). This example also demonstrates the risk of market manipulation. The cases of Enron’s fraudulent energy derivatives trading or the Amaranth hedge fund, charged with unlawful action in the natural gas markets (FERC, 2007), are notorious in this respect. A ? nal suspected risk is still vigorously debated. The booming of the trade in energy derivatives ignited a discussion to what extent this caused volatility in the value of the underlying, energy prices themselves.The one side claims that energy prices exceed their ‘fundamental’ values by far and have become unrelated to supply and demand factors. Speculation in derivatives markets would have been responsible for price bubbles and volatility (Masters and Whit e, 2008). The opposite view is that this logic is based on a ? awed understanding of derivatives. As for every position in a contract there is someone taking the opposite position, it is a zero-sum game. Therefore, the amount of derivatives trading does not affect the price of the underlying (Basu and Gavin, 2011).A G8 task force speci? cally set up to investigate this issue concluded that ‘‘economic fundamentals, rather than speculative activity, are L. Nijman / Energy Policy 47 (2012) 468–477 471 14000 12000 Billions of dollars 10000 8000 6000 4000 2000 0 Global OTC trade in commodity derivatives Notional amount Gross market value Ju n. ‘9 Ju 9 n. ‘0 Ju 0 n. ‘0 Ju 1 n. ‘0 Ju 2 n. ‘0 Ju 3 n. ‘0 Ju 4 n. ‘0 Ju 5 n. ‘0 Ju 6 n. ‘0 Ju 7 n. ‘0 Ju 8 n. ‘0 Ju 9 n. ‘1 0 to a central trade repository that is accessible by the European Securities and Markets Authority (ESMA), the ? nancial regulator.Sec ond, the trade repositories publish aggregate positions by class of derivatives – commercially sensitive information at the transaction level remains undisclosed. This should facilitate price ? nding. Finally, EMIR further stipulates that all ‘‘eligible’’ (standardized) OTC derivatives will have to be cleared by a central counterparty (CCP). 5 As CCPs generally require more collateral to be withheld, systemic resilience should increase. Non-? nancial institutions are not subject to the clearing obligation as long as the scale of their OTC derivatives trading does not exceed a clearing threshold.It is assumed that trading below this level serves hedging rather than speculation and does not pose systemic risk (EC, 2010a). In practice, most energy derivatives trading takes place below this threshold. 3. 2. MiFID 2 Whereas EMIR only covers OTC-derivatives, MiFID deals with all ? nancial instruments, including energy derivatives (EC, 2011d). MiFID, which entered into force in 2007, is principally directed at investment ? rms. The ? nancial crisis revealed shortcomings in MiFID with respect to supervisory powers and transparency. It also failed to keep pace with technological innovations, such as algorithmic trading.Most relevant for energy trade is the fact that commodity derivatives originally largely fell beyond its scope. The large volatility in these markets formed one of the key reasons to revise MiFID and increase regulatory oversight. The consultation round that preceded the new proposals in October 2011 received no less than 4200 reactions, many of which from energy companies. The essential elements of the revised legislation are: transaction reporting to the national ? nancial regulator who operate in coordination with ESMA, public disclosure of bid and ask prices and the classi? ation of different kinds of trading venues to stimulate competition among them. MiFID 2 is expected to signi? cantly impact energy trade. First, t he exemptions that commodity traders bene? ted from in the original MiFID will be narrowed, although energy companies (if trading on their own account in commodity derivatives) are likely to remain excluded. Also, a position reporting obligation will be introduced for commodity derivatives, to assess potential speculation. Crucially, the capacities on the side of ? nancial regulators to intervene are greatly enhanced.This includes the power to set position limits. Furthermore – like EMIR – MiFID 2 will curb OTC trade to a great extent, by requiring all standardized derivatives to be traded on an organized trading venue. Only transactions in bespoke derivatives are allowed to take place over the counter. Finally, for emission allowances also the spot trade will be brought under the scope of MiFID. 3. 3. MAD The Market Abuse Directive dates back to 2003, but in the aftermath of the ? nancial crisis the Commission wishes to strengthen it (EC, 2011b). MAD aims to increase the integrity of ? ancial markets by prohibiting market abuse. This can either be ‘insider dealing’ or ‘market manipulation’. Market participants are 5 A CCP is an institution placed between counterparties in ? nancial contracts. As such, it becomes the ‘‘buyer to every seller and the seller to every buyer’’ (cf BIS, 2004, 6; Graaf and Stegeman, 2011). Instead of executing a transaction with each other they now conclude this transaction with the CCP. This way, one counterparty’s default does not cause the collapse of other market participants, which could put the entire system at risk.By ‘netting’ transactions, a CCP can both reduce the amount of transactions as well as counterparty credit risk for everyone involved The CCP covers the credit risk it is exposed to by requiring members to post margins—an amount of collateral. Fig. 1. Global OTC trade in commodity derivatives [Based on BIS, 2010]. a plausibl e explanation for price changes in commodities’’ (IOSCO, 2009, 3). In any case, it is outside the question that the opposite holds: volatile energy prices create a demand for derivatives to hedge risk, but also because it opens up opportunities for speculation and arbitrage.The intricacies of this debate are beyond the scope of this paper. What matters are the policy measures currently taken under the suspicion that energy price volatility does indeed constitute a serious risk of derivatives trading. Together with the systemic risks for ? nancial and energy markets, this forms an important rationale to put derivatives trading under more scrutiny. The European Commission stated that ‘‘derivative contracts [y] often serve as a benchmark price discovery feeding into retail energy and food prices’’ (EC, 2011d, 8). Moreover, ‘‘the increased presence of ? ancial investors [y] may have led to excessive price increases and volatilityâ€⠄¢Ã¢â‚¬â„¢ (EC, 2011e, 3). In sum, physical and ? nancial markets have become intertwined. To curb price volatility in the former and ensure stability in the latter, a vast set of legislative initiatives at the EU-level has been put forward. The next section will deal with these proposals in more detail. 3. The wave of regulation To achieve its twin objectives of fostering stability in both the energy and ? nancial markets, the European Commission has put forward a number of regulatory proposals.The most important initiatives that will have an effect on energy trading are the European Market Infrastructure Regulation (EMIR), the new Markets in Financial Instruments Directive (MiFID 2) and the updated Market Abuse Directive (MAD). For energy markets speci? cally, the Regulation on Energy Market Integrity and Transparency (REMIT) is the most noteworthy development. Fig. 2 illustrates these pieces of legislation graphically. This section will brie? y elaborate on each of these proposal s, before distilling the aspects that will have the most signi? cant impact on energy markets. 3. 1.EMIR EMIR, adopted early 2012, seeks to address the risks involved in derivatives trading that were exposed by the ? nancial crisis. Because the overwhelming majority of derivatives are traded in the less transparent OTC markets where the build-up of systemic risk is less visible, EMIR aims to implement the G20 ambitions of shifting all trade in standardized OTC derivatives to regulated exchanges (G20, 2011). EMIR seeks to complement the revised MiFID (EC, 2011c). A ? rst important feature is the reporting of all trade in OTC derivatives 472 L. Nijman / Energy Policy 47 (2012) 468–477 REMIT Energy markets legislationThird Energy Package Energy trade Financial markets legislation MiFID CRD EMIR MAD Existing, not (yet) under review Existing, under review Proposed Fig. 2. Existing and proposed regulations impacting energy trade. required to disclose price sensitive information. Si multaneously with MiFID 2, a new proposal for MAD was presented, with important consequences for energy trade. Again, the perceived gaps in regulation for commodity trade form one of the key issues to be addressed. Hitherto, someone could bene? t in energy derivatives transactions from inside information about the energy spot markets.A ? rst step taken by MAD is to counter such information asymmetries by covering more than just the ? nancial markets. To the extent that information in the spot markets for energy can be expected to in? uence prices of derived ? nancial instruments, it also falls under MAD. This cross-market approach works the other way too. Moreover, the interpretation of what constitutes insider information regarding commodity derivatives is widened and brought in line with other ? nancial instruments. Also, more trading venues will fall under the scope of MAD. The Directive covers all ? ancial instruments admitted to trading on a regulated market, irrespective of wh ether trade actually takes place there or elsewhere. Finally, regulators are given more authorities to request documentation when a breach of MAD is suspected and if necessary to impose sanctions, even in case of ‘attempted market manipulation’. 3. 4. REMIT REMIT is largely analogous to MAD, but addresses market abuse in wholesale markets for electricity and natural gas speci? cally (EC, 2010b). REMIT represents an important step in the recognition by the EU of the intertwinement of ? ancial and physical markets. It de? nes wholesale energy products as being both physical energy products as well as derived ? nancial instruments. 6 REMIT aims to ? ll the gap between regulations for 6 ‘‘‘Wholesale energy products’ means [y] (a) contracts for the supply of natural gas and electricity; (b) derivatives relating to natural gas and electricity; (c) contracts relating to the transportation of natural gas or electricity; (d) derivatives relating to the t ransportation of natural gas or electricity’’ (EC, 2010c, 12). each of these spheres.The volatility and rise of energy prices that market abuse would bring about is on one of REMIT’s main concerns. The Regulation covers both spot and forward transactions. Inside information is de? ned rather vaguely as information that ‘‘a reasonable market participant is likely to use as part of the basis for his decision to enter into a transaction’’ (EC, 2010c). The de? nition of market manipulation is equivalent to the one MAD employs. As an example, the Commission mentions an event in which an energy company would make it appear as if the capacity of energy generation or transmission is other than what is actually available.REMIT greatly reduces information asymmetries in energy trade between energy companies and other derivatives traders. This legislation is likely to result in an abundance of information for the new regulator it establishes, the Agency for the Cooperation of Energy Regulators (ACER). All transactions on wholesale energy markets will have to be reported there. REMIT will take effect as of January 2013. 3. 5. Overview: The key elements In sum, a plethora of rules seems likely to exert a decisive in? uence on the way energy trading is conducted.For a long time, energy companies maintained a rather passive attitude towards the Commission proposals. In the spring of 2011 however, the seriousness of the legislative set and the Commission’s adamancy to push through with it appeared to have dawned upon energy companies. Since, they have been busy consulting sector organizations, authorities and each other about the upcoming changes. A consultation paper by RWE, a large German energy company, even argues it would ‘‘totally change the business model of European commodity traders’’ (RWE, 2011, 5). The elements in the regulatory package that are most likely to exert a signi? ant effect boil down to just a handful. Table 1 lists these. The next section will deal with these elements separately L. Nijman / Energy Policy 47 (2012) 468–477 473 Table 1 Essential elements for energy trade in (new) EU legislation. Element Transparency Emergence of new platforms Central clearing of OTCderivatives Mandatory use of regulated exchanges Capital requirements Transaction reporting Legislation MiFID, REMIT, MAD MiFID EMIR MiFID CRD, EMIR MAD (to national ? nancial regulator), EMIR (to trade repositories and ESMA), REMIT (to ACER), MiFID (to national ? ancial regulator), Third Energy Package (to national energy regulator) to assess the incentives each offers for market participants and the market outcomes that can be expected. 4. Implications for energy companies: Incentives and market effects To assess the potential impact of the new ? nancial legislation on energy markets, a yardstick to measure this effect is needed. Market quality involves multiple elements: liquidity,7 price discovery, volatility, transaction costs and stability (ISDA, 2009). These aspects are positively correlated. This section will evaluate the key elements identi? d above by looking at the incentives they present to traders and how their responses could in turn impact this broad notion of market quality. 4. 1. Transparency Transparency – ranging from the publication of positions to the disclosure of price sensitive information – is present in different forms in each of the proposals. The theoretical effects of improved transparency on markets are ambiguous (Degryse, 2008). According to the Commission, transparency makes ‘true’ price discovery easier, bringing about fair price formation (EC, 2004). A number of empirical studies support this line of reasoning (Baruch, 2005; Boehmer et al. 2005). On the contrary, other research suggests that it could lead to a deterioration of liquidity: participants who are better informed about ‘actual’ p rices become reluctant to post orders because it would give away their advantage (Harris, 1997; Madhavan et al. , 2005). Others conclude that it depends on the transaction size: transparency deteriorates liquidity for large transactions, but not for small transactions (Elstob, 2011). Because MiFID entered into force in 2007, it is possible to look at some tentative empirical results of enhanced transparency so far to form an expectation of what could happen in energy arkets. It is dif? cult to disentangle the impact of MiFID from that of the ? nancial crisis and the advent of automated high frequency trading (HFT) (Gresse, 2011). However, after an initial worsening of liquidity, recent results suggest a slightly positive effect of increased transparency under MiFID (Degryse et al. , 2010). Apart from these more ‘objective’ ? ndings, a recent consultation of market participants’ perceptions of the transparency requirements of MiFID yielded inconclusive results too (City of London, 2011).Transparency had neither improved nor worsened price discovery in their view. Energy companies are not too keen on increasing transparency. This is not surprising, as it could 7 A liquid market is ‘‘one in which buyers and sellers can trade into and out of positions quickly and without having large price effects’’ (O’Hara 2004, 1). involve commercially sensitive information (Eurogas, 2011). As German energy giant E. ON stated it: ‘‘Publishing post execution data [y] without unintentionally disclosing suf? cient information for market participants to identity the trade parties is very dif? ult’’ (E. ON, 2011, 8). The publication of fundamental data (e. g. , planned energy generation) is not likely to be a panacea either. It does remove an important information advantage that energy companies currently possess over other ? nancial market participants because they are directly able to in? uence the physi cal amount being traded. They can also be expected to be more knowledgeable about retail market developments. However, this in? uence on the production side is limited to those parties that have their own generation facilities.Since the unbundling under liberalization, for many suppliers this is no longer the case. Also, if energy (spot) markets are rendered more stable, the question remains what the subsequent effect for the ? nancial side of the markets will be. A reduction of trading there could conceivably involve lower liquidity and a degree of instability. If increased transparency does bring about the liquid and stable markets the Commission wishes to accomplish, market participants face a tradeoff with respect to this regulation. In the short run, a less transparent market offers attractive pro? opportunities for parties with superior knowledge in the presence of information asymmetries. On the other hand, in the long run the higher risk in these markets also entail higher ? nancing costs: risk management is more demanding, accounting standards require more capital to be kept aside and a larger share of the company’s maximum ‘value at risk’ is taken up, which leaves less room for other trades. In short, the transparency requirements seem to add only little to liquidity and market stability but do take away some important information advantages energy companies currently possess. . 2. Market fragmentation: New platforms MiFID aims to pave the way for new trading platforms to emerge and compete with incumbent trading venues. The theoretical effects of the emergence of new platforms where energy is traded are ambiguous. On the positive side, competition could induce lower trading costs (Biais et al. , 2000). Also, innovation and specialization is stimulated (Degryse, 2008). A potential positive effect on liquidity is twofold. First, lower fees would attract more participants, increasing total trade.Second, as traders shift assets acros s trading venues to exploit arbitrage opportunities, the total volume of trade increases, again improving liquidity (Cantillon and Yin, 2011). It is even thinkable that all trade moves to a single market; the most liquid market attracts traders, rendering it even more liquid (Degryse et al. , 2010). This would then lower transaction costs because of economies of scale. 474 L. Nijman / Energy Policy 47 (2012) 468–477 On the negative side, if a given trading volume is dispersed across venues, liquidity deteriorates per venue.Price discovery could work more ef? ciently if all trade takes place on one single platform. Moreover, trades have a larger price impact if the volume on a certain platform is lower. This results in more volatility. A ? nal effect could be that with the same asset trading on multiple platforms, tracking prices and ? nding a suitable counterparty becomes more costly (Davies, 2008). Information asymmetries about actual prices could increase (AFM, 2008). The e arly results of the original MiFID can again offer some empirical insights.Fragmentation has indeed occurred (Fidessa, 2011). The effect is ambivalent. On the one hand, the expected reduction in trading costs has taken place. Fees per transaction decreased by as much as 25–90% across the EU, which is estimated to have added 0. 7–0. 8% to EU GDP (City of London, 2010). On the other hand, two negative consequences can be witnessed. Fragmentation of a given volume across venues means these individual platforms are more sensitive than would have been the case if all trade were concentrated in a single location (Valiante and Assi, 2011).Also, a reduction in average trade size as they are dispersed cancels out the effect of lower transaction costs, as the number of transactions has exploded. Taking all this together however, the net effect of fragmentation has been slightly positive (Gresse, 2011). In sum, although the theoretical effects are ambiguous, empirical results sug gest the impact of fragmentation for energy markets could be positive. As a result of lower trading costs, between 0. 1 and 0. 5% less return on an investment is needed to yield the same revenue.If passed on to retail markets, this could lead to lower consumer prices for energy. 4. 3. Mandatory central clearing Although the views among scholars and market participants on the effects of mandatory central clearing greatly diverge, there is agreement that the impact on energy markets could be signi? cant (Grootveld and Zebregs, 2011; Graaf and Stegeman, 2011; EC, 2010a; RWE, 2011). The rationale for creating a central counter party (CCP) is that by greatly reducing counterparty credit risk, domino effects are precluded and markets will be more stable.However, because of some static and dynamic side effects, this is not necessarily the case. First, although systemic risk may be reduced, all the risk is concentrated at the CCP (Citigroup, 2006). As a result, CCPs may become ‘too bi g to fail’. Given the large margins demanded, a default is not very likely. But if it occurs the CCP could very well be ‘too big to save’. Close monitoring of CCPs is key. A second effect is more dynamic, as it relates to market participants’ responses to a change in incentives. For central clearing to work, derivatives must be clearable.A derivative is ‘‘eligible’’ for clearing if it is suf? ciently liquid; that is, a CCP can easily ? nd counterparties. The less standardized the order, the more dif? cult this is. Previously, two transaction parties could  reduce risk exposure vis-a-vis one another by simply netting their mutually outstanding positions. Under central clearing however, a situation may occur where a negative position in a standardized contract is cleared centrally, while a positive position in a speci? c contract can only be cleared bilaterally. This way, a market party is left with the entire risk exposure for its positive position.In short, if only a part of the derivatives contracts is standardized, systemic risk may well increase under central clearing. Market parties who view this risk as less costly than the margins they have to post at the CCP have an incentive to circumvent central clearing by devising highly speci? c contracts. Indeed, energy companies often claim that the derivatives they trade are too unique to be cleared centrally (EFET, 2010). A third effect, also more dynamic, depends on the subsequent choices made by parties that are also active in the physical (retail) markets.Supposedly, the margins demanded by CCPs reduce energy companies’ working capital (RWE, 2011). They back their objections to central clearing by arguing that it would cause a plunge in investments in infrastructure and generation capacity and, ultimately, increases in consumer prices (EEI, 2010). These arguments can easily be countered. First, as market participants receive interest compensation o n the margins they post, the extra costs are limited to the difference between this compensation and the interest paid on loans to fund infrastructural investments.Second, as these rules are directed to the trading desks of energy companies, the ‘physical’ asset side of the company is not relevant. In turn, energy companies claim that a reduction in the funds available for the trading desk means it has to engage in even riskier trading to meet the same targets. However, a trading desk with a return target certainly does not resonate with the claim that trading only serves hedging purposes. These points also pertain to the capital requirements demanded by EMIR and the Capital Requirements Directive (CRD). For the CRD, the exemptions applying to the energy sector will be reviewed in 2013.A ? nal effect concerns the clearinghouses that play the role of a CCP. Competition on the market for clearinghouses gives them an incentive to lower their fees. At the same time, competi tion presents them with a tradeoff between increasing the range of derivatives they are willing to clear and the risk of not being able to ? nd a counterparty. The result could be ‘adverse selection’ where it ends up with the most risky counterparties and the least clearable contracts. In sum, central clearing could bring about a signi? cant reduction in systemic risk by avoiding domino effects.However, market parties have some perverse incentives related to standardization that should be considered. Also, CCPs need to be monitored closely to prevent them from becoming ‘too big to fail’ or from taking on too much risk. 4. 4. Transaction reporting Another key element in all the proposals is transaction reporting to the regulator in question. Although in theory it would facilitate the detection of market abuse, there are a few caveats. First, it is rather vague what regulators will actually do with the abundance of transaction data and how it will create more stable energy and ? ancial markets. The capacity to impose sanctions is very limited. At energy regulator ACER, only six people are responsible for analyzing the data for every wholesale energy transaction in the EU (EC, 2010c). Moreover, one may ask whether ? nancial regulators can be expected to possess the expertise needed to make informed judgments about the energy markets. Maybe sector-speci? c regulation would be more appropriate. This is also the advice given to the European Commission in a combined report by ? nancial and energy market regulators CESR8 (now ESMA) and ERGEG (2008). Second, the amount of reporting poses a considerable administrative burden on market participants that increases transaction costs while potentially overshooting its goals. A dispersion of competences among authorities (ESMA, ACER, ERGEG and national regulators) may create confusion and risks double reporting. Each regulator requires data to be submitted in a different format and with different sp eci? cations. Simply keeping 8 9 Committee of European Securities Regulators. European Energy Regulators Group for Electricity and Gas. L. Nijman / Energy Policy 47 (2012) 468–477 475 he transaction records, only to be submitted to regulators if so requested, could reduce administrative costs. 5. Is the regulatory package the appropriate instrument? This section will explore whether, given the effects outlined above, the proposed legislation is the appropriate instrument to bring about what the Commission desires. This question consists of two subquestions. First, if enacted, should this ? nancial legislation extend to non-? nancial institutions in the energy markets too? If the answer is af? rmative, this then raises the second question whether this particular set of ? ancial legislation is the right instrument to accomplish the Commission’s objectives. 5. 1. Is subjecting non-? nancial institutions to ? nancial legislation necessary? A large part of the discussion th at emanated from the Commission’s proposals revolved around the question whether they should also cover non-? nancial institutions such as energy companies. This question is somewhat misplaced, as the proposals seek to expand supervision on energy derivatives trading, not so much on the institutions trading them. However, the key objection expressed by energy companies in particular is that subjecting them to ? ancial legislation is misguided because of the nature of their business. Their motivations to trade would differ fundamentally from ? nancial institutions (E. ON, 2011). Five arguments are generally presented to back this claim. Under closer scrutiny, each loses its validity. A ? rst fundamental difference between ? nancial and non? nancial energy traders is that the latter are involved in the production of the underlying asset. Their ? nancial positions are ‘‘naturally’’ one-sided – offset by a position in the physical market.Behind en ergy companies there are solid assets like a power plant or a grid. The problem with this argument is that it negates the changing nature of the European energy markets. As a result of liberalization, a growing number of suppliers do not have their own physical assets. A second argument advanced by energy companies is that they do not pose the same systemic risk as ? nancial institutions. Unlike the banks that turned out to be ‘‘too big to fail’’, the withdrawal of an energy company from the market would not create a ? nancial meltdown. For three reasons, this argument fails to hold stake.First, whether an institution poses systemic risk is not an appropriate criterion to decide whether or not to regulate it. Small banks are not exempted from ? nancial regulation either. What matters is the level playing ? eld, not the players. Second, the importance of energy for the wider economy would actually make an energy company’s default more worrisome. The s upply of energy is just as crucial for the economy as the supply of credit. Third, there is not just a macroeconomic risk but also an energy market risk. Although in many respects Enron was a unique case, its collapse resulted in power outages and major ? ancial losses for both energy companies and ? nancial institutions trading energy derivatives (Brunet and Shafe, 2007). A third reason why non-? nancial institutions would pose less systemic risk is a low level of market concentration (EFET, 2010). However, several studies have pointed out that market concentration in the European energy markets is still much higher than envisioned when market liberalizations were introduced. This also applies to the ? nancial energy markets. A Commission inquiry concluded that ‘‘even the most developed forward markets remain dependent upon on the few players that enjoy a net xcess of generation compared to their retail supplies’’ (EC, 2007, 139). Fourth, non-? nancial ins titutions do not take deposits and do not give investment advice. Although this is certainly true, it is a grey area. It is a matter of interpretation whether an energy company putting the electricity that a ? rm no longer plans to use back on the forward market at the most favorable terms is providing investment advice or not. Moreover, whether the funds involved in derivatives trading come from clients’ energy bills or from deposits is not relevant, what matters is the risk of trading them (EFET, 2010).Whether energy companies speculate or not is beyond the scope of this article. The point is that the line between hedging and speculation is blurry and almost impossible to monitor precisely. Moreover, ? nancial institutions may just as well be involved in the energy markets for hedging purposes. In sum, if the European Commission wishes to stabilize markets by strengthening ? nancial regulation, there is no convincing argument why non-? nancial institutions, trading the same (? nancial) instruments as ? nancial institutions, should be excluded.Although the exemptions are considerably narrowed in the new proposals, the ‘‘trading on own account’’ exemption remains in place. Given the Commissions own ? nding that the trade in energy products poses the same risks as other ? nancial instruments, this distinction is not entirely justi? ed. 5. 2. Is the proposed package the right instrument to stabilize markets? If it makes sense to subject non-? nancial institutions to the same legislation as their ? nancial counterparties in energy trade, this then raises the question whether this entire package of legislation constitutes the most appropriate tool to stabilize markets.For three reasons, this is not necessarily the case. First, the unclear link between derivatives trading and energy price volatility creates some serious concerns. As pointed out in Section 2, volatile energy prices create a demand for derivatives. Therefore, curtaili ng commodity derivatives trading is a strange response to volatile commodity prices. It removes market parties’ solution to cope with this volatility. Furthermore, as it is much less clear whether derivatives trading also causes energy price volatility, drawing up legislation under the assumption that is does may be ill-advised.Second, the Commission statements often miss the point that policy makers themselves have contributed to the uncertainty that drives derivatives trading. One factor is the deregulation of energy markets. This increased the exposure of energy companies to price volatility, enhancing the need to trade derivatives. Consumers may well bear the costs of more complex risk management by energy companies (New York Times, 5. 5. 2011). Moreover, deregulation prompted a move to derivatives trading to provide for an alternative source of revenue. In other words, this legislation may run counter to the key EU objective of market liberalization.Another way in which political factors have added to volatile energy markets has been regulatory uncertainty. An undecided environmental sustainability agenda and uncertainty about future ? nancial legislation discourages long-term investments and intensi? es the importance of active risk management. Third, as the previous section illustrated, the market outcomes of the proposed legislation are theoretically ambiguous and dif? cult to estimate beforehand. In some cases, the result can even be a deterioration of market quality along one or more dimensions.This applies to both ? nancial and physical markets. Therefore, implementing such a broad set of measures at the same time is a step that could be too ? rm. It is important to maintain a healthy balance on two fronts. The deadweight loss in economic terms caused by a reduction in trading as participants 476 L. Nijman / Energy Policy 47 (2012) 468–477 face higher transaction costs to comply with regulation needs to be balanced against the bene? t to society of more stable markets (Partnoy, 1997). Only if the latter outweighs the former, the negative side effects are acceptable.Second, a balance needs to be struck between the stability provided by standardization and close supervision on the one hand and the economic bene? ts of ? nancial innovation and the ability for parties to devise contracts that meet their speci? c needs on the other. In sum, the Commission should not take it for granted that tightened regulation will automatically result either in more stability of ? nancial markets or less volatility of commodity prices. However, whether or not to implement it is in the end a political tradeoff. If responding to political pressure to send a strong signal to ? ancial markets is the overriding objective, then the Commission should proceed. If on the other hand energy market liberalization is the guiding motive, then energy derivatives trading should be facilitated because liberalization creates a demand for increased ri sk management. Speci? c energy market considerations, such as security of supply, sustainability or reasonable consumer prices are other factors to take into account. the aim of reducing volatility, but with the sole effect of deteriorating liquidity. This only adds to volatility. Moreover, maybe too many (con? icting) objectives are simultaneously pursued for the energy markets.These range from liberalized and competitive energy markets, security of supply, reasonable consumer prices, environmental sustainability, stable ? nancial markets, energy price volatility to energy price moderation. It is important to keep the famous Tinbergen rule in mind: for each policy target there usually has to be at least one policy instrument. Increased regulation is one instrument, but cannot be suf? cient to accomplish all these targets simultaneously. References ? [AFM] Autoriteit Financiele Markten, 2008. Markets in Financial Instruments Directive—In 82 vragen door de MiFID. 2nd ed. Janua ry 2008. Baruch, S. 2005. Who bene? ts from an open limit-order book? Journal of Business 78 (4), 1267–1306. Basu, P. , Gavin, W. T. , 2011. What explains the growth in commodity derivatives? Federal Reserve Bank of St. Louis Review 93 (1), 37–48. [BIS] Bank for International Settlements, 2004. Recommendations for Central Counterparties, Consultative Report. March 2004. [BIS] Bank for International Settlements, 2010. Amounts Outstanding of OTC Equity-Linked and Commodity Derivatives. Semiannual OTC Derivatives Statistics. June 2010. Biais, B. , Martimort, D. , Rochet, J. C. , 2000. Competing mechanisms in a common value environment.Econometrica 82 (82), 251–288. Boehmer, E. , Saar, G. , Yu, L. , 2005. Lifting the veil: an analysis of pre-trade transparency at the NYSE. Journal of Financial Markets 8, 217–264. Brunet, A. , Shafe, M. , 2007. Beyond enron: regulation in energy derivatives trading. Northwestern Journal of International Law & Business 27, 665à ¢â‚¬â€œ706. Cantillon, E. , Yin, P. , 2011. Competition between exchanges: A research agenda. International Journal of Industrial Organization 29 (3), 329–336. CESR, ERGEG, 2008. CESR and ERGEG Advice to the European Commission in the Context of the Third Energy Package. Response to Question F. 0 – Market Abuse. CESR/08–739. Citigroup, 2006. CCPs: A User’s Perspective. Discussion Paper for the Joint Conference of the European Central Bank and the Federal Reserve Bank of Chicago on Issues Related to Central Counterparty Clearing. April 2006. City of London, 2010. Understanding the Impact of MiFID. Special Interest Series. October 2010. City of London, 2011. Impact of MiFID in the Context of Global and National Regulatory Innovations, European Study. London Economics, 37. May 2011. Davies, R. J. , 2008. MiFID and a Changing Competitive Landscape. Babson College Working Paper Series.April 2008. ? Degryse, H. , 2008. MiFID: competitie op ? nanciele markten en ? nancieel toezicht. Economische Statistische Berichten 93, 51–57. Degryse, H. de Jong, F. , Van Kervel, V. , 2010. The Impact of MiFID on the Quality of Euronext. Working paper, Tilburg University. Diaz-Rainey, I. , Siems, M. , Ashton, J. , 2011. The Financial Regulation of European Wholesale Energy and Environmental Markets. USAEE-IAEE Working Paper 11–070. March 2011. ? [DNB] De Nederlandsche Bank, 2007. Overzicht Financiele Stabiliteit in Nederland. 5, Spring 2007. ? [DNB] De Nederlandsche Bank, 2011.Overzicht Financiele Stabiliteit in Nederland. 13, Spring 2011. [EEI] Edison Electric Institute, 2010. US Energy Companies Response to OTC Derivatives Reform: Energy Sector Impacts. January 2010. [EEX] European Energy Exchange, 2011. Hour Contracts; Spot Hourly Auction. European Electricity Index. 25 May 2011. [EFET] European Federation of Energy Traders, 2010. EFET Response to Public Consultation by the Directorate General for Internal Market and Services on Derivati ves and Market Infrastructures (‘‘EC Consultation’’). 9. 7. 2010. EGL, 2011. View on Electricity Markets. No. 116. February 2011. Elstob, P. 2011. FSA at Odds with European Commission Over Aspects of MiFID II. WBC. 29, March 2011. E. ON, 2011. E. ON’s Position on: Consultation on the Review of the Markets in Financial Instruments Directive (MiFID). 2. 2. 2011. Eurogas, 2011. Eurogas Cover Note on MIFID, 2. 2. 2011. European Commission, 2004. Directive 2004/39/EC of the European Parliament and of the Council of 21 April 2004, on Markets in Financial Instruments Amending Council Directives 85/611/EC and 93/6/EEC and Directive 200/12/ EC of the European Parliament and of the Council and repealing Council Directive 93/22/EEC, OJ L 145, 30. 4. 2004.European Commission, 2007. DG Competition Report on Energy Sector Inquiry Part 1. 10. 1. 2007. Brussels, SEC (2006) 1724. European Commission, 2010a. Proposal for a Regulation of the European Parliament and of the Council on OTC Derivatives, Central Counterparties and Trade Repositories. Brussels, COM (2010) 484 ? nal. 6. Concluding thoughts The ? nancial and physical energy markets have become intertwined. This article has described the vast set of ? nancial legislation that, if pushed through, would have signi? cant consequences for European energy markets. The European Commission seeks to stabilize both ? ancial markets and energy prices by regulating the trade in ? nancial instruments, including energy derivatives. Key elements in this regulatory package are transparency, the emergence of new trading platforms, central clearing of OTC derivatives and transaction reporting. Having assessed some of the theoretical effects of these aspects by looking at the new incentives they offer participants in the energy markets, this article has advanced two arguments. First, if the Commission wishes to strengthen the regulation of trade in energy derivatives, it should extend this regulation to al l market participants.There are no compelling arguments to exempt non-? nancial institutions, such as energy companies. Second, it would be misguided to expect that stepping up regulation of energy derivatives trading automatically reduces volatility; neither in the ? nancial, nor in the physical energy markets. The precise link between derivatives trading remains unclear, the political discourse itself has added to volatility and this legislation may have some ambiguous and unintended effects. Therefore, it would be advisable to take a more cautious stance and carefully weigh the various costs and bene? ts.If the Commission decides to push through with the whole package, a few caveats are in order. First, overlaps and gaps between the several regulations should be avoided. For instance, it would be sensible to establish a single regulator for the energy sector instead of conferring competences upon four different ones. Gaps exists between de? nitions. For example, REMIT de? nes ins ide information by referring to the owner of the product. Financial legislation on the other hand refers to the originator. It is unclear which one of the two is responsible for the reporting and transparency obligations. Another caveat relates to the con? ence in the political discourse in increased regulation and the ability of regulators to prevent ? nancial crises. Being engulfed in transaction data does not mean regulators will have the knowledge or the agility to immediately act upon it. It may be a necessary measure, but it is by no means suf? cient. A third risk the Commission needs to avoid is policy inconsistency. It should be careful not to implement regulation with L. Nijman / Energy Policy 47 (2012) 468–477 477 European Commission, 2010b. Proposal for a Regulation of the European Parliament and of the Council on Energy Market Integrity and Transparency.Brussels, COM (2010) 726 ? nal. European Commission, 2010c. Impact Assessment, Accompanying the Proposal for a R egulation of the European Parliament and of the Council on Energy Market Integrity and Transparency. Brussels, SEC (2010) 1511. European Commission, 2011a. Communication from the Commission to the European Parliament, The Council, the European Economic and Social Committee and the Committee of the Regions, Tackling the Challenges in Commodity Markets and on Raw Materials. Brussels, COM (2011) 25 ? nal. European Commission, 2011b. Proposal for a Regulation of theEuropean Parliament and of the Council on Insider Dealing and Market Manipulation (Market Abuse). Brussels, COM (2011) 651 ? nal. European Commission 2011c. Proposal for a Regulation of the European Parliament and of the Council on Markets in Financial Instruments and Amending Regulation [EMIR] on OTC Derivatives, Central Counterparties and Trade Repositories. Brussels, COM (2011) 652 ? nal. European Commission, 2011d. Proposal for a Directive of the European Parliament and of the Council on Markets in Financial Instruments R epealing Directive 2004/39/EC of the European Parliament and of the Council.Brussels, COM (2011) 656 ? nal. European Commission, 2011e. Commission Staff Working Paper, Executive Summary of the Impact Assessment, Accompanying the Do

A Game of Thrones Chapter Fifty-four

Daenerys When he had taken his pleasure, Khal Drogo rose from their sleeping mats to tower above her. His skin shone dark as bronze in the ruddy light from the brazier, the faint lines of old scars visible on his broad chest. Ink-black hair, loose and unbound, cascaded over his shoulders and down his back, well past his waist. His manhood glistened wetly. The khal's mouth twisted in a frown beneath the droop of his long mustachio. â€Å"The stallion who mounts the world has no need of iron chairs.† Dany propped herself on an elbow to look up at him, so tall and magnificent. She loved his hair especially. It had never been cut; he had never known defeat. â€Å"It was prophesied that the stallion will ride to the ends of the earth,† she said. â€Å"The earth ends at the black salt sea,† Drogo answered at once. He wet a cloth in a basin of warm water to wipe the sweat and oil from his skin. â€Å"No horse can cross the poison water.† â€Å"In the Free Cities, there are ships by the thousand,† Dany told him, as she had told him before. â€Å"Wooden horses with a hundred legs, that fly across the sea on wings full of wind.† Khal Drogo did not want to hear it. â€Å"We will speak no more of wooden horses and iron chairs.† He dropped the cloth and began to dress. â€Å"This day I will go to the grass and hunt, woman wife,† he announced as he shrugged into a painted vest and buckled on a wide belt with heavy medallions of silver, gold, and bronze. â€Å"Yes, my sun-and-stars,† Dany said. Drogo would take his bloodriders and ride in search of hrakkar, the great white lion of the plains. If they returned triumphant, her lord husband's joy would be fierce, and he might be willing to hear her out. Savage beasts he did not fear, nor any man who had ever drawn breath, but the sea was a different matter. To the Dothraki, water that a horse could not drink was something foul; the heaving grey-green plains of the ocean filled them with superstitious loathing. Drogo was a bolder man than the other horselords in half a hundred ways, she had found . . . but not in this. If only she could get him onto a ship . . . After the khal and his bloodriders had ridden off with their bows, Dany summoned her handmaids. Her body felt so fat and ungainly now that she welcomed the help of their strong arms and deft hands, whereas before she had often been uncomfortable with the way they fussed and fluttered about her. They scrubbed her clean and dressed her in sandsilk, loose and flowing. As Doreah combed out her hair, she sent Jhiqui to find Ser Jorah Mormont. The knight came at once. He wore horsehair leggings and painted vest, like a rider. Coarse black hair covered his thick chest and muscular arms. â€Å"My princess. How may I serve you?† â€Å"You must talk to my lord husband,† Dany said. â€Å"Drogo says the stallion who mounts the world will have all the lands of the earth to rule, and no need to cross the poison water. He talks of leading his khalasar east after Rhaego is born, to plunder the lands around the Jade Sea.† The knight looked thoughtful. â€Å"The khal has never seen the Seven Kingdoms,† he said. â€Å"They are nothing to him. If he thinks of them at all, no doubt he thinks of islands, a few small cities clinging to rocks in the manner of Lorath or Lys, surrounded by stormy seas. The riches of the east must seem a more tempting prospect.† â€Å"But he must ride west,† Dany said, despairing. â€Å"Please, help me make him understand.† She had never seen the Seven Kingdoms either, no more than Drogo, yet she felt as though she knew them from all the tales her brother had told her. Viserys had promised her a thousand times that he would take her back one day, but he was dead now and his promises had died with him. â€Å"The Dothraki do things in their own time, for their own reasons,† the knight answered. â€Å"Have patience, Princess. Do not make your brother's mistake. We will go home, I promise you.† Home? The word made her feel sad. Ser Jorah had his Bear Island, but what was home to her? A few tales, names recited as solemnly as the words of a prayer, the fading memory of a red door . . . was Vaes Dothrak to be her home forever? When she looked at the crones of the dosh khaleen, was she looking at her future? Ser Jorah must have seen the sadness on her face. â€Å"A great caravan arrived during the night, Khaleesi. Four hundred horses, from Pentos by way of Norvos and Qohor, under the command of Merchant Captain Byan Votyris. Illyrio may have sent a letter. Would you care to visit the Western Market?† Dany stirred. â€Å"Yes,† she said. â€Å"I would like that.† The markets came alive when a caravan had come in. You could never tell what treasures the traders might bring this time, and it would be good to hear men speaking Valyrian again, as they did in the Free Cities. â€Å"Irri, have them prepare a litter.† â€Å"I shall tell your khas,† Ser Jorah said, withdrawing. If Khal Drogo had been with her, Dany would have ridden her silver. Among the Dothraki, mothers stayed on horseback almost up to the moment of birth, and she did not want to seem weak in her husband's eyes. But with the khal off hunting, it was pleasant to lie back on soft cushions and be carried across Vaes Dothrak, with red silk curtains to shield her from the sun. Ser Jorah saddled up and rode beside her, with the four young men of her khas and her handmaids. The day was warm and cloudless, the sky a deep blue. When the wind blew, she could smell the rich scents of grass and earth. As her litter passed beneath the stolen monuments, she went from sunlight to shadow and back again. Dany swayed along, studying the faces of dead heroes and forgotten kings. She wondered if the gods of burned cities could still answer prayers. If I were not the blood of the dragon, she thought wistfully, this could be my home. She was khaleesi, she had a strong man and a swift horse, handmaids to serve her, warriors to keep her safe, an honored place in the dosh khaleen awaiting her when she grew old . . . and in her womb grew a son who would one day bestride the world. That should be enough for any woman . . . but not for the dragon. With Viserys gone, Daenerys was the last, the very last. She was the seed of kings and conquerors, and so too the child inside her. She must not forget. The Western Market was a great square of beaten earth surrounded by warrens of mud-baked brick, animal pens, whitewashed drinking halls. Hummocks rose from the ground like the backs of great subterranean beasts breaking the surface, yawning black mouths leading down to cool and cavernous storerooms below. The interior of the square was a maze of stalls and crookback aisles, shaded by awnings of woven grass. A hundred merchants and traders were unloading their goods and setting up in stalls when they arrived, yet even so the great market seemed hushed and deserted compared to the teeming bazaars that Dany remembered from Pentos and the other Free Cities. The caravans made their way to Vaes Dothrak from east and west not so much to sell to the Dothraki as to trade with each other, Ser Jorah had explained. The riders let them come and go unmolested, so long as they observed the peace of the sacred city, did not profane the Mother of Mountains or the Womb of the World, and honored the crones of the dosh khaleen with the traditional gifts of salt, silver, and seed. The Dothraki did not truly comprehend this business of buying and selling. Dany liked the strangeness of the Eastern Market too, with all its queer sights and sounds and smells. She often spent her mornings there, nibbling tree eggs, locust pie, and green noodles, listening to the high ululating voices of the spellsingers, gaping at manticores in silver cages and immense grey elephants and the striped black-and-white horses of the Jogos Nhai. She enjoyed watching all the people too: dark solemn Asshai'i and tall pale Qartheen, the bright-eyed men of Yi Ti in monkey-tail hats, warrior maids from Bayasabhad, Shamyriana, and Kayakayanaya with iron rings in their nipples and rubies in their cheeks, even the dour and frightening Shadow Men, who covered their arms and legs and chests with tattoos and hid their faces behind masks. The Eastern Market was a place of wonder and magic for Dany. But the Western Market smelled of home. As Irri and Jhiqui helped her from her litter, she sniffed, and recognized the sharp odors of garlic and pepper, scents that reminded Dany of days long gone in the alleys of Tyrosh and Myr and brought a fond smile to her face. Under that she smelled the heady sweet perfumes of Lys. She saw slaves carrying bolts of intricate Myrish lace and fine wools in a dozen rich colors. Caravan guards wandered among the aisles in copper helmets and knee-length tunics of quilted yellow cotton, empty scabbards swinging from their woven leather belts. Behind one stall an armorer displayed steel breastplates worked with gold and silver in ornate patterns, and helms hammered in the shapes of fanciful beasts. Next to him was a pretty young woman selling Lannisport goldwork, rings and brooches and torcs and exquisitely wrought medallions suitable for belting. A huge eunuch guarded her stall, mute and hairless, dressed in sweat-stained velvets and scowling at anyone who came close. Across the aisle, a fa t cloth trader from Yi Ti was haggling with a Pentoshi over the price of some green dye, the monkey tail on his hat swaying back and forth as he shook his head. â€Å"When I was a little girl, I loved to play in the bazaar,† Dany told Ser Jorah as they wandered down the shady aisle between the stalls. â€Å"It was so alive there, all the people shouting and laughing, so many wonderful things to look at . . . though we seldom had enough coin to buy anything . . . well, except for a sausage now and again, or honeyfingers . . . do they have honeyfingers in the Seven Kingdoms, the kind they bake in Tyrosh?† â€Å"Cakes, are they? I could not say, Princess.† The knight bowed. â€Å"If you would pardon me for a time, I will seek out the captain and see if he has letters for us.† â€Å"Very well. I'll help you find him.† â€Å"There is no need for you to trouble yourself.† Ser Jorah glanced away impatiently. â€Å"Enjoy the market. I will rejoin you when my business is concluded.† Curious, Dany thought as she watched him stride off through the throngs. She didn't see why she should not go with him. Perhaps Ser Jorah meant to find a woman after he met with the merchant captain. Whores frequently traveled with the caravans, she knew, and some men were queerly shy about their couplings. She gave a shrug. â€Å"Come,† she told the others. Her handmaids trailed along as Dany resumed her stroll through the market. â€Å"Oh, look,† she exclaimed to Doreah, â€Å"those are the kind of sausages I meant.† She pointed to a stall where a wizened little woman was grilling meat and onions on a hot firestone. â€Å"They make them with lots of garlic and hot peppers.† Delighted with her discovery, Dany insisted the others join her for a sausage. Her handmaids wolfed theirs down giggling and grinning, though the men of her khas sniffed at the grilled meat suspiciously. â€Å"They taste different than I remember,† Dany said after her first few bites. â€Å"In Pentos, I make them with pork,† the old woman said, â€Å"but all my pigs died on the Dothraki sea. These are made of horsemeat, Khaleesi, but I spice them the same.† â€Å"Oh.† Dany felt disappointed, but Quaro liked his sausage so well he decided to have another one, and Rakharo had to outdo him and eat three more, belching loudly. Dany giggled. â€Å"You have not laughed since your brother the Khal Rhaggat was crowned by Drogo,† said Irri. â€Å"It is good to see, Khaleesi.† Dany smiled shyly. It was sweet to laugh. She felt half a girl again. They wandered for half the morning. She saw a beautiful feathered cloak from the Summer Isles, and took it for a gift. In return, she gave the merchant a silver medallion from her belt. That was how it was done among the Dothraki. A birdseller taught a green-and-red parrot to say her name, and Dany laughed again, yet still refused to take him. What would she do with a green-and-red parrot in a khalasar? She did take a dozen flasks of scented oils, the perfumes of her childhood; she had only to close her eyes and sniff them and she could see the big house with the red door once more. When Doreah looked longingly at a fertility charm at a magician's booth, Dany took that too and gave it to the handmaid, thinking that now she should find something for Irri and Jhiqui as well. Turning a corner, they came upon a wine merchant offering thimble-sized cups of his wares to the passersby. â€Å"Sweet reds,† he cried in fluent Dothraki, â€Å"I have sweet reds, from Lys and Volantis and the Arbor. Whites from Lys, Tyroshi pear brandy, firewine, pepperwine, the pale green nectars of Myr. Smokeberry browns and Andalish sours, I have them, I have them.† He was a small man, slender and handsome, his flaxen hair curled and perfumed after the fashion of Lys. When Dany paused before his stall, he bowed low. â€Å"A taste for the khaleesi? I have a sweet red from Dorne, my lady, it sings of plums and cherries and rich dark oak. A cask, a cup, a swallow? One taste, and you will name your child after me.† Dany smiled. â€Å"My son has his name, but I will try your summerwine,† she said in Valyrian, Valyrian as they spoke it in the Free Cities. The words felt strange on her tongue, after so long. â€Å"Just a taste, if you would be so kind.† The merchant must have taken her for Dothraki, with her clothes and her oiled hair and sun-browned skin. When she spoke, he gaped at her in astonishment. â€Å"My lady, you are . . . Tyroshi? Can it be so?† â€Å"My speech may be Tyroshi, and my garb Dothraki, but I am of Westeros, of the Sunset Kingdoms,† Dany told him. Doreah stepped up beside her. â€Å"You have the honor to address Daenerys of the House Targaryen, Daenerys Stormborn, khaleesi of the riding men and princess of the Seven Kingdoms.† The wine merchant dropped to his knees. â€Å"Princess,† he said, bowing his head. â€Å"Rise,† Dany commanded him. â€Å"I would still like to taste that summerwine you spoke of.† The man bounded to his feet. â€Å"That? Dornish swill. It is not worthy of a princess. I have a dry red from the Arbor, crisp and delectable. Please, let me give you a cask.† Khal Drogo's visits to the Free Cities had given him a taste for good wine, and Dany knew that such a noble vintage would please him. â€Å"You honor me, ser,† she murmured sweetly. â€Å"The honor is mine.† The merchant rummaged about in the back of his stall and produced a small oaken cask. Burned into the wood was a cluster of grapes. â€Å"The Redwyne sigil,† he said, pointing, â€Å"for the Arbor. There is no finer drink.† â€Å"Khal Drogo and I will share it together. Aggo, take this back to my litter, if you'd be so kind.† The wineseller beamed as the Dothraki hefted the cask. She did not realize that Ser Jorah had returned until she heard the knight say, â€Å"No.† His voice was strange, brusque. â€Å"Aggo, put down that cask.† Aggo looked at Dany. She gave a hesitant nod. â€Å"Ser Jorah, is something wrong?† â€Å"I have a thirst. Open it, wineseller.† The merchant frowned. â€Å"The wine is for the khaleesi, not for the likes of you, ser.† Ser Jorah moved closer to the stall. â€Å"If you don't open it, I'll crack it open with your head.† He carried no weapons here in the sacred city, save his hands—yet his hands were enough, big, hard, dangerous, his knuckles covered with coarse dark hairs. The wineseller hesitated a moment, then took up his hammer and knocked the plug from the cask. â€Å"Pour,† Ser Jorah commanded. The four young warriors of Dany's khas arrayed themselves behind him, frowning, watching with their dark, almond-shaped eyes. â€Å"It would be a crime to drink this rich a wine without letting it breathe.† The wineseller had not put his hammer down. Jhogo reached for the whip coiled at his belt, but Dany stopped him with a light touch on the arm. â€Å"Do as Ser Jorah says,† she said. People were stopping to watch. The man gave her a quick, sullen glance. â€Å"As the princess commands.† He had to set aside his hammer to lift the cask. He filled two thimble-sized tasting cups, pouring so deftly he did not spill a drop. Ser Jorah lifted a cup and sniffed at the wine, frowning. â€Å"Sweet, isn't it?† the wineseller said, smiling. â€Å"Can you smell the fruit, ser? The perfume of the Arbor. Taste it, my lord, and tell me it isn't the finest, richest wine that's ever touched your tongue.† Ser Jorah offered him the cup. â€Å"You taste it first.† â€Å"Me?† The man laughed. â€Å"I am not worthy of this vintage, my lord. And it's a poor wine merchant who drinks up his own wares.† His smile was amiable, yet she could see the sheen of sweat on his brow. â€Å"You will drink,† Dany said, cold as ice. â€Å"Empty the cup, or I will tell them to hold you down while Ser Jorah pours the whole cask down your throat.† The wineseller shrugged, reached for the cup . . . and grabbed the cask instead, flinging it at her with both hands. Ser Jorah bulled into her, knocking her out of the way. The cask bounced off his shoulder and smashed open on the ground. Dany stumbled and lost her feet. â€Å"No,† she screamed, thrusting her hands out to break her fall . . . and Doreah caught her by the arm and wrenched her backward, so she landed on her legs and not her belly. The trader vaulted over the stall, darting between Aggo and Rakharo. Quaro reached for an arakh that was not there as the blond man slammed him aside. He raced down the aisle. Dany heard the snap of Jhogo's whip, saw the leather lick out and coil around the wineseller's leg. The man sprawled face first in the dirt. A dozen caravan guards had come running. With them was the master himself, Merchant Captain Byan Votyris, a diminutive Norvoshi with skin like old leather and a bristling blue mustachio that swept up to his ears. He seemed to know what had happened without a word being spoken. â€Å"Take this one away to await the pleasure of the khal,† he commanded, gesturing at the man on the ground. Two guards hauled the wineseller to his feet. â€Å"His goods I gift to you as well, Princess,† the merchant captain went on. â€Å"Small token of regret, that one of mine would do this thing.† Doreah and Jhiqui helped Dany back to her feet. The poisoned wine was leaking from the broken cask into the dirt. â€Å"How did you know?† she asked Ser Jorah, trembling. â€Å"How?† â€Å"I did not know, Khaleesi, not until the man refused to drink, but once I read Magister Illyrio's letter, I feared.† His dark eyes swept over the faces of the strangers in the market. â€Å"Come. Best not to talk of it here.† Dany was near tears as they carried her back. The taste in her mouth was one she had known before: fear. For years she had lived in terror of Viserys, afraid of waking the dragon. This was even worse. It was not just for herself that she feared now, but for her baby. He must have sensed her fright, for he moved restlessly inside her. Dany stroked the swell of her belly gently, wishing she could reach him, touch him, soothe him. â€Å"You are the blood of the dragon, little one,† she whispered as her litter swayed along, curtains drawn tight. â€Å"You are the blood of the dragon, and the dragon does not fear.† Under the hollow hummock of earth that was her home in Vaes Dothrak, Dany ordered them to leave her—all but Ser Jorah. â€Å"Tell me,† she commanded as she lowered herself onto her cushions. â€Å"Was it the Usurper?† â€Å"Yes.† The knight drew out a folded parchment. â€Å"A letter to Viserys, from Magister Illyrio. Robert Baratheon offers lands and lordships for your death, or your brother's.† â€Å"My brother?† Her sob was half a laugh. â€Å"He does not know yet, does he? The Usurper owes Drogo a lordship.† This time her laugh was half a sob. She hugged herself protectively. â€Å"And me, you said. Only me?† â€Å"You and the child,† Ser Jorah said, grim. â€Å"No. He cannot have my son.† She would not weep, she decided. She would not shiver with fear. The Usurper has woken the dragon now, she told herself . . . and her eyes went to the dragon's eggs resting in their nest of dark velvet. The shifting lamplight limned their stony scales, and shimmering motes of jade and scarlet and gold swam in the air around them, like courtiers around a king. Was it madness that seized her then, born of fear? Or some strange wisdom buried in her blood? Dany could not have said. She heard her own voice saying, â€Å"Ser Jorah, light the brazier.† â€Å"Khaleesi?† The knight looked at her strangely. â€Å"It is so hot. Are you certain?† She had never been so certain. â€Å"Yes. I . . . I have a chill. Light the brazier.† He bowed. â€Å"As you command.† When the coals were afire, Dany sent Ser Jorah from her. She had to be alone to do what she must do. This is madness, she told herself as she lifted the black-and-scarlet egg from the velvet. It will only crack and burn, and it's so beautiful, Ser Jorah will call me a fool if I ruin it, and yet, and yet . . . Cradling the egg with both hands, she carried it to the fire and pushed it down amongst the burning coals. The black scales seemed to glow as they drank the heat. Flames licked against the stone with small red tongues. Dany placed the other two eggs beside the black one in the fire. As she stepped back from the brazier, the breath trembled in her throat. She watched until the coals had turned to ashes. Drifting sparks floated up and out of the smokehole. Heat shimmered in waves around the dragon's eggs. And that was all. Your brother Rhaegar was the last dragon, Ser Jorah had said. Dany gazed at her eggs sadly. What had she expected? A thousand thousand years ago they had been alive, but now they were only pretty rocks. They could not make a dragon. A dragon was air and fire. Living flesh, not dead stone. The brazier was cold again by the time Khal Drogo returned. Cohollo was leading a packhorse behind him, with the carcass of a great white lion slung across its back. Above, the stars were coming out. The khal laughed as he swung down off his stallion and showed her the scars on his leg where the hrakkar had raked him through his leggings. â€Å"I shall make you a cloak of its skin, moon of my life,† he swore. When Dany told him what had happened at the market, all laughter stopped, and Khal Drogo grew very quiet. â€Å"This poisoner was the first,† Ser Jorah Mormont warned him, â€Å"but he will not be the last. Men will risk much for a lordship.† Drogo was silent for a time. Finally he said, â€Å"This seller of poisons ran from the moon of my life. Better he should run after her. So he will. Jhogo, Jorah the Andal, to each of you I say, choose any horse you wish from my herds, and it is yours. Any horse save my red and the silver that was my bride gift to the moon of my life. I make this gift to you for what you did. â€Å"And to Rhaego son of Drogo, the stallion who will mount the world, to him I also pledge a gift. To him I will give this iron chair his mother's father sat in. I will give him Seven Kingdoms. I, Drogo, khal, will do this thing.† His voice rose, and he lifted his fist to the sky. â€Å"I will take my khalasar west to where the world ends, and ride the wooden horses across the black salt water as no khal has done before. I will kill the men in the iron suits and tear down their stone houses. I will rape their women, take their children as slaves, and bring their broken gods back to Vaes Dothrak to bow down beneath the Mother of Mountains. This I vow, I, Drogo son of Bharbo. This I swear before the Mother of Mountains, as the stars look down in witness.† His khalasar left Vaes Dothrak two days later, striking south and west across the plains. Khal Drogo led them on his great red stallion, with Daenerys beside him on her silver. The wineseller hurried behind them, naked, on foot, chained at throat and wrists. His chains were fastened to the halter of Dany's silver. As she rode, he ran after her, barefoot and stumbling. No harm would come to him . . . so long as he kept up.

Technology stack Case Study Example | Topics and Well Written Essays - 1500 words

Technology stack - Case Study Example It includes layers of components or services which are used for providing software solutions. Technology stack is also articulated as a list of technologies and programming languages for instance ‘Java’, ‘C++’ and ‘SQL Server’ among other programs. It is considered to be the base for developing any kind of application. The report is based on technology stack of a popular web application named Twitter. The objective of the report is to understand the use of technologies towards developing Twitter. The report also aims at understanding the hindrances that twitter witnessed owing to the usage or application of such a technology. Furthermore, the report also describes the future of Twitter as a web application. History of Twitter Twitter is a web application which facilitates people to communicate by using text, graphics and other formats. It was developed in the year 2006 and soon achieved huge admiration by people internationally, as several users joined the application to share information. The core of Twitter’s business is free ‘Application Programming Interface’ (APIs) for every task undertaken by a user on the portal. The idea of Twitter web application was first initiated during a hack project in an organization named ODEO. Over years, the organization attempted to make the aspect of sharing information easier for people. Consequently, the engineers began prototyping programs for better information sharing which turned into Twitter in the later days. Ruby on Rails is identified to be the technological stack of Twitter. Twitter uses Rails application with lots of Ruby programming, performing asynchronous functions in the back-end design (Makice, 2009). Where the Application Fits In Relation to Similar Applications Apart from Twitter, Ruby on Rails also fits in several web applications such as Groupon, Shopify and Yellow Pages among other websites. Several fastest web oriented organizations are applyin g Ruby on Rails structure with high number of readers and subscribers. Ruby on Rails is considered as the most dynamic way to construct a web application. Where other custom applications can be quite expensive to develop, Ruby on Rails makes the application development quite cost-effective for organizations which do not desire to take risk by spending money on technological experimentation (Hansson, n.d). The Technology on which Twitter is Built Twitter is built on Ruby on Rails structure. It is known to be a full-stack internet application which helped in forming Twitter. Ruby is generally referred as a programming language and Rails is a kind of technological framework. Together Ruby and Rails provides required tools and components which are essential to form powerful application in an instinctual environment. Ruby on Rails helps in ensuring the aspect of website development to be increasingly effectual and less troublesome. As it is a full-stack internet application, Ruby on Rail s helped Twitter to encompass both areas i.e. ‘front-end’ and ‘back-end’ design (Slater, 2008). In the recent days, Twitter has been learnt to have shifted its ‘front-end’ search function from Ruby and Rails to a Java application named ‘Blender’. This shift was inspired owing to the benefits of Java. Java is believed to provide high level of performance and enhanced scalability. Furthermore, it was also determined by the wish for better encapsulation of different services and other architectural aspects. Blender is a HTTP service developed on ‘Netty’, a high accessible client server transcribed by Java language, which

Racial Profiling on Drug Warfare Essay Example | Topics and Well Written Essays - 2000 words

Racial Profiling on Drug Warfare - Essay Example However, one can recognize the modest changes in white racist domination in the United States without downplaying the strong relationship between being black and being a target of serious racial discrimination. In one way or another, all black Americans and Caucasians continue to suffer discrimination because white domination of black Americans and other people of color remains a major organizing principle for group life in the United States. According to statistical results "Although African Americans comprise only 12.2 percent of the population and 13 percent of drug users, they make up 38 percent of those arrested for drug offenses and 59 percent of those convicted of drug offenses causing critics to call the war on drugs the "New Jim Crow" (Race and the Drug War n.d.). The racial hierarchy is supported by a range of dominant-group prejudices and stereotypes, yet it is perpetuated most centrally by the discrimination carried out by many whites on a recurring basis. Age-old pattern s of racial inequality-of unjust enrichment and unjust impoverishment-are reproduced by the daily routines of antiblack discrimination. For instance, "During the height of the war on drugs, from 1986 to 1991, the number of white drug offenders in state prisons increased by 110 percent. The number of black drug offenders grew by 465 percent" (Shaw 2000). Police pays a special attention to African-Americans and Caucasians because of ethical differences and stereotypes. It should be no surprise then, that African Americans are often depicted as criminals in mass media. Crime in America is often portrayed in blackface, seemingly suggesting not only that African Americans and Caucasians are likely to be involved in crime, but that they are responsible for most of the crime in America today. "Racial profiling is the law enforcement practice of substituting skin color for evidence as grounds for suspicion" (Race and the Drug War n.d.). Contemporary patterns of discrimination are grounded in the benefits that whites have historically secured. All forms of racial discrimination transmit the legacy of the past, that of slavery and legal segregation. Today discriminatory practices reproduce and reinforce the unjust impoverishment and enrichment of the past. Discrimination also reflects and perpetuates the age-old racist ideology, with its asso ciated array of anti-black images and attitudes. When blacks and Caucasians encounter whites in a broad array of contemporary settings, they often meet negative beliefs about their abilities, values, and orientations. Racial barriers persist today because a substantial majority of whites harbor anti-black sentiments, images, and beliefs and because a large minority are very negative in their perspectives. When most whites interact with black Americans at work, in restaurants, on the street, at school, or in the media they tend to think about the latter, either consciously or unconsciously, in terms of racist stereotypes inherited from the past and constantly reiterated and reinforced in the present (Daum 65). Police may actively persecute blacks, or they may engage in an array of avoidance behaviors.

Ancient History of Egyptian Medicines Essay Example | Topics and Well Written Essays - 1750 words

Ancient History of Egyptian Medicines - Essay Example Egyptians are considered to be one of the few dynasties to have lived healthy lifestyles. Their average life expectancies have been estimated to be thirty to thirty six years. A few outliers could be traced to have lived more than sixty years as well. A few prominent examples include Kings Pepy II and Ramesses II (Musso, 2005). Egyptians have for long relied on prayer, magic and a jewelry which they usually hung about the neck and thought to be a magical protection from diseases to find cure of any illness present. They have never really taken diet as a source of cure. Milk products were seldom consumed as was the seeds or oil. Moreover, their belief in magic has produced effective results not because of the magic itself but the belief that it could cure illness. Ingredients were chosen because they were devised from substance, plant or animals which resembled condition of the patient. Only because of this rationale that many patients were given strong drugs which affected their heal th in a negative direction. For instance, an ostrich egg is included in the treatment of a broken skull, and an amulet picturing a hedgehog which might be used against baldness.Egyptians doctors or more commonly known as doctor cum priest-physicians were known to specialize in treating different constituents of the body, which aligned believes about different Gods governing specific parts of the body. Usually, doctors were called as ‘sunu’, which was written with an arrow-shaped symbol.

A High School Teacher Proffesion Essay Example | Topics and Well Written Essays - 1000 words - 2

A High School Teacher Proffesion - Essay Example Basically, a high school teacher works school hours (commonly spanning from 8 am to 5 pm) which varies depending on the school regulations or state laws. However, some high school teachers can, at their own leisure, work in the evenings, or weekends, to grade (mark) papers and prepare lessons (Maloy and Irving, 24). Most high school teachers do not, however, teach during summer, on public holidays and when schools close on April, August, and December. Judging from the nature of work of a high school teacher, and the amount of free time in a year compared to other demanding, all year round professions such as those of doctors, I think their median annual wage of USD 55,050 is fair. However, there is still room for improvement on this figure and more motivation because teachers are responsible for the important task of shaping the destiny of a nation by modeling students into better citizens, relatives, friends, leaders and employees/ employers (professionals) in all fields (Maloy and Irving, 43). High school teaching can come with its own fair share of challenges and stress. Teachers can often be at the end of unfair criticism from both their superiors, supervisors and students’ parents because of the students’ poor performances while they could have actually tried their best, or while the problem lies elsewhere (either in the school, at home or in the communities in which the students live). Moreover, teachers have too high school teachers have to accept that they will occasionally encounter utter disrespect and lack of motivation from students. Furthermore, high school teachers can find work difficult in schools with very large classes and an absence of critical learning/ teaching tools such as updated textbooks and computers (Haugen, 78).     

The role and representation of men Essay Example | Topics and Well Written Essays - 2000 words

The role and representation of men - Essay Example man as weak and vulnerable, yet often such film makes a point of portraying this as a tragedy, an injustice in which man is stripped of his natural power. In stark contrast; the female role is often a vulnerable one – she is the beautiful daughter or the caring wife – she is the home-maker who cooks the meals and cleans the house; she is the child-bearer. Such stereotypical portrayals of the sexes are indeed extremely common, and have roots in the age-old status roles which men and women took centuries ago. This essay will focus on the role of the male in film; it will assess which forms the male role has taken in film and for which message it was intended to portray. Film media plays an immense role in portraying the stereotypical roles of men and women on the screen. As has already been stated, the male role is often connected with masculinity, and all that comes with this label; namely independence, financial success, violence, aggression and physical attractiveness. Men suffering problems are portrayed as ‘drinking’ them away or using methods of violence to ease the anger associated with the problem. A ‘real’ man is portrayed as muscular, harsh, well-endowed and often is a womaniser because of these qualities. It is almost as if these qualities give the male a reason, or a right to such womanising activities. The French male role is often the suave, less masculine in terms of violence, yet more beautiful and poetic. Entre nous depicts and accentuates the difference between the ideal and the typical male role. It portrays the ability of the female characters in constructing a network of friendship and mutual support, in which they are able to establish and maintain a form of independence from their husbands. In this film, the male role depicts that of the caring husband, the admirer of his wife and daughters, the provider of the family, yet in a less masculine sense. By depicting the women in this manner, the film manages to accentuate