Prof. Jayanth R. Varma's Financial Markets Blog (comments) http://www.iima.ac.in/~jrvarma/blog/index.cgi A Blog on Financial Markets and Their Regulation en Copyright Prof. Jayanth R. Varma blosxom simplerss20 modified http://blogs.law.harvard.edu/tech/rss <![CDATA[Re: Should Equifax be shut down?]]> Comment relating to Should Equifax be shut down? (posted Wed, 13 Sep 2017 21:32:00 +0530)
Maries wrote on Thu, 14 Sep 2017 13:57

They consider fine as fees. Dan Ariely in his Predictably irrational tells the difference between fine and fees.

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Thu, 14 Sep 2017 13:57:00 +0530 https://faculty.iima.ac.in/~jrvarma/blog/index.cgi/Y2017-18/equifax.discuss http://www.iima.ac.in/~jrvarma/blog/index.cgi/Y2017-18/equifax.discuss#0
<![CDATA[Re: Re: Should Equifax be shut down?]]> Comment relating to Should Equifax be shut down? (posted Wed, 13 Sep 2017 21:32:00 +0530)
Krishna iyer wrote on Tue, 03 Oct 2017 06:37

Wow, that's a radical way to see things. Strikes right at the heart of the Joint Stock Company. I wonder what 'shut down' would imply. Is it a sale to someone else? In that case it would be BAU under new management Is it change of management? Ditto Is it forced winding down of the company? Now that would shake the ground under capitalism. Imagine of there is a probability however small of a company being wound down and sold for its parts, the knock to the cumulative stock market valuation would be terrible.. Plus, the investors would have done nothing to deserve it. The management needs to pay a price and investors a fine to insist on better manager behavior I future.

Thus in fitness of things I imagine shutting down would be too drastic a step...

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Tue, 03 Oct 2017 06:37:00 +0530 https://faculty.iima.ac.in/~jrvarma/blog/index.cgi/Y2017-18/equifax.discuss http://www.iima.ac.in/~jrvarma/blog/index.cgi/Y2017-18/equifax.discuss#0-0
<![CDATA[Re: In the sister blog and on Twitter during January-July 2017]]> Comment relating to In the sister blog and on Twitter during January-July 2017 (posted Wed, 02 Aug 2017 14:15:00 +0530)
Prof. Jayanth R Varma wrote on Thu, 03 Aug 2017 17:50

Comments were not working for some time. Have been restored now.

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Thu, 03 Aug 2017 17:50:00 +0530 https://faculty.iima.ac.in/~jrvarma/blog/index.cgi/Y2017-18/sister-blog-n-twitter-2017-01-to-07.discuss http://www.iima.ac.in/~jrvarma/blog/index.cgi/Y2017-18/sister-blog-n-twitter-2017-01-to-07.discuss#0
<![CDATA[Re: Re: In the sister blog and on Twitter during January-July 2017]]> Comment relating to In the sister blog and on Twitter during January-July 2017 (posted Wed, 02 Aug 2017 14:15:00 +0530)
Prof. Jayanth R Varma wrote on Thu, 03 Aug 2017 18:15

Testing whether reply works

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Thu, 03 Aug 2017 18:15:00 +0530 https://faculty.iima.ac.in/~jrvarma/blog/index.cgi/Y2017-18/sister-blog-n-twitter-2017-01-to-07.discuss http://www.iima.ac.in/~jrvarma/blog/index.cgi/Y2017-18/sister-blog-n-twitter-2017-01-to-07.discuss#0-0
<![CDATA[Re: Equity Derivatives versus Cash Equities in India]]> Comment relating to Equity Derivatives versus Cash Equities in India (posted Mon, 31 Jul 2017 21:22:00 +0530)
Dilip Kumar Agrawal wrote on Mon, 07 Aug 2017 21:25

I have gone through the whole article and found it to be so good and to the point , that I am thinking why such people are not consulted by the regulators which are headed by IAS burocrats who don't have true knowledge of the subject . They don't know that a vibrant capital market is a must for the growth of an economy . And what ever the author has said if followed will lead to a vibrant capital market .

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Mon, 07 Aug 2017 21:25:00 +0530 https://faculty.iima.ac.in/~jrvarma/blog/index.cgi/Y2017-18/derivatives-v-cash.discuss http://www.iima.ac.in/~jrvarma/blog/index.cgi/Y2017-18/derivatives-v-cash.discuss#0
<![CDATA[Re: Why Aadhaar transaction authentication is like signing a blank paper]]> Comment relating to Why Aadhaar transaction authentication is like signing a blank paper (posted Wed, 19 Jul 2017 21:34:00 +0530)
Nirmesh Mehta wrote on Thu, 03 Aug 2017 08:41

With reference to your article, I have a fundamental doubt here - is there a difference between verifying identity and authenticating a transaction?

I think the real question involved is

If X is verifying identity of A, is it the same as saying that X has proof that it has verified the identity?

If I understand correctly, there are systems where X can verify identity but cannot prove the same - for instance, if

1. There is key that is shared only between X and A

2. X has a message signed with that key

3. X knows that it did not sign the message

Then X can be sure that A signed it but not prove the same to a third party.

However, the problem is that X needs to be a consistent, internally reliable person and cannot be a system - as far as I understand there is, currently, no way to prove that X did not do something.

Hence, my conclusion is that if a system claims to have verified the identity of a user U, it must claim that the user U has authenticated the transaction of the said verification. Alternatively, the only claim that the system may make is that there is an agent A who claims that he has verified the identity of U.

In practice, I dont think this second assertion is useful. For instance, Why would a business use Aadhaar to perform KYC if it couldn't later prove to law enforcement agency that the Aadhaar number of the customer is, in fact, what they claim it to be and not some random number created from the figment of imagination of one of their employees? If there is court case at some point, would the employee who carried out the authentication really be able to testify that he actually did it?

Just as an aside, I know of a few paranoid people who are very careful about self attesting PAN cards (or other identity cards) - they write on the photocopy what purpose they are attesting it for. The reason is the same that you had mentioned - the self attested identity document is sufficient for purchasing a SIM card.

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Thu, 03 Aug 2017 08:41:00 +0530 https://faculty.iima.ac.in/~jrvarma/blog/index.cgi/Y2017-18/adhaar.discuss http://www.iima.ac.in/~jrvarma/blog/index.cgi/Y2017-18/adhaar.discuss#0
<![CDATA[Re: Re: Why Aadhaar transaction authentication is like signing a blank paper]]> Comment relating to Why Aadhaar transaction authentication is like signing a blank paper (posted Wed, 19 Jul 2017 21:34:00 +0530)
Prof. Jayanth R Varma wrote on Tue, 29 Aug 2017 21:10

I agree with much of what you say. In cryptography, we draw two distinctions:

(1) between Entity Authentication and Message Authentication

(2) between Message Authentication and Non-repudiation

My blog post focused on the first while you have focused on the second. In practice, both distinctions are important.

An identity card for example provides an entity authentication

Suppose (a) I know you well and (b) you come to my office and (c) tell me something orally, message authentication has been accomplished. I am sure that you told me this, but you can repudiate it because I have no proof.

Now assume (b) and (c) but not (a). Instead, you use (a') an identity card to convince me that it was Nirmesh told me this. (a'+b+c) gives message authentication without non repudiation.

Now assume (a) or (a') and (b) and (c') instead of (c) where (c') is that you write everything down on a piece of paper, sign it it my presence and give it to me. This gives message authentication with non repudiation. Without (a) or (a') I do not know that the signature on the paper is that of Nirmesh.

Aaadhar can serve as (a').

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Tue, 29 Aug 2017 21:10:00 +0530 https://faculty.iima.ac.in/~jrvarma/blog/index.cgi/Y2017-18/adhaar.discuss http://www.iima.ac.in/~jrvarma/blog/index.cgi/Y2017-18/adhaar.discuss#0-0
<![CDATA[Re: How to bury zombie companies quickly]]> Comment relating to How to bury zombie companies quickly (posted Fri, 16 Jun 2017 18:51:00 +0530)
Suhas Hari wrote on Sun, 05 Nov 2017 21:47

Dear Prof. Varma, in light of the new recapitalisation plan, would you not think that the sovereign credit risk itself is at risk? Also, why would the banks not resort to lending to the same zombie firms with the same promoters? Would like to hear your views on these. Thank you.

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Sun, 05 Nov 2017 21:47:00 +0530 https://faculty.iima.ac.in/~jrvarma/blog/index.cgi/Y2017-18/zombie-companies.discuss http://www.iima.ac.in/~jrvarma/blog/index.cgi/Y2017-18/zombie-companies.discuss#0