Models of Regulation Flashcards
Rules based approach regulation
- specific detailed
- box tixing
- prescriptive
- little allowance for interpretation
loop holes
Principles based approach regulation
High level rules and guidance
flexibility to support innovation
Forms of Self - regulation
- Industry based organisations
- Exchange- based frameworks
- Private associations
SRO
Self Regulatory Organisations
ICMA
regulatory body that covers specific financial product or service on national basis
elements of self regulatory model
specialised knowledge
industry motivation
contractual relationship
Transparency and accountability
Flexible SRO compliance programmes (ability react market changes)
Co-ordiantion and sharing info
Banking Reform
UK Independent Commission on Banking
US Dodd-Frank Act
Promoting the financial stability of the financial system
Market Integrity
EU MIFID
creating a single market
EIMIR regards regulation of OTC derivatives
Sarbanes - Oxley Act
protects investors by improving accuracy and reliability of disclosures
regulation will apply for UK listed company, having dual listing with a US Market
UK Bribery act scope
UK or worldwide
when committed by person with a close connection to UK.
Combating Tax evasion
US Foreign Account Tax Compliance Act
Combat tax evasion by US persons holding investments in offshore accounts (must report to IRS)
MTF
Multilateral Trading Facility
operated by market operators and investment firms
directly regulated by national regulators
OTF
Organised trading facility
Bond/ derivative trading
Systematic internaliser
Firm on frequent + systematic basis deals on own account when existing client orders.
Facilitates cross trade between clients
Order driven markets
Best five prices level on both buy and sell side
Quote driven markets
best five bids and offers of market makers
