Regulatory bodies

Question 1

What is the macroeconomic reason to supervise the financial system?

Answer 1

To maintain the stability of the financial system (banking regulations)

Question 2

What is the dilemma regarding regulation?

Answer 2

Different types of regulations mean creating different types of markets and then different playing fields

Question 3

What are the general political regulatory institutions of supranational regulation?

Answer 3

The European Parliament, the European Commission, and the Council of Europe

Question 4

What is the difference between the ESCB and the Eurosystem?

Answer 4

The former includes all the members of the EU and the latter only the ones that have the euro as currency

Question 5

What do the ESCB and Eurosystem have in common?

Answer 5

They are both composed by the ECB and the national central banks of the countries included

Question 6

What is the ECB?

Answer 6

A supranational organism with judicial authority according to public international law

Question 7

What can you say about the National Central Banks?

Answer 7

They are rules according to the national legislation, they carry out the duties assigned by the ECB but can also carry out duties outside the eurosystem under their own responsability if it does not interfere with its original duties

Question 8

What are the general political regulatory institutions at a national level?

Answer 8

Las Cortes Generales, the government and, the Ministry of Economy

Question 9

What is ESMA? What is its corresponding spanish body?

Answer 9

European Security and Markets Authrority is a independent Authority body that contributes to safeguard the stability of the financial system. It ensures the orderly functioning of the securities market, in Spain it is known as CNMV.

Question 10

What is EIOPA? What is its corresponding spanish body?

Answer 10

European Insurance and Occupational Pensions Authorityis a independent advisary body that contributes to protecting consumers , pensions and insurance. Its spanish equivalent is Dirección General de Seguros y Fondos de Pensiones

Question 11

What is Solvency II?

Answer 11

It is the updated set of regulatory requirements for insurence firms that operate in the European Union, it is based on economic principles for the measurement of assets and liabilities

Question 12

WhWhat are the governing bodies of the ECB?

Answer 12

The governing council, the executtive commitee (board), and the general council, the first one formulates and the second one implemets monetary policies

Question 13

What are the pillars of the banking union proposal?

Answer 13

A single supervisory mechanism, roled played by the ECB, a single resolution mechanism, and a deposit guarantee scheme

Question 14

What is the BIS?

Answer 14

The Bank of International Settlements, it is considered as the central banks of the central banks, it is a forum to promote debate and facilitate decision-making processes both among the Centra Banks and in the heart of the international financial community. It includes the Basel Committee

Question 15

What is the FSB?

Answer 15

The Financial Stability Board is a institutions established to coordinate at the international level the work of national financial authories and international standards setting bodies

Question 16

What is the MiFID?

Answer 16

Markets and Financial Instruments Directive, it is one of the most important regulatory efforts in the financial system. Is a European regulation that increases the transparency across the European Union’s financial markets and standardizes the regulatory disclosures required for firms operating in the European Union.

Question 17

What are the two measures used by the MiFID to protect investors?

Answer 17

Interralation (focused on the way entities deal with clients and the market) and Organisational (focused on the internal organisation of entities)

Question 18

What are the aims of MiFID II?

Answer 18

To ensure organized bargaining takes place, to introduce rules over HFT to improve transparency and supervision adn to reinforce investors protection

Question 19

What are the trading platforms defined by the MiFID?

Answer 19

The regulated markets, the Multi Trading Facilities and the Systematic Internalisers, now the broker can decide if it wants to hold it internally, place it on the market or send it to some trading platform

Question 20

What are the possitive and negative consequences of this increased competitiviness giving by the new trading platforms?

Answer 20

Positive: lower costs (increase comission), negative: fragmentation leads to less liquidity in each market.