Financial Regulation in the UK and Ireland Essay -- Finance Business E

financial Regulation in the UK and Ireland There has been considerable changes in the regulating of financial markets in the UK and other countries. Why is this? Financial markets tend to be more highly regulated than other markets. Explain why. In May 1997, the British Chancellor of the Exchequer made the decision to cue the function of direction of financial institutions into the hands of a new regulatory authority, the Financial Services Authority (FSA). This new authority replaced the Securities and Investments Board and took over responsibility for the supervision of banks, listed money market institutions and clearing houses from the Bank of England. (Blake, 1999). Overall responsibility for regulation of financial markets lies with HM Treasury and is then divided up surrounded by the Bank of England and the FSA. Now, the Bank of Englands remit is the operation of monetary policy and ensuring the stability of the financial system. The FSA has five primary func tions Authorisation of market participants Prudential supervision of banks, insurance companies, securities firms and fund managers, and regulation of their conduct of business Investigation, enforcement and discipline Regulation of investment exchanges and clearing houses Regulation of collective investment schemes. The change has been a impel away from largely self-regulation to a combination of self-regulation and government interventionist regulation. Before 1997 the UK relied primarily on private regulation (by the stock exchange and, to an increasing extent, by the institutes of leased accountants). (Benston, 1985). The regulation of the financial system in the UK however is not as explicit as the system in the US where the Securities and deepen Commission holds most of the most extensive regulations, which are viewed by some as being excessive. The more complex and formal US rules and procedures do not permit as much flexibility and speed (Benston, 1995). So the UKs new system is a compromise between the best of self regulation and statutory regulation to ensure the financial markets work in an efficient and orderly manner. The FSA reinforces the orderly operation of the UK markets. For example, when a firm wishes to list on the London Stock Exchange (LSE), they must satisfy requirements of the previously self-regulatory LSE as well as ... ...es it has scrape in the form of strict regulation, for others in relatively flexible regulation. The challenges now come from the increasing need for harmonisation of regulations in the EU and also the need to react to the effect that technology can have on financial markets, something that many an(prenominal) current financial regulatory systems have yet to tackle.Works CitedBenston, G.J. Towards a Cost/Benefit analysis of the SEC Have the British a let out Way?, Midland Corporate Finance Journal, 1985.Blake, D. Financial Market Analysis. Wiley, 1999Goodhart et al. Financial Regulation Why, How and Wh ere Now?, Routledge, 1998.Labate, J. Senate Banking chief Phil Gramm orders overhaul of legislation Financial Times, Dec 27 2000.Leader, Neuer Markt Financial Times, Jan 3 2001London Stock Exchange, Admission and Disclosure Standards May 2000.Quinn, T.P. The Economics of Financial Regulation A Survey., Central Bank of Ireland. 1992Stewart, J. The Changing genius of Financial Regulation in Ireland , Journal of Financial Services Research , 1996.Stewart, J. The Effects of BIS Capital Adequacy Ratios on Bank financing, Irish Accounting Review,