Financial Regulation In The Uk And Ireland

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Financial Regulation In The Uk And Ireland

There has been considerable changes in the regulation 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 move the responsibility of supervision 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 between 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 functions: 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 move 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 chartered 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 Exchange Commission holds some 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 the United Kingdom Listing Authority (UKLA), which is a body of the FSA. Both authorities work closely together and have powers of instit...

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