tailieunhanh - Lecture Principles of money, banking, and financial markets (12th edition): Chapter 15 - Ritter, Silber, Udell

Chapter 15 - The regulation of markets and institutions. In this chapter you will learn to describe the different methods of regulating primary, secondary, and intermediated financial markets; understand the United States dual banking system and the array of regulators who oversee it; explain universal banking and its possible benefits and risks. | Chapter 15 The Regulation of Markets and Institutions Copyright © 2009 Pearson Addison-Wesley. All rights reserved. Learning Objectives • Describe the different methods of regulating primary, secondary, and intermediated financial markets • Understand the United Stated dual banking system and the array of regulators who oversee it • Explain universal banking and its possible benefits and risks Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 15-2 Introduction • Financial system is one of most intensely regulated sectors in US economy – – – – Promote competition Protect individual consumers Assure stability of financial system Facilitate monetary policy Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 15-3 1 Regulation of Financial Markets in the United States • Desire to protect individual investor • Best protection is adequate information about securities • Full disclosure broadens investor’s participation in financial markets Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 15-4 Regulation of Financial Markets in the United States (Cont.) • Regulation of the Primary Market – Securities Act of 1933 • Requires disclosure of information for newly issued publicly traded securities • Privately held firms are not required to reveal financial information to the public at large, only to the lenders – Securities Exchange Act of 1934 • Created the Securities and Exchange Commission (SEC) to administer provisions of 1933 Act • Publicly traded security must file registration statement and preliminary prospectus disclosing information about issue Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 15-5 Regulation of Financial Markets in the United States (Cont.) • Regulation of the Primary Market (Cont.) – Securities Exchange Act of 1934 (Cont.) • The prospectus does not state the interest rate on a bond issue or price for equity issues—determined in the market when sold • If information is adequate, SEC .