tailieunhanh - Legal and regulatory aspects of banking supervision 10

The following will be discussed in this chapter: The four approaches to financial supervision, the functional approach, the integrated approach, the twin peaks approach, why institutional/regulatory structure is important? | MBF-705 LEGAL AND REGULATORY ASPECTS OF BANKING SUPERVISION OSMAN BIN SAIF Session: TEN Summary of previous session Institutional Approaches to Banking Regulation Introduction Background Policy Goals of Regulations Safety and Soundness of Financial Institutions Mitigation of systematic risk Fairness and efficiency of markets Protection of Customers and investors The four Approaches to Financial supervision The institutional Approach Case Example-- CHINA 2 Agenda of this session The four Approaches to Financial supervision The Functional Approach CASE Example FRANCE The integrated Approach CASE Example UNITED KINGDOM The Twin peaks Approach CASE Example AUSTRALIA Why institutional / regulatory structure is important? 6 Reasons 3 2. The Functional Approach Under the Functional Approach, supervisory oversight is determined by the business that is being transacted by the entity, without regard to its legal status. Each type of business may have its own functional regulator. 4 2. The Functional Approach (Contd.) For example, under a “pure” Functional Approach, if a single entity were engaged in multiple businesses that included banking, securities, and insurance activities, each of those distinct lines of business would be overseen by a separate, “functional” regulator. 5 2. The Functional Approach (Contd.) The functional regulator would be responsible for both safety and soundness oversight of the entity and business conduct regulation. The challenge for the Functional Approach is that activities must fall into categories clear enough for the regulator to oversee. 6 CASE-Example-France France also has a regulatory oversight model that can best be described as a Functional Approach, although, like Italy, there is some allocation of functions that closely resembles the Twin Peaks Approach. Financial services oversight was reformed in France in 2003 with the goal of improving efficiency of the regulatory system. 7 CASE-Example-France (Contd.) The framework for financial . | MBF-705 LEGAL AND REGULATORY ASPECTS OF BANKING SUPERVISION OSMAN BIN SAIF Session: TEN Summary of previous session Institutional Approaches to Banking Regulation Introduction Background Policy Goals of Regulations Safety and Soundness of Financial Institutions Mitigation of systematic risk Fairness and efficiency of markets Protection of Customers and investors The four Approaches to Financial supervision The institutional Approach Case Example-- CHINA 2 Agenda of this session The four Approaches to Financial supervision The Functional Approach CASE Example FRANCE The integrated Approach CASE Example UNITED KINGDOM The Twin peaks Approach CASE Example AUSTRALIA Why institutional / regulatory structure is important? 6 Reasons 3 2. The Functional Approach Under the Functional Approach, supervisory oversight is determined by the business that is being transacted by the entity, without regard to its legal status. Each type of business may have its own functional regulator. 4 2. The .