Oversight Of The Financial Industry Regulatory Authority

Oversight of the Financial Industry Regulatory Authority : hearing before the Subcommittee on Capital Markets and Government Sponsored Enterprises of the Committee on Financial Services, U.S. House of Representatives, One Hundred Fourteenth Congress, first session, May 1, 2015.

SECURITIES REGULATION: Opportunities Exist to Improve SEC's Oversight of the Financial Industry Regulatory Authority

In light of on-going global financial crises, the institutional structure of financial regulation is currently a subject of significant academic and practical interest. The financial crisis has called into question the adequacy of financial regulation at the national and supranational levels, and has instigated financial regulatory reforms in major markets overseas. This has included the enactment of the Dodd-Frank Act in the US, and the programme to split the Financial Services Authority in the UK. This book examines the institutional structure reform of financial regulation from a comparative perspective, exploring both fundamental theories and international experiences. The book explores the three main institutional structures of financial regulation in the world; the sectors-based model, adopted in the US, Mainland China and Hong Kong; the twin-peaks model with Australia and the Netherlands as its pioneers; and the single-regulator model as represented by the former Financial Services Authority in the UK and the Financial Services Agency in Japan. The book contains contributions from renowned experts in the field of financial regulation including Douglas Arner, Jeffrey Carmichael, Robin Hui Huang, Dirk Schoenmaker, and Michael Taylor, and will be of interest to students and researchers of banking and finance law, and comparative economics.

This comprehensive account of financial regulation and supervision in times of crisis analyses the complex changes under way regarding the new financial regulatory structures in the EU. Focusing on the organisation of financial supervision, it deals with the background to the reforms, the architecture of the regulatory system, the likely implications for the financial institutions and the challenge of international co-operation. Changes in the US have been heavily criticised and in Europe a brand new regulatory system with three new regulatory agencies and a systemic risk board has been developed. National systems are in the process of being updated. International cooperation, although still difficult, has made progress, with the Financial Stability Board now acting on behalf of the G.20. Central bank cooperation has improved significantly and in the meantime, sectoral regulations are being adapted in full speed, such as Basel III, AIDMD, MiFID and many others. This book gives an overall view of these complex changes. The first section of the book provides an assessment of the reforms and considers the background to their making. In the section on regulatory structure there is analysis of the new regulatory bodies, their complex competences and actions. The book also takes a critical look at their likely effectiveness. The final section of the work considers the actual implementation of the new rules in a cross-border context.

Despite the intense debate on the advantages and disadvantages of adopting integrated supervision that has taken place in recent years, little is known about the experiences of countries that have adopted it and the obstacles and challenges they have faced to implement it. In an attempt to shed light on this area, the authors present the results of a survey conducted in a group of 15 countries that have adopted integrated supervision. After a brief review of the literature on integrated supervision, the authors examine four topics: 1) The reasons cited by this group of countries for establishing an integrated supervisory agency. 2) The scope of regulatory and supervisory powers of these agencies. 3) The progress of these agencies in harmonizing their regulatory and supervisory practices across the intermediaries they supervise. 4) The practical problems faced by policymakers in adopting integrated supervision. The survey revealed that the group of integrated supervisory agencies is not as homogeneous as it seems. Important differences arise with regard to the scope of regulatory and supervisory powers the agencies have been given. In fact, contrary to popular belief, less than 50 percent of the agencies can be categorized as mega-supervisors. Another finding is that in most countries progress toward the harmonization of prudential regulation and supervision across financial intermediaries remains limited. Interestingly, the survey revealed that practically all countries believe they have achieved a higher degree of harmonization in the regulation and supervision of banks and securities companies than between banks and insurance firms. The survey also identified some practical problems faced by this group of countries in establishing their unified supervisory agencies. The authors discuss these problems, along with the practical lessons and recommendations provided by the 15 agencies to other countries considering integrated supervision, in the final section of the paper.

The essays in this work offer a high-level examination of the most important issues facing financial services regulation,and the far-reaching effects of the Financial Services and Markets Act 2000 on the UK financial sector in the context of rapid global change. Taking an interdisciplinary approach the book includes contributions by many distinguished academic authorities on the law and economics of regulation, and also some of the most influential practitioners, regulators and policymakers. As such it provides an authoritative analysis of the underlying issues affecting the broad development of financial services regulation: the objectives of regulation, the responsibilities of the regulated community, the accountability of regulators, the regulation of electronic financial markets and the impact of stock market mergers, regional regulation within Europe, and the development of global financial regulation.

In nearly every major financial crisis of the past decade-from East Asia to Russia, Turkey, and Latin America-political interference in financial sector regulation helped make a bad situation worse. Political pressures not only weakened financial regulation, but also hindered regulators and supervisors from taking action against troubled banks. This paper investigates why, to fulfill their mandate to preserve financial sector stability, financial sector regulators and supervisors need to be independent-from the financial services industry as well as from the government-as well as accountable.