The role that company regulators play

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Date added: 17-06-26

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Since the 2008 global financial crisis, there is a great impact and effects on both developed and developing countries by the financial crisis. Australia Governments have taken active measures to tackle the financial crisis. In developed countries, Australia was the first to recover in short time from the global economic recession. In 2009, the economy in Australian would rebound quickly, as the world's fastest growing economies in the developed countries. First, the Australia government take timely, accurate and effective measures to stimulate economic development. The most important role is that Australian financial market supervision system. Regulation and prudential supervision in Australia is the stability and flexibility to find the best balance between the points. Australia regulatory structure include: Reserve Bank of Australia¼ˆRBA¼‰, Australian Prudential Regulation Authority( APRA), Australian Securities and Investments Commission(ASIC) and Australian Competition and Consumer Commission(ACCC). The economic regulatory system in Australia has improved constantly, they are both independently perform their responsibility and to mutual complementation for each other, making Australia's economic stability and development of institutions. The main points of the plan are as the follows: RBA, it is stability and payable system, the main responsibility is monetary policy to maintain a stable low inflation rate. Other responsibilities include maintaining financial system stability and promoting the safety and efficiency of payment systems. Responsible for managing Australia's foreign exchange reserves, issue currency notes. APRA, regulation include oversees banks, credit unions, building societies, general insurance and life insurance and the superannuation industry, APRA is funded largely industries that is supervises. Give prudential regulation and supervision of deposit- taking institutions. ACCC, is a competition policy, Regulation include: unfair market practices, industry standards, company mergers and acquisitions, product safety, product liability, price control, telecommunications, coal, gas, electricity and airport industry regulation. ASIC, as the corporate regulator, is main responsible for the registration and supervision of the company's internal operation and management. To ensure that company directors and managers' honesty, diligence, in order to interest of the Company to performance its duties. Accusations include: corporate finance, mergers and arrangement plans, audit and financial reporting, market disclosure, shareholder rights and corporate management. As a financial services regulator, APRA, its regulatory supervision by the addition of financial areas, including: pension, managed funds, stocks, securities, derivatives and insurance. Responsible for issuing operating licenses and supervise financial services business, effective, honest and fair business.( Wikipedia,2010) In short, the four regulatory agencies in accordance with their respective scope of regulation, market discipline in promoting the operation of the Australian economy, to maintain Australia's economic security, stability and prosperity to play an important role. Irregular currency options trading at the national Australia Bank (National Australia Bank Limited), According to the report, On 13 January 2004, and the NAB announced that it had experienced a loss of $180m from unauthorized dealing within its Currency Options business. (NAB 2004) The key points include: the foreign currency options are weakness in system and processes to hide losses and protect bonuses. In the market division is inadequate management supervision, weaknesses in control procedure and financial controls, fails of risk management. ( NAB ASX Announcement,2004).And on 24 March, Australia Prudential Authority (APRA) prohibition of the National Australia Bank currency options tractions, and being investigated by the Australian companies and Securities Commission(ASIC)and AFP. And APRA advised NBA must balanced requirements and remedial actions, according to APRA Announcement, include these regulatory policies: NAB's internal target capital adequacy ratio is to rise to ten per cent; NAB's approval to use an internal model to determine market risk capital is withdrawn. NAB will be required to calculate its regulatory capital for market risk according to the standard regulatory method; and NAB's currency options desk is to remain closed to corporate business and proprietary trading. (APRA, 2004) In certain circumstances, APRA have intervened in where the action of NAB, firstly, NAB is to change all the policy and systems until been agreed with APRA. In the meantime, NAB will be close the management before the APRA satisfied. Secondly, increase the capital adequacy ratio. In view of the seriousness of this problem, NAB has the greatest risk, in recently, have lower capital adequacy ratio, below the requirement of APRA. So, APRA regulate that NAB's internal target capital adequacy ratio rise to ten per cent. (APRA report, 2004) thirdly, it is the recognition of the model. APRA need NAB use the standard method to recognise the market risk capital. The other one, about the currency option trading, APRA and nab achieve consensus to reduce risk on the desk, and offer an opportunity for nab face to market. Lastly, is taking the change of personnel in nab. APRA will discuss with nab's staffing changes in order to solve the number of the personnel, had quite a good balance and pointes the way to a better solution.
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