Financial Market Regulators

Question 1

Name the three bodies who regulate the financial market

Answer 1

1) Financial Policy Committee (FPC)
2) Prudential Regulation Authority (PRA)
3) Financial Conduct Authority

Question 2

What type of regulation do the FPC undertake?

Answer 2

Macro prudential regulation
- Means their job is to manage/regulate the whole financial sector

Question 3

Jobs of the FPC

Answer 3

• Identify, monitor and protect against SYSTEMIC RISK
• Can instruct PRA and FCA to help tackle financial stability issues
• Can advise government
• Enact stress tests
  - Tests if banks in the UK are able to deal with worst
  possible crisis
• Can provide emergency liquidity to protect against systemic risk

Question 4

What type of regulation do the PRA and FCA undertake?

Answer 4

Micro prudential regulation

Question 5

Jobs of PRA

Answer 5

• To maintain and regulate the stability of banks
• Supervise management of risk
• Set industry standards to ensure conduct and management of banks is upheld.
• Specify ratios and reserve requirements
  (e.g., capital ratio and reserve requirement)