Governance, Risk and Compliance Word limit: 3000 You are an international regulatory consultant. You have been contracted by the Government of Assessistan, a newly formed independent country. The...

Running Head: Governance, Risk and Compliance 1












Governance, Risk and Compliance

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Governance, Risk and Compliance 2
Introduction
Regulation can be defined as the system of standards which are being set on the formal or
informal controlling system along with monitoring of the activities through positive enforcement
in order to
ing out the shape in the behavior of all the financial institutions in a uniform
manner. It also covers making up rules along with constant supervisions and setting enforcement
methods so that common ways and methods can be implemented by all institutes in the finance
field. The development of a country’s economy is highly dependent over stability and efficiency
concerns of the financial system as all the capital formation is basically stored in the finance
sector only. It also set the basis for capital allocation and providing the system best efficiency
along with that of the consumer’s confidence into the financial integration system. In any
financial structure model, both the supply side as well as the demand side is affected in an
economy because a strong financial regulation system would increase further investment. In the
paper, a detailed analysis will be done regarding the financial structure models and their
strengths and weaknesses. Finally, the best financial structural model will be perceived as the
one to be used for the international as well as for domestic financial forum after studying the
threats and potentials of each of them.
Financial regulation structural models
In order to shape the behavior of legal rules to be followed by the financial institutions
and banking nerve of the country, it is necessary to articulate the well-structured model so that
public goals can be achieved for generating maximum social welfare.
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The regulations of financial markets involve contractual laws on the basis of enforceable
obligations to conduct the statutory as well as structural basis of banking sector. These structural
models include –
a. For promoting integrity in the financial market in a globalized economy.
. Regulation for promoting maximum competition which is related to mergers and conduct of
anti-competitive behavior.
c. Prudential regulation promotes structure of supervision with prudent needs.
d. Protecting consumers under regulatory acts which is the goal of almost all the regulatory
structures.
In order to provide the disclosures for the finance related product under the given
prescriptions to deal with the consumers, there has been provision of structural models which
simply helps in resolving disputes in the a
angements made. The aim of these structural models
is also to make the a
angements for the investors who look forward for maximizing their returns
over given money invested. Monetary policy measures matters a lot in describing the globalized
nature of nations and its impact over the inflation rate and interest rate in the country over a
period of time. It has been found that there globalisation reinforces the inflationary impact over
the movements in exchange rates which can be incorporated through monetary policy horizon. In
the paper, economic and globalization of world economies are closely inter-linked providing the
credentials issues to be discussed in terms of monetary policy measures (Coleman, 2016).
Hence, it can be said that different models of structures of finance in countries ensures
different promises to be fulfilled on the basis of their aspects to complete their natural purposes.
In case of prudential regulation, there are higher chances of meeting out the promises for success
in the system inbuilt and used for implementing the intent. On the other hand, consumers need to
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face various types of risks associated with their financial transactions which would ultimately
provide the recourse actions so that they are not mislead by not meeting out the promise for
keeping their money safe (Lastra, 1996).
In some structural cases, there is provision of contract laws under criminal and civil legal
implications and rules which clearly ensures the meeting of promises with both the investors as
well as the consumers. They would be devoid and safe from any fraudulent activity leading to
their losses. Similarly, the regulation which promotes raising of funds in both the securities as
well as markets of derivatives through exchange of different forms of money market instruments
and making money through short term ‘over the counter’ trading practices falls under the
category of market integrity regulation. It includes all the basic disclosure requirements along
with approving of exchanges on overnight basis. However, it prohibits any unfair practices of
trading so that market success can be manipulated through principles of a
angement and
provision of regulatory assessments. Fewer differences are recognized between the trading
transactions of financial sector between that of retail sector and the wholesale one. That is why;
it has the disadvantage of overlapping issues and inconsistency attached with the protecting
consumers under the chain reaction (Denters, 2009).
Similarly, under the well-known market principles of competitive skills, there is greater
engagement of participants into the market supply of money through adjustments in the resource
cost. Henceforth, it makes use of assumptions of perfect competition wherein there are many
uyers and sellers and prices are given to the firms from the industrial course of actions. It leads
to meeting the minimum requirements in terms of determining fair market price and quantity
traded in the regulations of competition. In this way, competition regulation reduces any
concentration of market suppliers of financial instruments. Monopolistic competition does not
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provide the best and efficient outcome of output produced in the market as earning super normal
profits is the prime aim of running business. It might be directed towards market collusion to
justify the cu
ent pricing schedule and trends in competitive phenomenon. It is closely...