Financial Markets & Risk - Essay Example

According to this act, FSA is responsible for the authorisation and prudential supervision of banks and building societies. It is also responsible for the supervision of following agencies: It is also entrusted with the supervision of financial markets, securities listings and of clearing and settlement systems. At the same time, it may be responsible for conducting operations in response to problem cases influencing firms, markets and clearing and settlements systems under situation when the nature of the operations was agreed according to the provisions of the tripartite Memorandum.

It is also responsible for regulatory policy in these areas, including that aimed with an objective to promote the resilience to operational disruption of authorised firms and Recognised bodies. It has also advisory responsibility and hence it should guide on the regulatory implications for authorised firms and recognised bodies of developments in domestic and international markets and of initiatives, both domestic and international level. Global financial problems may come at an unexpected intervals and hence they are equipped with necessary flexibility in their duties.

For example, under exceptional circumstances FSA has responsibility to undertake official financial operations to limit the risk of problems in or influencing particular institutions spreading to other parts of the financial system. It should also ensure proper communication with standing Committees of the Bank of England and HM treasury to co-ordinate the response to a crisis. Like FSA, the Bank of England was also entrusted with huge responsibilities to bring financial stability in United Kingdom.

The Bank of England is responsible for the predicting unforeseen challenges of the financial system as a whole. It also ensures the stability of the monetary system as part of its monetary policy functions. It should act in the markets to deal with fluctuations in