Law investments and financial markets chpt 1 notes PDF

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Law investments and financial markets chpt 1 notes...

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Law of Investment & Financial Markets Topic 1: Introduction to financial markets in Australia and the regulatory framework Separation of Powers • Legislature (the parliament) makes the law (or change) • Executive (the elected government) administers the law (puts law into action) • Judiciary (the courts) interpret the law (make judgements on the law) Purpose of Law  Resolves disputes  Maintains the social order  Stabilises the economy  Helps the disadvantaged  Reinforces community values  Prevents the misuse of power - doctrine of separation of powers The Rule of Law: The law applies to everybody equally(generally) What is Legislation?  Law made by parliaments  Legislation is also known as statute law, statues or Acts of parliament What is Common Law? • Law made by judges • Not the same as Civil Law • It operates whenever legislation is either non-existent or imprecise • It includes case precedents AND interpretation of statute Criminal Law: Wrong against society • Prosecuted by the state • Examples: Murder rape & thef • Proof: Beyond reasonable doubt • Remedies: Most serious-punishable by imprisonment Civil Law: Wrongs between individuals • Action brought by one individual against another • Examples: Breach of contract, trespass, negligence • Aim: Compensate the injured party • Burden of proof: Balance of Probabilities • Damages: Monetary compensation awarded for the loss, damage or injury suffered by one person cause by the behaviour of another Legislation vs Court decision Legislation will take priority, unless: • The legislation is struck down by the courts as invalid - The starting point when examining an area of the law is the actual legislation, then look at how the statute has been interpreted by the courts

Why Regulate?(Financial Services Sector) • To maintain confidence in the integrity of the AUS financial system • Transparency • Financial Stability • Investor/consumer protection • Reduction of financial crime Who regulates financial markets in AUS? ASIC (Australian Securities & Investments Commission) ASIC is Australia’s corporate, markets and financial services regulator. Function: The promotion of confident and informed participation by investors and consumers in the financial system. How does it do this: • The Corporations Act 2001(Cth), Chs7 (financial services markets), 6D (fundraising) and 5C (managed investment schemes) • Regulation of Australian companies • Licensing • Disclosure • Regulatory guides+ The laws administered by ASIC are designed to protect: • Consumers • Investors • Creditors APRA (Australian Prudential Regulation Authority) Function: It oversees banks, credit unions, building societies, general insurance and reinsurance companies, life insurance, private health insurance, friendly societies, and most members of the superannuation industry. How does it do this: Enforces prudential standards, relating to: • Capital • Risk management • Accounting • Prudential reporting. ASX (Australian Securities Exchange) Not a governmental regulatory agency What does it do: • A market operator, clearing house and payment systems facilitator • Oversees compliance with its operating rules • Promotes standards of corporate governance among AUS listed companies • Helps to educate retail investors ASX has to cooperate with ASIC in the performance of ASIC’s functions s792D • Providing info about listed companies/notifying ASIC about any breach in rules/C ACT AUSTRAC An AUS Government agency that uses financial intelligence and regulation to disrupt money laundering, terrorism financing and other serious crime.

MEDIA Exposes scandals/ regulatory failures/corporate misconduct etc....