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Self regulating bodies that are recognized by the government and are given regulatory
powers:
A)
are less effective in carrying out regulatory objectives than are governmental
agencies.
B) are common in civil law countries.
C) may be susceptible to political pressures from members.
Calisto is a developed market nation with large natural resources, oil and precious metals,
with growing financial markets. Calisto is a stable constitutional monarchy with elected
representatives as the legislative body, appointed and legislative-majority approved judges
as the judicial body, and the ruling royal family as the executive body.
Calisto is a member of COPA, an alliance of three bordering countries, Calisto, Olaguay, and
Peristan, that formed a regional monetary union. The COPA currency is known as the 'copa'
with the symbol COP.
As part of Calisto joining COPA Calisto has standardized their regulations and regulatory
institutions. Regulatory standardization among the three countries was part of the
prerequisite for each to join. The standardization covers most major governmental agencies
but does not cover all industries. Calisto anticipates having to bear additional costs and loss
of productivity in some of their business sectors. Oil and precious metal extractions are
expected to be affected by environmental regulations.
Calisto has adopted the COPA Financial Intermediaries Standards (COPA FIS). COPA FIS
covers all financial institutions: (1) commercial banks, (2) exchanges for bonds, stocks,
commodities and derivatives, and (3) insurance companies and pension entities. The COPA
FIS were rewritten as legislation by Calisto's representatives and passed unanimously as the
Financial Intermediaries Standards Act of 2001 (FISA).
Calisto restructured their financial regulatory institutions into three different organizations
with each institution serving as government recognized self regulatory organizations (SRO)
for oversight and enforcement for the industry.
Commercial Banking Standards Board (CBSB) – regulates all commercial banking
including capital requirements, underwriting standards for loans and investments.
Often coordinates policy and procedures with the independent Central Bank of Calisto
(CBoC).
Exchange Trading Commission (ETC) – regulates all exchanges including margin
requirements, counterparty stipulations, transactional information, transparency
rules and market making standards.
Insurance and Pension Oversight Committee (IPOC) – regulates all insurance and
pension related matters.
One example of an ETC regulation is: All companies listed on the Calistose Stock Exchange
are required to furnish audited financial statements on quarterly and annual basis prepared
by Calistose accounting firms. The accounting standards of Calisto are a combination of US
GAAP and IFRS that is used throughout COPA.
Before ETC rules and regulations, Calisto's equities markets were less liquid. The volume of
trades have increased significantly since ETC has become the self regulatory organization for
financial markets. More Calistose citizens are buying stocks and listing of both Calistose and
foreign stocks has risen significantly over the last ten years (2002 – 2012).
Calisto
2002
2012
2022 (est.)
Population (in millions)
45.8
55.2
65.1
GDP (in $ billions)
$1,240.0
$2,000.0
$3,280.0
Effective Income Tax Rate
19.5%
20.4%
22.5%
Savings rate (average is 10.0%)
10.0%
9.8%
9.5%
Number of listed stocks
120
1200
2400
Calisto has a three tiered progressive income tax rates of 10%/20%/30%. Sales tax rates are
5% on most goods except food items and higher tax rates on snack foods, tobacco, alcohol
and luxury imports. Most food items are not taxed. Government revenues are derived from
taxes and oil revenues from government owned lands.
Tobacco and alcohol consumption in Calisto has been on the rise over the last years. Over
the same time period smoking rates have fallen in Olaguay, and Peristan. Olaguay and
Peristan both have higher tax rates on tobacco products, government warnings on tobacco
packaging and anti-smoking marketing campaigns. Tobacco companies have purposefully
targeted Calisto by lowering prices because of the higher demand. Calisto government
health leaders will combat the higher smoking rates by adopting similar measures of their
COPA members or creating a COPA regional policy.
Fines and penalties for insider trading are prohibitive high. Individuals who are fiduciaries
and represent financial firms who are caught for insider trading can face more severe
punishment for themselves and their firms.