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Author: wetc
Sponsor: Milkcrack
Type: Act of Parliament
Preamble: This Act aims to define and regulate financial institutions in Azalea, specifying the roles, powers, and obligations of commercial banks, investment banks, and stock exchanges to ensure a stable and transparent financial system.
1. Definitions
(a) Commercial Banks: Institutions that accept deposits, make loans, and provide essential financial services to individuals and businesses.
(b) Investment Banks: Institutions that facilitate capital raising, manage investment funds, and trade securities, including government securities.
(c) Stock Exchanges: Institutions that facilitate the buying and selling of stocks and other securities between independent buyers and sellers.
2. Commercial Banks
(a) Commercial banks are exempt from regular taxes and instead adhere to the following tax structure:
(i) 25% of monthly profits must be paid to the Ministry of Commerce (MoC)
(ii) A sum equal to 0.25% of total deposits must be paid monthly into a fund managed by the MoC called the Deposit Restitution Reserve.
(b) Deposit Restitution Reserve:
(i) The DRR is to be used in the event of a bank failure when a commercial bank cannot cover withdrawal requests. It is only to cover depositors and not to be liquidated for creditors, shareholders, etc. In the event of a failure, depositors will make claims with the MoC, which will pay out depositors based on the last disclosure received by the MoC from the bank in question.
(ii) The fund is pooled between all commercial banks and managed by the MoC.
(iii) It is to be invested exclusively in corporate bonds, government bonds, or certificates of deposit notes.
(iv) The fund will be liquidated only in the event of a commercial bank’s failure to pay depositors.
(v) Deposit insurance is capped at $5,000 per individual and $15,000 per company.
(vi) If the fund cannot cover a bank failure, the government is under no obligation to contribute additional capital.
(vii) The MoC will be audited quarterly by the Bank of Azalea to ensure stability and compliance with the terms of this bill.
3. Investment Banks:
(a) Investment banks are the sole entities outside of the Bank of Azalea (BOA) permitted to:
(i) Purchase government securities directly from the government.
(ii) Create and manage private investment funds for clients.
(b) Public Disclosures:
(i) Investment banks must publish a quarterly disclosure detailing:
(ii) The size of all managed funds.
(iii) The holdings and composition of each fund.
(iv) The disclosures must be publicly accessible and submitted to the MoC.
(c) Funds:
(i) A fund is an entity that takes investments or deposits from prospective clients for growth or tracking an index. A fund invests in securities or commodities for growth or tracking an index.
4. Stock Exchanges
(a) Stock exchanges are the exclusive entities permitted to facilitate the trade of stocks and other securities.
(b) Operational Requirements:
(i) Stock exchanges must issue a monthly public report that includes:
(ii) The total value of all stocks listed on the exchange.
(iii) The total deposits held by the exchange.
(iv) The volume of securities traded during the month.
(b) Quote Regulation:
(i) Stock exchanges may not artificially generate their quotes for securities.
(ii) Quotes or an average of independently generated quotes must be sourced directly from independent buyers and sellers.
5. Reporting and Oversight
(a) The MoC is tasked with auditing financial institutions for compliance with this Act.
(b) Non-compliance by a financial institution may result in penalties, suspension of operations, or revocation of its license to operate, depending on the severity of the violation.
Enactment: This Act comes into force immediately upon passage.
Sponsor: Milkcrack
Type: Act of Parliament
A
BILL
TO
Establish and Regulate Financial Institutions
BILL
TO
Establish and Regulate Financial Institutions
Preamble: This Act aims to define and regulate financial institutions in Azalea, specifying the roles, powers, and obligations of commercial banks, investment banks, and stock exchanges to ensure a stable and transparent financial system.
1. Definitions
(a) Commercial Banks: Institutions that accept deposits, make loans, and provide essential financial services to individuals and businesses.
(b) Investment Banks: Institutions that facilitate capital raising, manage investment funds, and trade securities, including government securities.
(c) Stock Exchanges: Institutions that facilitate the buying and selling of stocks and other securities between independent buyers and sellers.
2. Commercial Banks
(a) Commercial banks are exempt from regular taxes and instead adhere to the following tax structure:
(i) 25% of monthly profits must be paid to the Ministry of Commerce (MoC)
(ii) A sum equal to 0.25% of total deposits must be paid monthly into a fund managed by the MoC called the Deposit Restitution Reserve.
(b) Deposit Restitution Reserve:
(i) The DRR is to be used in the event of a bank failure when a commercial bank cannot cover withdrawal requests. It is only to cover depositors and not to be liquidated for creditors, shareholders, etc. In the event of a failure, depositors will make claims with the MoC, which will pay out depositors based on the last disclosure received by the MoC from the bank in question.
(ii) The fund is pooled between all commercial banks and managed by the MoC.
(iii) It is to be invested exclusively in corporate bonds, government bonds, or certificates of deposit notes.
(iv) The fund will be liquidated only in the event of a commercial bank’s failure to pay depositors.
(v) Deposit insurance is capped at $5,000 per individual and $15,000 per company.
(vi) If the fund cannot cover a bank failure, the government is under no obligation to contribute additional capital.
(vii) The MoC will be audited quarterly by the Bank of Azalea to ensure stability and compliance with the terms of this bill.
3. Investment Banks:
(a) Investment banks are the sole entities outside of the Bank of Azalea (BOA) permitted to:
(i) Purchase government securities directly from the government.
(ii) Create and manage private investment funds for clients.
(b) Public Disclosures:
(i) Investment banks must publish a quarterly disclosure detailing:
(ii) The size of all managed funds.
(iii) The holdings and composition of each fund.
(iv) The disclosures must be publicly accessible and submitted to the MoC.
(c) Funds:
(i) A fund is an entity that takes investments or deposits from prospective clients for growth or tracking an index. A fund invests in securities or commodities for growth or tracking an index.
4. Stock Exchanges
(a) Stock exchanges are the exclusive entities permitted to facilitate the trade of stocks and other securities.
(b) Operational Requirements:
(i) Stock exchanges must issue a monthly public report that includes:
(ii) The total value of all stocks listed on the exchange.
(iii) The total deposits held by the exchange.
(iv) The volume of securities traded during the month.
(b) Quote Regulation:
(i) Stock exchanges may not artificially generate their quotes for securities.
(ii) Quotes or an average of independently generated quotes must be sourced directly from independent buyers and sellers.
5. Reporting and Oversight
(a) The MoC is tasked with auditing financial institutions for compliance with this Act.
(b) Non-compliance by a financial institution may result in penalties, suspension of operations, or revocation of its license to operate, depending on the severity of the violation.
Enactment: This Act comes into force immediately upon passage.
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