Financial regulation

"Financial regulator" redirects here. For the Irish authority, see Financial Regulator.

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Financial regulation is a form of regulation or supervision, which subjects financial institutions to certain requirements, restrictions and guidelines, aiming to maintain the integrity of the financial system. This may be handled by either a government or non-government organization.

Aims of regulation

The aims of financial regulators are usually:

• To prevent cases of market manipulation, such as insider trading
• To ensure competence of providers of financial services
• To protect clients, and investigate complaints
• To maintain confidence in the financial system
• To reduce violations under laws

Authority by country

See main article List of financial regulatory authorities by country

The following is a short listing of regulatory authorities in various jurisdictions, for a more complete listing, please see list of financial regulatory authorities by country.

• United States
  • U.S. Securities and Exchange Commission (SEC)
  • Financial Industry Regulatory Authority (FINRA)
  • Commodity Futures Trading Commission (CFTC)
  • Federal Reserve System ("Fed")
  • Federal Deposit Insurance Corporation (FDIC)
  • Office of the Comptroller of the Currency (OCC)
  • National Credit Union Administration (NCUA)
  • Office of Thrift Supervision (OTS)
• Financial Services Authority (FSA), United Kingdom
• Financial Services Agency (FSA), Japan
• Federal Financial Supervisory Authority (BaFin), Germany
• Autorité des marchés financiers (France) (AMF), France
• Monetary Authority of Singapore (MAS), Singapore
• Swiss Financial Market Supervisory Authority (FINMA), Switzerland
• Commissione Nazionale per le Società e la Borsa (CONSOB), Italy
• Netherlands Authority for the Financial Markets (Autoriteit Financiële Markten, AFM), Netherlands
• People's Republic of China
  • China Securities Regulatory Commission (CSRC)
  • China Insurance Regulatory Commission (CIRC)
  • China Banking Regulatory Commission (CBRC)
• Securities and Exchange Commission (Comissão de Valores Mobiliários, CVM), Brazil
• Canada
  • Canada is one of the few countries that does not have a country wide securities regulator. Canadian securities regulation is instead done at province level by separate agencies coordinated through the Canadian Securities Administrators.
  • Investment Industry Regulatory Organization of Canada (IIROC) (French: Organisme canadien de réglementation du commerce des valeurs mobilières, OCRCVM)
  • Office of the Superintendent of Financial Institutions (OSFI)

Unique jurisdictions

In most cases, financial regulatory authorities regulate all financial activities. But in some cases, there are specific authorities to regulate each sector of the finance industry, mainly banking, securities, insurance and pensions markets, but in some cases also commodities, futures, forwards, etc. For example, in Australia, the Australian Prudential Regulation Authority (APRA) supervises banks and insurers, while the Australian Securities and Investments Commission (ASIC) is responsible for enforcing financial services and corporations laws.

Sometimes more than one institution regulates and supervises the banking market, normally because, apart from regulatory authorities, central banks also regulate the banking industry. For example, in the USA banking is regulated by a lot of regulators, such as the Federal Reserve System, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, the National Credit Union Administration, the Office of Thrift Supervision, as well as regulators at the state level.

In addition, there are also associations of financial regulatory authorities. In the European Union, there are the Committee of European Securities Regulators (CESR), the Committee of European Banking Supervisors (CEBS) and the Committee of European Insurance and Occupational Pensions Supervisors (CEIOPS), which are Level-3 committees of the EU in the Lamfalussy process. And, at a world level, we have the International Organization of Securities Commissions (IOSCO), the International Association of Insurance Supervisors, the Basel Committee on Banking Supervision, the Joint Forum, and the Financial Stability Board.

The structure of financial regulation has changed significantly in the past two decades, as the legal and geographic boundaries between markets in banking, securities, and insurance have become increasingly "blurred" and globalized.

Regulatory reliance on credit ratings

Think-tanks such as the World Pensions Council have argued that most European governments pushed dogmatically for the adoption of the Basel II recommendations, adopted in 2005, transposed in European Union law through the Capital Requirements Directive (CRD), effective since 2008. In essence, they forced European banks, and, more importantly, the European Central Bank itself e.g. when gauging the solvency of EU-based financial institutions, to rely more than ever on the standardized assessments of credit risk marketed by two private US agencies- Moody’s and S&P, thus using public policy and ultimately taxpayers’ money to strengthen an anti-competitive duopolistic industry. Ironically, European governments have abdicated a key component of their regulatory authority in favor of a non-European, highly deregulated, private cartel…

See also

• Bank regulation
• Insurance law
• Global financial system
• Regulation of commodity markets
• Group of Thirty
• Regulatory capture
• Securities Commission
• International Organization of Securities Commissions
• International Centre for Financial Regulation
• Finance
• Financial repression

External links

• Securities Lawyer's Deskbook from the University of Cincinnati College of Law
• Securities Law Home Page
• The Compliance Exchange Jonathan Halsey's financial regulation research resource
• ICFR (The International Centre for Financial Regulation)
• Ana Carvajal, Jennifer Elliott: IMF Study Points to Gaps in Securities Market Regulation
• IOSCO: Objectives and Principles of Securities Regulation (PDF-Datei 67 Seiten)
• The Samuel & Ronnie Heyman Center on Corporate Governance The Samuel & Ronnie Heyman Center on Corporate Governance
• The Institute for Financial Market Regulation The Institute for Financial Market Regulation