Financial regulation

Financial regulation

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Financial regulation is a form of regulation
Regulation
Regulation is administrative legislation that constitutes or constrains rights and allocates responsibilities. It can be distinguished from primary legislation on the one hand and judge-made law on the other...

 or supervision, which subjects financial institution
Financial institution
In financial economics, a financial institution is an institution that provides financial services for its clients or members. Probably the most important financial service provided by financial institutions is acting as financial intermediaries...

s to certain requirements, restrictions and guidelines, aiming to maintain the integrity of the financial system. This may be handled by either a government
Government
Government refers to the legislators, administrators, and arbitrators in the administrative bureaucracy who control a state at a given time, and to the system of government by which they are organized...

 or non-government organization.

Aims of regulation


The specific aims of financial regulators are usually:
  • To enforce applicable laws
  • To prevent cases of market manipulation, such as insider trading
    Insider trading
    Insider trading is the trading of a corporation's stock or other securities by individuals with potential access to non-public information about the company...

  • 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
    United States
    The United States of America is a federal constitutional republic comprising fifty states and a federal district...

    • U.S. Securities and Exchange Commission (SEC)
    • Financial Industry Regulatory Authority
      Financial Industry Regulatory Authority
      In the United States, the Financial Industry Regulatory Authority, Inc., or FINRA, is a private corporation that acts as a self-regulatory organization . FINRA is the successor to the National Association of Securities Dealers, Inc. ...

       (FINRA)
    • Commodity Futures Trading Commission
      Commodity Futures Trading Commission
      The U.S. Commodity Futures Trading Commission is an independent agency of the United States government that regulates futures and option markets....

       (CFTC)
    • Federal Reserve System
      Federal Reserve System
      The Federal Reserve System is the central banking system of the United States. It was created on December 23, 1913 with the enactment of the Federal Reserve Act, largely in response to a series of financial panics, particularly a severe panic in 1907...

       ("Fed")
    • Federal Deposit Insurance Corporation
      Federal Deposit Insurance Corporation
      The Federal Deposit Insurance Corporation is a United States government corporation created by the Glass–Steagall Act of 1933. It provides deposit insurance, which guarantees the safety of deposits in member banks, currently up to $250,000 per depositor per bank. , the FDIC insures deposits at...

       (FDIC)
    • Office of the Comptroller of the Currency
      Office of the Comptroller of the Currency
      The Office of the Comptroller of the Currency is a US federal agency established by the National Currency Act of 1863 and serves to charter, regulate, and supervise all national banks and the federal branches and agencies of foreign banks in the United States...

       (OCC)
    • National Credit Union Administration
      National Credit Union Administration
      The National Credit Union Administration is the United States independent federal agency that supervises and charters federal credit unions...

       (NCUA)
    • Office of Thrift Supervision
      Office of Thrift Supervision
      The Office of Thrift Supervision was a United States federal agency under the Department of the Treasury that charters, supervises, and regulates all federally- and state-chartered savings banks and savings and loans associations. It was created in 1989 as a renamed version of another federal agency...

       (OTS)
  • Financial Services Authority
    Financial Services Authority
    The Financial Services Authority is a quasi-judicial body responsible for the regulation of the financial services industry in the United Kingdom. Its board is appointed by the Treasury and the organisation is structured as a company limited by guarantee and owned by the UK government. Its main...

     (FSA), United Kingdom
    United Kingdom
    The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...

  • Financial Services Agency
    Financial Services Agency
    The is a Japanese government organization responsible for overseeing banking, securities and exchange, and insurance in order to ensure the stability of the financial system of Japan. The agency operates with a commissioner and reports to the Minister of Finance. It oversees the Securities and...

     (FSA), Japan
    Japan
    Japan is an island nation in East Asia. Located in the Pacific Ocean, it lies to the east of the Sea of Japan, China, North Korea, South Korea and Russia, stretching from the Sea of Okhotsk in the north to the East China Sea and Taiwan in the south...

  • Federal Financial Supervisory Authority (BaFin), Germany
    Germany
    Germany , officially the Federal Republic of Germany , is a federal parliamentary republic in Europe. The country consists of 16 states while the capital and largest city is Berlin. Germany covers an area of 357,021 km2 and has a largely temperate seasonal climate...

  • Autorité des marchés financiers (France) (AFM), France
    France
    The French Republic , The French Republic , The French Republic , (commonly known as France , is a unitary semi-presidential republic in Western Europe with several overseas territories and islands located on other continents and in the Indian, Pacific, and Atlantic oceans. Metropolitan France...

  • Monetary Authority of Singapore
    Monetary Authority of Singapore
    The Monetary Authority of Singapore is Singapore's central bank and financial regulatory authority...

     (MAS), Singapore
    Singapore
    Singapore , officially the Republic of Singapore, is a Southeast Asian city-state off the southern tip of the Malay Peninsula, north of the equator. An island country made up of 63 islands, it is separated from Malaysia by the Straits of Johor to its north and from Indonesia's Riau Islands by the...

  • Swiss Financial Market Supervisory Authority
    Swiss Financial Market Supervisory Authority
    Swiss Financial Markets Authority is the Swiss government body responsible for financial regulation. This includes the supervision of banks, insurance companies, stock exchanges and securities dealers as well as other financial intermediaries in Switzerland.FINMA is an independent institution...

     (FINMA), Switzerland
    Switzerland
    Switzerland name of one of the Swiss cantons. ; ; ; or ), in its full name the Swiss Confederation , is a federal republic consisting of 26 cantons, with Bern as the seat of the federal authorities. The country is situated in Western Europe,Or Central Europe depending on the definition....

  • Commissione Nazionale per le Società e la Borsa
    Commissione Nazionale per le Società e la Borsa
    Commissione Nazionale per le Società e la Borsa or Italian Securities and Exchange Commission is the government authority of Italy responsible for regulating the Italian securities market...

     (CONSOB), Italy
    Italy
    Italy , officially the Italian Republic languages]] under the European Charter for Regional or Minority Languages. In each of these, Italy's official name is as follows:;;;;;;;;), is a unitary parliamentary republic in South-Central Europe. To the north it borders France, Switzerland, Austria and...

  • Netherlands Authority for the Financial Markets
    Netherlands Authority for the Financial Markets
    The Netherlands Authority for the Financial Markets is the financial services regulatory authority for the Netherlands. Its role is comparable to the role of the SEC in the United States.-History:...

     (Autoriteit Financiële Markten, AFM), Netherlands
    Netherlands
    The Netherlands is a constituent country of the Kingdom of the Netherlands, located mainly in North-West Europe and with several islands in the Caribbean. Mainland Netherlands borders the North Sea to the north and west, Belgium to the south, and Germany to the east, and shares maritime borders...

  • People's Republic of China
    People's Republic of China
    China , officially the People's Republic of China , is the most populous country in the world, with over 1.3 billion citizens. Located in East Asia, the country covers approximately 9.6 million square kilometres...

    • China Securities Regulatory Commission
      China Securities Regulatory Commission
      The China Securities Regulatory Commission is an institution of the State Council of the People's Republic of China , with ministry-level rank...

       (CSRC)
    • China Insurance Regulatory Commission
      China Insurance Regulatory Commission
      The China Insurance Regulatory Commission is an agency of China authorized by the State Council to regulate the Chinese insurance products and services market and maintain legal and stable operations of insurance industry...

       (CIRC)
    • China Banking Regulatory Commission
      China Banking Regulatory Commission
      The China Banking Regulatory Commission is an agency of the People's Republic of China authorised by the State Council to regulate the banking sector of the PRC except the territories of Hong Kong and Macau, both of which are special administrative regions...

       (CBRC)
  • Securities and Exchange Commission
    Securities and Exchange Commission (Brazil)
    The Securities Commission of Brazil ' is the securities market authority in Brazil. It regulates the capital markets in Brazil and all of its participant. This includes stock exchanges, public companies, financial intermediaries and investors...

     (Comissão de Valores Mobiliários, CVM), Brazil
    Brazil
    Brazil , officially the Federative Republic of Brazil , is the largest country in South America. It is the world's fifth largest country, both by geographical area and by population with over 192 million people...

  • Canada
    Canada
    Canada is a North American country consisting of ten provinces and three territories. Located in the northern part of the continent, it extends from the Atlantic Ocean in the east to the Pacific Ocean in the west, and northward into the Arctic Ocean...

    • Canada is one of the few countries that does not have a country wide securities regulator. Canadian securities regulation
      Canadian securities regulation
      Canadian securities regulation is managed through laws and agencies established by Canada's 13 provincial and territorial governments. Each province and territory has a securities commission or equivalent authority and its own piece of provincial or territorial legislation.Unlike any other major...

       is instead done at province level by separate agencies coordinated through the Canadian Securities Administrators
      Canadian Securities Administrators
      The Canadian Securities Administrators is an association of provincial and territorial securities regulators in Canada.-List of securities regulators:* BC: British Columbia Securities Commission*: jointly regulates the TSX Venture Exchange...

      .
    • Investment Industry Regulatory Organization of Canada
      Investment Industry Regulatory Organization of Canada
      The Investment Industry Regulatory Organization of Canada, abbreviated IIROC in English or Organisme canadien de réglementation du commerce des valeurs mobilières in French, is a non-profit, national self-regulatory organization...

       (IIROC) (French
      French language
      French is a Romance language spoken as a first language in France, the Romandy region in Switzerland, Wallonia and Brussels in Belgium, Monaco, the regions of Quebec and Acadia in Canada, and by various communities elsewhere. Second-language speakers of French are distributed throughout many parts...

      : Organisme canadien de réglementation du commerce des valeurs mobilières, OCRCVM)
    • Office of the Superintendent of Financial Institutions
      Office of the Superintendent of Financial Institutions
      The Office of the Superintendent of Financial Institutions is an independent agency of the Government of Canada reporting to the Minister of Finance created "to contribute to public confidence in the Canadian financial system"...

       (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
Insurance
In law and economics, insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for payment. An insurer is a company selling the...

 and pensions markets, but in some cases also commodities, futures, forwards, etc. For example, in Australia
Australia
Australia , officially the Commonwealth of Australia, is a country in the Southern Hemisphere comprising the mainland of the Australian continent, the island of Tasmania, and numerous smaller islands in the Indian and Pacific Oceans. It is the world's sixth-largest country by total area...

, the Australian Prudential Regulation Authority
Australian Prudential Regulation Authority
The Australian Prudential Regulation Authority is a statutory authority and the prudential regulator of the Australian financial services industry.-Regulatory scope:...

 (APRA) supervises banks and insurers, while the Australian Securities and Investments Commission
Australian Securities and Investments Commission
The Australian Securities & Investments Commission is an independent Australian government body that acts as Australia's corporate regulator...

 (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
Federal Reserve System
The Federal Reserve System is the central banking system of the United States. It was created on December 23, 1913 with the enactment of the Federal Reserve Act, largely in response to a series of financial panics, particularly a severe panic in 1907...

, the Federal Deposit Insurance Corporation
Federal Deposit Insurance Corporation
The Federal Deposit Insurance Corporation is a United States government corporation created by the Glass–Steagall Act of 1933. It provides deposit insurance, which guarantees the safety of deposits in member banks, currently up to $250,000 per depositor per bank. , the FDIC insures deposits at...

, the Office of the Comptroller of the Currency
Office of the Comptroller of the Currency
The Office of the Comptroller of the Currency is a US federal agency established by the National Currency Act of 1863 and serves to charter, regulate, and supervise all national banks and the federal branches and agencies of foreign banks in the United States...

, the National Credit Union Administration
National Credit Union Administration
The National Credit Union Administration is the United States independent federal agency that supervises and charters federal credit unions...

, the Office of Thrift Supervision
Office of Thrift Supervision
The Office of Thrift Supervision was a United States federal agency under the Department of the Treasury that charters, supervises, and regulates all federally- and state-chartered savings banks and savings and loans associations. It was created in 1989 as a renamed version of another federal agency...

, as well as regulators at the state level.

In addition, there are also associations of financial regulatory authorities. In the European Union
European Union
The European Union is an economic and political union of 27 independent member states which are located primarily in Europe. The EU traces its origins from the European Coal and Steel Community and the European Economic Community , formed by six countries in 1958...

, there are the Committee of European Securities Regulators
Committee of European Securities Regulators
The Committee of European Securities Regulators was an independent committee of European Securities regulators established by European Commission on June 6 of 2001...

 (CESR), the Committee of European Banking Supervisors
Committee of European Banking Supervisors
The Committee of European Banking Supervisors was an independent advisory group on banking supervision in the European Union. Established by the European Commission in 2004 by Decision 2004/5/EC, and its charter revised on 23 January 2009, it was composed of senior representatives of bank...

 (CEBS) and the Committee of European Insurance and Occupational Pensions Supervisors (CEIOPS), which are Level-3 committees of the EU in the Lamfalussy process
Lamfalussy process
The Lamfalussy Process is an approach to the development of financial service industry regulations used by the European Union. Originally developed in March 2001, the process is named after the chair of the EU advisory committee that created it, Alexandre Lamfalussy...

. And, at a world level, we have the International Organization of Securities Commissions
International Organization of Securities Commissions
The International Organization of Securities Commissions is an association of organisations that regulate the world’s securities and futures markets....

 (IOSCO), the International Association of Insurance Supervisors
International Association of Insurance Supervisors
The International Association of Insurance Supervisors is an international organisation that brings together the world's insurance supervisors and regulators.-History:The IAIS was created in 1994...

, the Basel Committee on Banking Supervision
Basel Committee on Banking Supervision
The Basel Committee on Banking Supervision is a committee of banking supervisory authorities that was established by the central bank governors of the Group of Ten countries in 1975. It provides a forum for regular cooperation on banking supervisory matters. Its objective is to enhance...

, the Joint Forum
Joint Forum
the Joint Forum is an international group bringing together financial regulatory representatives from banking, insurance and securities...

, and the Financial Stability Board
Financial Stability Board
The Financial Stability Board is an international body that monitors and makes recommendations about the global financial system. It was established after the 2009 G-20 London summit in April 2009 as a successor to the Financial Stability Forum. The Board includes all G-20 major economies, FSF...

.

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
Globalization
Globalization refers to the increasingly global relationships of culture, people and economic activity. Most often, it refers to economics: the global distribution of the production of goods and services, through reduction of barriers to international trade such as tariffs, export fees, and import...

.

See also

  • Bank regulation
    Bank regulation
    Bank regulations are a form of government regulation which subject banks to certain requirements, restrictions and guidelines. This regulatory structure creates transparency between banking institutions and the individuals and corporations with whom they conduct business, among other things...

  • Insurance law
    Insurance law
    Insurance law is the name given to practices of law surrounding insurance, including insurance policies and claims. It can be broadly broken into three categories - regulation of the business of insurance; regulation of the content of insurance policies, especially with regard to consumer...

  • Global financial system
    Global financial system
    The global financial system is the financial system consisting of institutions and regulators that act on the international level, as opposed to those that act on a national or regional level...

  • Regulation of commodity markets
  • Group of Thirty
    Group of Thirty
    The Group of Thirty, often abbreviated to G30, is an international body of leading financiers and academics which aims to deepen understanding of economic and financial issues and to examine consequences of decisions made in the public and private sectors related to these issues...

  • Regulatory capture
    Regulatory capture
    In economics, regulatory capture occurs when a state regulatory agency created to act in the public interest instead advances the commercial or special interests that dominate the industry or sector it is charged with regulating. Regulatory capture is a form of government failure, as it can act as...

  • Securities Commission
    Securities Commission
    Securities Commission a statutory body entrusted with the responsibility of regulating and systematically developing the capital markets in Malaysia.-History:...

  • International Organization of Securities Commissions
    International Organization of Securities Commissions
    The International Organization of Securities Commissions is an association of organisations that regulate the world’s securities and futures markets....

  • International Centre for Financial Regulation
    International Centre for Financial Regulation
    The International Centre for Financial Regulation is a non-partisan organisation focused entirely on financial regulation . It is the product of a collaboration between International Financial Services institutions and the UK Government...

  • Finance
    Finance
    "Finance" is often defined simply as the management of money or “funds” management Modern finance, however, is a family of business activity that includes the origination, marketing, and management of cash and money surrogates through a variety of capital accounts, instruments, and markets created...

  • Financial repression
    Financial repression
    Financial repression is a term used to describe several measures which governments employ to channel funds to themselves which in a deregulated market would go elsewhere. Financial repression can be particularly effective at liquidating debt....


External links