Financial regulation is a form of regulation or supervision, which subjects financial institutions to certain requirements, restrictions and guidelines, aiming to maintain the stability and integrity of the financial system. This may be handled by either a government or non-government organization. Financial regulation has also influenced the structure of banking sectors by increasing the variety of financial products available. Financial regulation forms one of three legal categories which constitutes the content of financial law, the other two being market practices and case law.
History
In the early modern period, the Dutch were the pioneers in financial regulation. The first recorded ban (regulation) on short selling was enacted by the Dutch authorities as early as 1610.
Aims of regulation
The objectives of financial regulators are usually: market confidence – to maintain confidence in the financial system financial stability – contributing to the protection and enhancement of stability of the financial system consumer protection – securing the appropriate degree of protection for consumers. reduce financial crime regulate foreign participation
Structure of supervision
Acts empower organizations, government or non-government, to monitor activities and enforce actions. There are various setups and combinations in place for the financial regulatory structure around the globe.
Supervision of stock exchanges
Exchange acts ensure that trading on the floor of exchanges is conducted in a proper manner. Most prominent the pricing process, execution and settlement of trades, direct and efficient trade monitoring.
Supervision of listed companies
Financial regulators ensure that listed companies and market participants comply with various regulations under the trading acts. The trading acts demands that listed companies publish regular financial reports, ad hoc notifications or directors' dealings. Whereas market participants are required to publish major shareholder notifications. The objective of monitoring compliance by listed companies with their disclosure requirements is to ensure that investors have access to essential and adequate information for making an informed assessment of listed companies and their securities.
Supervision of investment management
Asset management supervision or investment acts ensures the frictionless operation of those vehicles.
Supervision of banks and financial services providers
Banking acts lay down rules for banks which they have to observe when they are being established and when they are carrying on their business. These rules are designed to prevent unwelcome developments that might disrupt the smooth functioning of the banking system. Thus ensuring a strong and efficient banking system.
Authority 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 and its territories U.S. Securities and Exchange Commission (SEC) Financial Industry Regulatory Authority (FINRA) Consumer Financial Protection Bureau (CFPB) Commodity Futures Trading Commission (CFTC) Federal Reserve System ("Fed") Federal Deposit Insurance Corporation (FDIC) Office of the Comptroller of the Currency (OCC) National Association of Insurance Commissioners (NAIC) (a State-based regulatory standards organization, the McCarran–Ferguson Act exempts the "business of insurance" from most regulation at the Federal level) National Credit Union Administration (NCUA) United Kingdom Bank of England (BoE) Prudential Regulation Authority (PRA) Financial Conduct Authority (FCA) 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 People's Republic of China China Banking Regulatory Commission (CBRC) China Insurance Regulatory Commission (CIRC) China Securities Regulatory Commission (CSRC) Hong Kong Monetary Authority (HKMA) India: Reserve Bank of India (RBI) Securities and Exchange Board of India (SEBI) Insolvency and Bankruptcy Board of India (IBBI) Insurance Regulatory and Development Authority of India (IRDAI) Pension Fund Regulatory and Development Authority (PFRDA)