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v t e

Number of countries having a banking crisis in each year since 1800. This is based on www.reinhartandrogoff.com (web site for This Time is Different: Eight Centuries of Financial Folly), which covers only 70 countries. The general upward trend might be attributed to many factors. One of these is a gradual increase in the percent of people who receive money for their labor. The dramatic feature of this graph is the virtual absence of banking crises during the period of the Bretton Woods agreement, 1945 to 1971. This analysis is similar to Figure 10.1 in Reinhart and Rogoff (2009). For more details see the help file for "bankingCrises" in the Ecdat package available from the Comprehensive R Archive Network (CRAN).

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v t e

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 [edit]

The objectives of financial regulators are usually:^[1]

• 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.
• reduction of financial crime - reducing the extent to which it is possible for a regulated business to be used for a purpose connected with financial crime.

Structure of supervision [edit]

Acts empowers organizations, government or non-government, to monitor activities and enforce actions.^[2] There are various setups and combinations in place for the financial regulatory structure around the global.^[3][4] Leaf parts are in any case:

Supervision of stock exchanges [edit]

Exchange acts ensure that trading on the exchanges is conducted in a proper manner. Most prominent the pricing process, execution and settlement of trades, direct and efficient trade monitoring.^[5][6]

Supervision of listed companies [edit]

Financial regulators ensures 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.^[7][8][9]

Supervision of anti-money laundering [edit]

The anti-money laundering supervision ensures that criminal activities does not threaten the reputation and financial strength of an institution, or also endanger the integrity and stability of the whole financial market. All companies concerned need to have policies in place which prevents transactions with criminal background.^[10]

Supervision of investment management [edit]

Asset management supervision or investment acts ensures the frictionless operation of those vehicles.^[11]

Supervision of banks and financial services providers [edit]

Banking acts lays 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.^[12][13]

Authority by country [edit]

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)
  • Consumer Financial Protection Bureau (CFPB)
• 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 [edit]

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.^[14]

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 rating agencies [edit]

Think-tanks such as the World Pensions Council (WPC) 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… ^[15]

See also [edit]

• 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

References [edit]

Reinhart, Carmen; Rogoff, Rogoff (2009). This Time is Different: Eight Centuries of Financial Folly. Princeton U. Pr. ISBN 978-0-691-15264-6. 

Notes [edit]

External links [edit]

• 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