Finance regulation is a popular topic these days as countries all over the world are being asked to take a second and third look at how finances are run in their respective countries and on a global scale. It’s no secret that the financial industry has been dealt some major blows in recent years. However, finance regulation promises that these oversights of the past will be met with laws and rules that will protect the financial sector and help the average person.
Finance regulation is a complicated topic because we live in a day and age where the financial worlds of many countries are intertwined. When the United States stock market took a dive in last 2008, the effects were felt worldwide. Any regulations that are passed and rules that are made have to understand the interconnectedness of the different financial systems.
Each country around the world has a governing body that regulates financial matters. In the United States, the Securities and Exchange Committee enforces the federal securities laws. It also regulates the securities industry, including the stock market and options markets. The SEC has five commissioners who are appointed by the President of the United States for terms of five years. The agency has four divisions which are associated with corporation finance, trading and markets, investment management and enforcement.
In Canada, the Investment Industry Regulatory Organization is responsible for setting regulatory and investment industry standards. It was established in 2008 when the Investment Dealers Association of Canada and Market Regulation Services, Inc, merged. The organization sets standards for securities trading practices. Unlike the U.S.’s version, the IIRO is an independent, non-profit organization.
The Financial Services Authority (FSA) functions in the United Kingdom in a similar way to the IIRO in Canada. The FSA is an independent non-government body. It regulates all kinds of financial services in the UK. Their primary objectives are to raise market confidence, public awareness of the financial systems, ensure consumer protection and reduce financial crime throughout the country.
Australia has two separate institutions that are responsible for financial regulation. The Australian Securities and Investments Commission is an independent government body. It functions as a regulator throughout the corporate world in Australia. The ASIC enforces the financial regulation laws that are passed by the Australian government. Primarily these rules are in place to protect consumers, investors and creditors. The second body in Australia is the Australian Prudential Regulation Authority. This is responsible for regulating the banks and other financial institutions, including insurance companies.
Any global rules for financial regulation would have to comply with these bodies, as well as similar organizations around the world. In March of 2009, the U.S. Federal reserve Chief Ben Bernanke called on governments around the world to develop a global solution to the worldwide financial crisis. Rather than create a worldwide financial organization, he suggested that existing financial organizations find ways to create global rules that all would use.
With all the countries around the world working together, it’s easy to see why financial regulation is going to be a major task ahead in the next several years.