Definition of financial regulation

Financial regulation: laws and rules that govern what financial institutions such as banks, brokers and investment companies can do. These rules are generally promulgated by government regulators or international groups to protect investors, maintain orderly markets and promote financial stability. The range of regulatory activities can include setting minimum standards for capital and conduct, making regular inspections, and investigating and prosecuting misconduct.


The US Securities and Exchange Commission (SEC) was created in 1934 and now enforces American securities laws including the 1933 act that sets standards for securities, the 1940 Investment Companies Act.  Finra is the US industry body that inspects and regulates broker-dealers under the oversight of the SEC. BaFin (Bundesanstalt für Finanzdienstleistungsaufsicht) is the German financial regulator that supervises about 4,000 banks, insurance firms and other financial services companies.  [1]



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