Financial regulatory authority

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A financial regulatory authority or financial supervisory authority is a public authority whose role is to ensure the proper implementation of financial regulation within its scope of responsibility.

Financial regulatory authorities include those in charge of bank supervision; of securities regulation, often referred to as securities commissions; of anti-money laundering supervision of financial firms; and of consumer protection in financial services, and more generally of enforcing "conduct-of-business" requirements, not to mention macroprudential regulation.

Some or all of these distinct mandates are often brought together in a single authority. Different jurisdictions have addressed the challenge of organizing financial regulation in multiple ways that have often evolved over time and display significant path dependence. In general, three types of financial supervisory architecture have been identified by scholars:

• a "sectoral" supervisory architecture (sometimes referred to as "institutional" or "functional"), in which different authorities are in charge of different sub-sectors of the financial system such as banking, insurance, and securities markets;
• an "integrated" architecture in which a single authority is in charge of all segments of the financial system under all applicable policy frameworks;
• a "twin peaks" architecture in which separate authorities are in charge, respectively, of prudential supervision and of conduct-of-business oversight.^[1]

As of 2023, examples of sectoral architecture include Brazil, Hong Kong, and India; examples of integrated architecture include Japan, Russia, Singapore, Switzerland, and South Korea; and examples of twin-peaks architecture include Australia, South Africa, and the United Kingdom. China, the European Union, and the United States have more complex supervisory systems that defy simple classification.^[2]

Whereas most financial regulatory authorities have a national mandate, there are instances of both subnational and supranational authorities:

• Subnational authorities are extant most prominently in Canada and the United States, at the level of individual provinces and states respectively, and in autonomous territories such as British Overseas Territories and Crown Dependencies, Constituent countries of the Kingdom of the Netherlands, Hong Kong and Macau, or the Republika Srpska (but not, for example, in individual countries of the United Kingdom or Overseas France)
  • Dedicated authorities have also been established for financial enclaves under a special regulatory regime, including the Abu Dhabi Global Market, the Dubai International Financial Centre, the GIFT International Financial Services Centre in India, the Astana International Financial Centre in Kazakhstan, the Labuan International Business and Financial Centre in Malaysia, and the Qatar Financial Centre
• Supranational financial authorities exist in Africa, the Eastern Caribbean, and the European Union. The main such authorities are:
  • the Eastern Caribbean Central Bank as banking supervisor in the Eastern Caribbean Currency Union (since 1983)
  • the Banking Commission of the West African Monetary Union as banking supervisor in the West African Monetary Union (since 1990)
  • the Central African Banking Commission as banking supervisor in the Economic and Monetary Community of Central Africa (since 1993)
  • the Regional Insurance Control Commission as insurance supervisor in the two African monetary unions and the Comoros (since 1995)
  • the Financial Markets Authority of the West African Monetary Union as securities commission in the WAMU (since 1996)
  • the European Central Bank within European Banking Supervision as supervisor of most of the euro area banking sector (since 2014)
  • the Central African Financial Market Supervisory Commission as securities commission in the EMCCA (since 2019)

In addition, both the European Securities and Markets Authority (since 2011) and the European Banking Authority (since 2023) have been granted direct supervisory mandates over limited market segments within the European Economic Area.

Several international or global bodies have financial regulatory authorities as their main membership. Given the variety of supervisory mandates and choices of supervisory architecture, the lists of members of these bodies occasionally overlap. These bodies include:

• Basel Committee on Banking Supervision (BCBS, est. 1974)
• International Organization of Securities Commissions (IOSCO, est. 1983)
• International Association of Insurance Supervisors (IAIS, est. 1994)
• International Association of Deposit Insurers (IADI, est. 2002)
• International Forum of Independent Audit Regulators (IFIAR, est. 2006)

Financial regulatory authorities from several jurisdictions are also represented in the Financial Stability Board, alongside finance ministries and central banks.

• Financial regulation
• Bank supervision
• Insurance law
• Anti–money laundering
• Securities commission

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