With the proliferation of retail traders and investors worldwide, regulatory bodies are tightening regulatory enforcement on the one side, while penalising defaulters for non-compliance on the other. Any business offering finance-related products and services falls under the purview of financial regulators, including brokerages, banks, payment providers, NBFCs and fintechs. With the deepening penetration of digital assets, regulators worldwide are adopting measures to regulate the nascent crypto market as well. As the leading marketing agency for the finance sector, we’re sharing our updated A-Z of financial regulators.
Most Significant Financial Regulators
Here’s a look at the most recognised and notable financial regulators in the world.
ASIC: Australia
Considered one of the best regulators in the world, the Australian Securities and Investments Commission is dedicated to ensuring transparency, efficiency and fairness for everyone in the financial system. The regulator authorises operators and regulates the financial conduct of the financial markets, corporates, financial service organisations and financial advisors. An ASIC license is a must for any broker to offer services in Australia.
After the Australian Financial Review Cyber Summit in mid-September 2023, the financial watchdog announced that businesses must prepare to mitigate the ever-rising cyber risks and not collaborate with third parties based on “trust” alone. It further declared that it would scrutinise and take legal action against any “recklessly ill-prepared” business executives and directors.
ASIC is dedicated to ensuring ethical marketing practices, honest business communications and member protection. The agency stated that greenwashing predatory lending and misleading insurance pricing will remain in focus through 2023. As part of this focus, the ASIC imposed a fine of $53,280 on Tlou Energy Limited and $13,000 on Future Super for greenwashing investors by overstating the positive environmental impact of their respective businesses.
The regulator also moved the courts to impose heftier fines on AustralianSuper in May 2023 for not having adequate policies that worked in the best interests of members. This was done to “send a message” to the entire industry. The case is still in progress at the time of writing.
CySEC: Cyprus
The Cyprus Securities and Exchange Commission is on a mission to promote the healthy development of the nation’s financial markets while ensuring investor protection. It regulates all firms that provide administrative services by overseeing the investment services market and asset management sector, as well as monitoring securities transactions. Due to its comprehensive oversight, most renowned brokerages choose to obtain a license from the CySEC to gain credibility among traders.
Contentworks closely follows CySEC announcements and recently listened to updates from CySEC chair Dr. George Theocharides at iFXEXPO 2023.
ESMA: EU
The European Securities and Markets Authority ensures investor protection and promotes stability and fair operations of the European financial markets. It does this by facilitating access to relevant statistical data for market participants, regulators and the public.
ESMA was extremely critical of S&P Global Ratings Europe Limited (S&P) for breaching the CRA Regulation and issued a penalty of €1,110,000 on the organisation. S&P Global had published credit ratings before the concerned securities were issued. This was due to internal control failures causing a breach of transparency requirements. ESMA has issued the Markets in Financial Instruments Directive (MiFID) framework, a law that standardises investment services and regulations across EEA member nations. In 2018, MiFID II enforced the latest measures regarding pre- and post-trade transparency requirements, increasing the product scope to encompass newer instruments and online trading. Luxembourg’s financial watchdog, Commission de Surveillance du Secteur Financier (CSSF) has issued more than €5.8 million in fines for breaches of MiFID II. Additionally, CSSF plans to carry out on-site inspections across the banking sector targeting environmental and climate risks, starting towards the end of 2023.
The latest concern for the regulator is the use of “dark patterns” on online interfaces. These are obscure attempts to mislead or deceive users into making intended choices.
New Legislation To Watch
MiCA is the latest set of regulations issued by the EU regarding disclosure, authorisation, transparency and transaction execution for the crypto segment. The most important part of the legislation is disclosure of involved risks, costs and operational charges to which crypto-asset service providers have so far been immune. Its goal is to establish protocols for licensing, regulating issuance of stablecoins, preventing money laundering and ensuring fairness in public offerings of crypto assets.
MiCA is scheduled to be enforced in 2024. The Transfer of Funds Regulation (TFR) is another significant compliance requirement set to be rolled out in January 2025 for crypto operators in the EU. It will govern all transactions related to crypto assets in the region.
FCA: UK
The Financial Conduct Authority of the UK regulates financial advisors, asset managers and any other firm not governed by the PRA, another regulatory body in the region. The goal of the FCA is to protect the consumer and ensure industry stability while encouraging healthy competition among financial service providers. With sweeping rights to enforce mandates and investigate non-compliance, it is one of the most comprehensive regulators and charges fees from the firms it authorises to carry out regulated activities in the UK.
The FCA is an uncompromising regulator that has imposed massive penalties on those who fail to comply. In July 2023, the regulator penalised trading firm ED&F Man Capital Markets Ltd. £17,219,300 for breaching wholesale conduct. One of the largest fines imposed by the FCA was on National Westminster Bank plc in 2021. The company was penalised a whopping £264.7 million for non-compliance with anti-money laundering regulations.
FINRA: US
With the belief that “a vibrant market is at its best when it works for everyone,” the Financial Industry Regulatory Authority safeguards market integrity to arm every individual with the confidence to participate fearlessly. The non-profit self-regulatory industry agency serves as the first line of oversight expertise, technology and market intelligence without any cost to taxpayers. The organisation provides the necessary tools for investors, member firms and policymakers to promote collaboration and innovation in the financial industry while maintaining fair broker-dealer relations.
The self-funded watchdog monitors and regulates the marking of share sales, trade reporting and supervisory rules. The regulator’s keen eye fell on Goldman Sachs Inc. for missing a single line of computer code that caused mismarked orders. Goldman Sachs was fined $3 million for failing to adequately mark about 60 million short and 8 million long sales.
FSCA: South Africa
The Financial Sector Conduct Authority is one of the twin regulatory peaks of South Africa’s financial sector, the other being the Prudential Authority (PA). The FSCA monitors the conduct of financial services providers, while the PA regulates banks, insurers, cooperative financial institutions and the financial markets.
The FSCA authorises brokerages and investment advisors in South Africa. In May 2023, it mandated that any crypto firm must register with the regulator or be penalised up to $510,000. As the South African financial sector and retail trader participation are expanding, any broker in the region can operate only after getting a license from the FSCA.
To maintain the long-standing resilience of the finance industry, the regulator issues guidelines and promptly acts on violators. In its Regulatory Actions Report, the FSCA disclosed that it has imposed fines worth R100 million during the 2022/23 financial year. According to the report, the enforcement interventions were related to unauthorised operations of Financial Advisory and Intermediary Services or insurance businesses.
JFSA: Japan
The Financial Services Authority of Japan works to ensure the stability of the Japanese financial system. It protects the interests of depositors, insurance policyholders and securities investors. The authority provides licenses and supervises banks, trust companies, funds transfer and service providers, asset managers, investment advice professionals, brokerages and securities firms. The goal of forming JFSA was to protect financial customers with fair treatment and enhance the efficiency and integrity of the financial markets. The watchdog does this by supervising compliance of financial institutions and taking appropriate remedial and enforcement measures.
Japan is known for its deeper empathy than the rest of the world. This does explain why there are fewer violations to exploit novice traders. However, when there are such breaches, the violator is not spared. For instance, the Securities and Exchange Surveillance Commission sent out a notice to the JFSA to hold two banks accountable and fine them for improperly selling unstructured bonds. The move was aimed at discouraging negligent sales practices in the industry.
SEC: USA
The Securities and Exchange Commission of the US protects investors, facilitates capital formation and ensures fair and orderly operations in the securities market. It monitors the business practices of brokers, advisory firms, asset management organisations and their representatives. The authority is powerful enough to take action against civil lawbreakers and works with the Justice Department to bring criminals to task. The SEC has separate divisions for corporate finance, law enforcement, investment management, economics and risk analysis, and trading and markets. It establishes the rules and regulations regarding the issuance, marketing, and trading of securities, compliance with which is monitored by FINRA.
The SEC is committed to ensuring investor security and transparency. It is known for imposing hefty fines on any firm that fails to comply. There are plenty of examples, starting from the penalties charged on 16 Wall Street firms, totally over $1.1 billion in fines for their longstanding recordkeeping failures. In 2022, it imposed a fine of $1.26 million on Kim Kardashian for failing to disclose that her Instagram post of EthereumMax, a cryptocurrency, was a paid promotion. This violated the anti-touting provision of the federal securities law.
In September 2023, the SEC ordered 9 investment advisory firms to pay a combined fine of $850,000 for falsely advertising their performance to investors. It’s worth noting that firms that failed to admit or deny the allegations were levied heavier fines.
Experts in Compliant Marketing
Contentworks has a deep understanding of the financial markets, providing services to the world’s leading brokers, fintechs and banks. We live and breathe finance and marketing and take great pride in staying updated on the latest regulatory changes across the world. Our experts provide full-spectrum services, from strategising and consulting to blogging, PR, social media management, design, video marketing and whitepapers.
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