Financial regulator

Financial regulator

A financial regulator is an institution that supervises and controls a financial system. Their objective is to guarantee fair and efficient markets and financial stability.

Many financial regulators are responsible for certain markets within a country, all markets in a country or even for markets consisting of multiple countries.

The Financial Conduct Authority (FCA)*, for instance, is one of the financial regulation bodies of the United Kingdom, while the BaFin is the financial regulation body of Germany.

* The FCA replaces the previous regulation body - the FSA. This was abolished in 2013, when the Financial Services Act 2012 came into force, changing the framework for regulation of the financial sector.

The main responsibilities of financial regulators are to enforce applicable laws, try to prevent cases of market manipulation, ensure the competence of financial service providers, execute regular inspections, protect traders and clients, and investigate and prosecute misconduct, such as insider trading.

Banks and brokers that are regulated are more secure to trade with, as they are obliged to meet certain standards and requirements.

Financial regulators are responsible for ensuring that a broker has segregated accounts. This means that the trading capital of a trader is safe even if the broker would get into financial troubles.

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