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Financial regulation is a type of supervision that places certain requirements, guidelines, and restrictions on financial institutions. The goal of financial regulation is to maintain the financial system's integrity and stability.
The objectives of financial regulators are usually to: Maintain market confidence, Contribute to the financial system's stability, Protect consumers, Reduce financial crime, and Regulate foreign participation.
Financial regulation is one of the three legal categories that make up financial law, along with case law and market practices. These regulations are designed to protect customers, promote fair competition, and maintain the financial system's stability.
Some types of financial regulation include: Prudential regulation: Requires financial firms to control risks and have enough capital as defined by capital requirements Consumer protection rules: Part of financial regulations Financial markets regulation: Includes the regulation of all businesses that issue securities to the public or provide financial services to the public
The Securities and Exchange Commission (SEC) is at the center of federal financial regulations. It maintains the standards that govern the stock markets, reviews corporate filing requirements, and oversees the Securities Investor Protection Corporation.
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