To have a proper trading and investing system, regulators are necessary to act as an enforcer of rules. In unregulated markets, things go awry quickly, as greedy participants use foul play to get ahead. As such, to truly understand trading and investing, you need to know about financial regulators as well. There are some global players, such as the FED, or regulators like the UK’s FCA, but some act more locally. The latter are no less important, as the entire financial market is the sum of its elements.
Today we’ll be tackling one institution that belongs in the latter group, the Financial Services and Markets Authority. It’s a Belgian supervisory body that aims to ensure fairness for financial service users. Its abbreviation is FSMA, and it also has official French (L’Autorité des services et marchés financiers), and Dutch (Autoriteit voor Financiële Diensten en Markten) names. It’s a relatively new entity compared to others in the branch but still acts as one of the most important regulators in Belgium.
As we said, the institution is fairly young as far as financial institutions go. However, since it’s competing against central banks that have been around for nearly a century, that doesn’t say much. The FSMA is still over a decade old, inheriting its role in 2011 from the Banking, Finance and Insurance Commission. The transition was a result of Belgium restructuring its financial regulatory system.
Belgium designated FSMA as an autonomous public institution. That differentiates it from broker regulators, such as CySEC, in that it’s established by law. FSMA’s role is carrying tasks that the Parliament designated it, which it deemed to be in the general interest. However, FSMA is not the only one to oversee the financial sector, as it has assistance from other entities. One of those is the country’s central bank, the National Bank of Belgium.
As of FSMA’s foundation, has six main obligations:
financial markets and listed companies supervision
rules of conduct supervision
financial service providers supervision
supplementary pensions supervision
contributing to improving financial education
FSMA’s staff has the status of employee in the private sector. Its members are dictated by the Royal Decree and serve six-year periods.
In the last section, we named some of FSMA’s obligations here, we’ll expand further on those.
For starters, we have financial markets and listed companies supervision. There, the FSMA needs to make sure takeovers adhere to rules, and everyone has simultaneous access to newly-listed firms. Beyond that, it inspects insider trading and market manipulation. Failing to follow the rules in any of these areas can result in direct action from the FSMA, in warnings, share suspensions, and fines.
Next, we have the rules of conduct, which all financial institutions under FSMA must follow. One of the primary clauses here is that they can only sell products that match their customers’ risk profile. In the same realm, it must also match investment goals. Another principle is that rules put customer interests over those of institutions.
FSMA also plays a massive role in product supervision. Before securities are sold in Belgium, FSMA needs to approve them. It also oversees collective investment actions conditions for loans and mortgages. Lastly, it looks at financial institutions’ marketing activity and may approve or decline advertisements.
We have a few more roles to go, and this one concerns financial service providers and intermediaries. In other words, it oversees those in direct contact with clients, such as exchange offices, portfolio managers, and mortgage companies. As for education, it’s still developing a plan to increase the financial knowledge of Belgians. And lastly, as far as pensions go, it handles complaints and acts as a backup if pension providers fail.
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