Financial market supervision

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Financial market supervision or financial service supervision means the state supervision of the participants in the financial market .


Two models compete with each other in financial market supervision. In some cases, different authorities in the states take on the supervision of different areas of the financial market such as banks , stock exchanges , over-the-counter securities trading , insurance , reinsurance , building societies , pension funds , asset managers , financial brokers , financial sales, etc.

In other countries, a single authority oversees and regulates the entire financial market. The latter model is known as financial supervision . In Ireland e.g. B. The Financial Market Authority is the responsible Financial Regulator department of the Central Bank and Financial Services Authority of Ireland, which is made up of the National Bank and the Supervisory Authority .

Since regularly also have the national banks control powers towards the banks, people speak, even if it and additionally those powers one 's financial market supervisory authority of financial supervision.

Unregulated or poorly regulated areas of the financial market are known in Germany as the gray capital market .

In recent years, in view of the globalization of the financial markets, efforts have been made to standardize the rules for financial market supervision internationally. A significant role played by the Bank for International Settlements with the Basel Committee on Banking Supervision ( Basel Committee on Banking Supervision ) and the Financial Stability Institute (FSI). An important result of these efforts is the framework agreement called Basel II "International convergence of capital measurement and capital requirements".

The traditional branches of financial market supervision Banking supervision , insurance supervision , stock exchange and securities supervision , Pension Supervision had joined together in part to international organizations, in particular:


Until the 1920s, there was practically no state financial market regulation. The bank owners practically bore the sole risk for their business and any losses. In order to be generally recognized by the market as serious business partners, the banks then had a significantly higher equity ratio and a conservative risk management system than they do today. After the unsuccessful attempt to spread mostly debt-financed, speculative securities or shares profitably among the masses or millions of small and small investors, the great American stock market crisis of 1929 occurred, see Black Thursday , the big one in the USA Depression and led to the global economic crisis . This was the hour of birth of the idea of ​​state financial market regulation, an imagined state control and supervisory mechanism, which was supposed to result in the state ultimately also giving its citizens a form of shared responsibility with regard to (speculative) banking transactions. This system was implemented from the USA within a very short time, in the UK and other countries, especially industrialized countries , and has existed in an adapted form to this day.

Speculative bubbles have often led to serious financial and economic crises in history . B. the new economy bubble in 2000 or the real estate bubble in 2007. Since the introduction of the state financial market supervisory authority, the equity ratio of banks has fallen significantly, the risk of (newly conceived) financial products has risen, and the eligibility for bonuses has increased The increasing number of dependent employees in the financial market has been expanded, and a wide variety of bank speculative losses are no longer (exclusively) a matter for the bank owners, but also for the state or taxpayers (see e.g. bank bailout after the financial crisis from 2007 , in the broader sense Greek sovereign debt crisis from 2010 ).


The pursuit of the financial supervision approach is not carried out in all countries. In some cases, the supervisory authority is also located at the respective central bank. On this basis, all financial supervision is the amalgamation of the supervision of banks , insurance companies and securities trading and services in one financial supervisory authority. Examples of such an integrated supervisory authority are the Scandinavian countries and Singapore, where this authority has been established for many years. The introduction of such a practice was also followed later in other countries, such as in Great Britain since 1985, Germany and Austria since 2002, Liechtenstein since 2005, in Switzerland since 2009 etc.

In addition, the authority consists of various bodies that carry out supervision. With regard to the German Federal Financial Supervisory Authority, the authority is supported, monitored or advised by various bodies . An example of this is the Board of Directors , which oversees the management. Furthermore, the various advisory boards (technical advisory board, insurance advisory board, securities advisory board and takeover advisory board) mainly assume advisory functions. The Forum for Financial Market Supervision is responsible for coordinating the cooperation between BaFin and the Deutsche Bundesbank in banking supervision or provides advice on all financial supervision.

Tasks and instruments

  • Risk and financial market analysis

Here it is especially the preoccupation with financial market issues, real estate risks and accounting for banks and insurance companies. By observing and analyzing developments on the national and international financial markets, current developments can be incorporated into supervisory practice in a timely manner.

Specific inquiries and complaints about banks, financial service providers and insurance companies are processed. This enables the company's behavior towards its customers to be checked and any weak points in the organization to be found. On this basis, one is also responsible for the certification of the old-age provision contracts and the existing security schemes ( deposit insurance and compensation schemes ).

  • Financial System Integrity

The extensive investigative and intervention powers of the Federal Agency monitor compliance with the ban, whether banking , financial services and insurance business are operated with state permission. This monitoring takes place with the help of the comprehensive information and submission obligations of the companies, the on-site examination of the company without prior notice, the search of the business premises without a judicial order and the securing of evidence.

Prevention of transactions with a criminal background such as B. Money laundering and terrorist financing and helping to detect and combat them is part of the proper business policy of all companies in the financial sector. Since these criminal processes threaten the solidity of an abused institution and can be dangerous for the integrity and stability of the entire financial center, the first EC money laundering directive was addressed not only to credit institutions , but also to financial service institutions and insurance companies as early as 1991 . The scope will later be extended to other professional groups. This is a consequence of the 2001 Second and 2005 Third Money Laundering Directives. In doing so, transparency in business relationships and financial transactions is targeted on a risk-oriented basis.

  • Cooperation between BaFin and the Deutsche Bundesbank

Their joint work consists primarily in monitoring the institutes. This ongoing monitoring includes the evaluation of the documents that have been set up by the institutions as well as the audit areas according to Section 26 KWG and the annual financial statements . This also includes the implementation and evaluation of banking audits in order to assess the appropriate capital adequacy and risk control procedures of the institutes and the assessment of audit findings. Since the Deutsche Bundesbank has the necessary substructure with the main administration, it is able to act on site and has to keep the guidelines of the BaFin.

Institutional structure of financial market supervision in relation to Europe

In Europe there is no European Financial Market Agency that is solely responsible for financial market supervision , but each member state is responsible for monitoring its own market and its own regulatory philosophy. On this basis, the Financial Market Authority in Europe can be described as a network of different organizations, formal and informal meetings at national and European level. With such a complex structured system, difficulties can arise with regard to accountability, decision transparency, questions of liability and legal categorization of legal acts. The fact that not all states are members of the European Union contributes to the variation in the intensity and competence of the regulation of the financial markets. In principle, financial market supervision is carried out by the Member States who have the duty to coordinate their policies with regard to the goal of creating a common market and who are supported by EC organizations , regardless of the structure of the Member State's financial supervision .

Coordination of financial market supervision in the member states of the European Union

In order to be able to realize a common financial market as well as a uniform monetary and currency policy , the financial market supervision is based on the principles of stability, minimal harmonization, competition of legal systems, national control and mutual recognition. Rather, these principles are a prerequisite for the long-term goal of market integration. It was precisely in this context that a committee of wise men was founded in 2000 under the chairmanship of Baron Alexandre Lamfalussy , whose task it was to examine various approaches to steering regulatory practice and cooperation between regulatory authorities .

With the so-called Lamfalussy procedure , which was originally used in securities trading but then also in all areas of financial market supervision, the Commission wants to coordinate the procedure between the national supervisory authorities and the European legislator. The other organizations that have a duty to monitor the financial markets, such as the European Central Bank (ECB) and the European System of Central Banks (ESCB), remain unaffected. The Commission has played the role of a framework legislator and an executive and supervisory body, assisted by the Council and its relevant committees.

The main task of the ESCB is to ensure price stability or, in other words, it takes over the control of inflation . This means that the ESCB's obligation to supervise the financial markets is restricted to those states that are members of the euro zone . However, as a member of the ESCB, the ECB has to carry out the actions of the ESCB; accordingly, the ESCB's task of supporting the financial market supervision of credit institutions and the stability of the financial market system is also transferred to the ECB. As with the ESCB, the ECB's supervisory functions remain unrestricted in the member states of the euro zone. In addition, the ECB may only take an advisory role in the financial market surveillance of the member states that use the euro both as a means of payment and as a non-means of payment. Those members who do not have the euro as their currency remain unaffected by the ESCB.


Agreements and institutions

There have been many global financial market players for a long time. Although there is no globally binding framework, markets develop across borders. As already mentioned, there are binding rules within the EU, with the help of the Lamfalussy procedure, which the supervised must comply with. However, there is no comparable legal system at the global level. As a result, various committees and collaborations have developed in order to satisfy the need for international harmonization and a reliable legal framework. An example are Memoranda of Understanding (MoU), which lead to the creation of the legal framework for efficient home country supervision of cross-border companies. Furthermore, BaFin participates in many international bodies and contributes to the creation of a uniform European financial market, to the design of worldwide supervisory standards and represents the interests of the financial center Germany. Examples are the sector-specific committees at European level such as the Committee of European Banking Supervisors (CEBS), Committee of European Insurance and Occupational Pensions Supervisors (CEIOPS) and Committee of European Securities Regulators (CESR) and at the international level International Association of Insurance Supervisors ( IAIS), International Organization of Securities Commissions (IOSCO) and, of course, last but not least, the Basel Committee on Banking Supervision. A significant role played by the Bank for International Settlements with the Basel Committee on Banking Supervision ( Basel Committee on Banking Supervision ) and the Financial Stability Institute (FSI). An important result of these efforts is the framework agreement called Basel II "International convergence of capital measurement and capital requirements". For a list of government regulators, see List of Financial Regulators .

Coordination in the Basel Committee on Banking Supervision

As the most important international body for the coordination of supervisory standards in the banking sector, the Basel Committee aims to develop effective supervisory standards that enable the international banks to be fully and appropriately monitored. The focus of the standards is the definition of capital requirements for banks. Through the contacts of all states, the Basel Committee strives for the implementation of universal standards.

The introduction of the new Basel Equity Accord (Basel II) aims to establish more precise requirements that are adapted to the individual risk. The prerequisites for this are both the approval of internal risk methods and the extensive recognition of security instruments under private law such as certain loan collateral, netting agreements or credit derivatives and risk transfer agreements such as securization.

According to Basel II, supervision of banks is divided into three pillars (three-pillar model). The first pillar comprises the refined capital requirements, which are enforced by mandatory legal requirements and internal risk management . The second pillar deals with supervision by the national supervisory authorities, which monitor state compliance with capital requirements and develop suitable risk management procedures and techniques. Finally, the far-reaching disclosure requirements of the banks in the third pillar ensure transparency on the capital markets.



State and comprehensive supervision of all banks was the result of the banking crisis of 1931. As the cornerstone of this uniform state supervision, numerous emergency ordinances were issued that were supposed to stabilize the financial sector. Later the Banking Act (KWG) was introduced, with which a general, codified banking supervision began, the basic principles of which are partially adhered to to this day. The Federal Banking Supervisory Office (BAK) was responsible for banking supervision .

In addition, insurance supervision came into being with the Imperial Law that came into force on January 1, 1902, which also created the Imperial Supervision Office for private insurance . After the interruption of the further development of insurance supervision by the First World War , the authority was renamed the Reichsaufsichtsamt für Privatversicherung and later the Reichsaufsicht für Versicherungswesen . After uniform supervision collapsed at the end of the Second World War , the Federal Supervisory Office for Insurance and Bank Saving (BAV) was established.

The youngest branch of supervision in Germany, namely securities supervision, emerged with the Second Financial Market Promotion Act passed in 1994 , the aim of which was to ensure the functionality and international competitiveness of the German financial center. As a result, the Federal Supervisory Office for Securities Trading (BAWe) was founded in 1995 , based on the Securities Trading Act (WpHG). The authority's task was to ensure the integrity and transparency of the capital market .

Finally, in 2002, the three supervisory authorities were merged and the Federal Financial Supervisory Authority  (BaFin) was formed from them. BaFin is responsible for the banking, insurance and securities trading sectors. Since then, the legal basis has been the Financial Services Supervision Act - FinDAG . The primary purpose of banking supervision is to ensure the security of the assets entrusted to the credit institutions and the stability of the banking system, checking whether sufficient financial resources are available and business operations are properly organized. Since the insurance companies should also be permanently in a position to provide their services in the event of an insured event, BaFin ensures that they assess the risks taken appropriately and that they maintain the financial resources in a correlated manner. Securities supervision is intended to ensure fair and smooth trading in securities, as well as investor protection and the defense against insider trading and market manipulation.


In Austria , the term is usually used as an abbreviation for the full name of the competent authority, the Financial Market Authority  (FMA).


In Liechtenstein , the FMA Financial Market Authority Liechtenstein is the competent authority for financial market supervision.


In Switzerland , the Swiss Financial Market Supervisory Authority (FINMA) oversees and controls all areas of the financial system. It emerged from the merger of the Swiss Federal Banking Commission  (SFBC), the Federal Office for Private Insurance  (FOPI) and the Anti-Money Laundering  Control Agency (Kst GwG) and began its work on January 1, 2009. FINMA is an institutionally, functionally and financially independent authority that exercises control over banks, insurance companies, stock exchanges, securities dealers , collective investment schemes , their asset managers and fund management companies as well as distributors and insurance intermediaries. FINMA's other tasks include protecting creditors , investors and policyholders as well as maintaining the functionality of the financial markets. She is in constant contact with various national and international institutions , associations and consumer protection organizations . She also works with foreign supervisory authorities, e.g. B. in the resolution of financial institutions, and also provides administrative assistance .

List of financial market regulators by country

See also


Web links

Individual evidence

  1. Official website ( Memento of the original dated December 30, 2007 in the Internet Archive ) Info: The archive link was inserted automatically and has not yet been checked. Please check the original and archive link according to the instructions and then remove this notice. @1@ 2Template: Webachiv / IABot /
  2. German text:
  3. Guillermo de la Dehesa: Financial Stability and Optimal Supervision in the EU 15. (PDF) Briefing Paper to the Committee on Economic and Monetary Affairs of the European Parliament Monetary Dialogue. In: June 2007, p. 1 , accessed December 5, 2010 (English).
  4. a b c d BaFin - Tasks & History. In: Federal Financial Supervisory Authority, January 9, 2018, accessed on October 2, 2018 .
  5. Peter Derleder ... (Ed.): Handbook on German and European Banking Law , Springer, 2009, p. 1937
  6. a b Jürgen Keßler, Hans-W. Micklitz, Norbert Reich (ed.): Institutional financial market supervision and consumer protection: a comparative study of the regulatory systems in Germany, Italy, Sweden, the United Kingdom and the European Community , Publisher: Nomos, 2010, pp. 176–189.
  7. German text:
  8. Peter Derleder ... (Ed.): Handbook on German and European Banking Law , Springer, 2009, pp. 2245–2246.
  9. a b Questions and answers on financial market supervision (in
  10. Law on the Federal Financial Supervisory Authority (Finanzdienstleistungsaufsichtsgesetz - FinDAG)