Financial Services and Markets Authority (FSMA)
The Financial Services and Markets Authority, abbreviated to FSMA, is a financial regulator with headquarters in Belgium. Like most regulators, it strives to ensure the fair treatment of financial institution customers. Furthermore, it demands that financial institutions play by the rules, thus encouraging healthy competition. That has the additional effect of making the financial landscape safer, eliminating practices it deems unhealthy or otherwise predatory.
One of FSMA’s primary roles is the oversight of the information companies provide. The information needs to be complete and correct, which allows financial market participants to judge them more precisely. Furthermore, it oversees financial institutions themselves, including their products and supplementary education. It also has a goal of promoting financial awareness and knowledge, overall improving the experience of financial consumers. FSMA wants to provide a reason for trust in the financial system to those that participate in it.
Supervision of Markets and Companies
The FSMA oversees financial markets in Belgium and cooperates with numerous other similar national agencies. That allows it to contribute to the health of the broader global financial system. However, its primary focus is the supervision of local financial market participants. That includes overseeing companies that are a part of the stock market, with the Authority verifying the fullness and truthfulness of their reports. As an extension, it also guarantees fair shareholder treatment, making sure they all have access to information at the same time.
It also looks over market infrastructures, which would include Euronext Brussels. It covers takeovers, making sure they’re compliant with the rules and preventing monopolies. It can prevent foul playing in numerous ways, including warnings, delisting shares, and financial punishments like fees. It’s also the one that’s in charge of shady practices such as market manipulations and insider trading.
Supervision of Products
Besides financial market participants, FSMA also looks over the products they provide. The main goal here is to ensure their comprehensiveness and utility. The products should be presented clearly to those that may purchase them, and the costs need to be clear. FSMA oversees all financial products institutions offer to customers.
For example, the FSMA must approve of all stocks and securities that are to become public. It also governs collective investment undertakings, such as investment funds and similar groups. It can approve or decline advertisements for financial services like savings accounts. Furthermore, the FSMA has the final say on whether financial product marketing is in line with the government’s rules.
All financial institutions, including banks, stockbroking firms, and insurance companies that need approval from the National Bank of Belgium, fall under the FSMA’s authority. They need to have an appropriate organizational structure and requisite procedures. That’s to allow financial service users to receive the attention they deserve. They also can’t provide services and products that are at odds with their customers’ risk profiles.
Financial Service Providers
The FSMA supervises a broad range of financial institutions that deal directly with their clients. That includes currency exchange offices, portfolio managers, investment advisors, intermediaries for financial services, and more. All brokers that wish to operate in Belgium need to be FSMA-verified and register as financial intermediaries. It also provides verification for individuals that wish to become a broker or banking product merchant.
As we said earlier, the FSMA also has an active effort to improve financial education for market participants. It’s to encourage them to improve their knowledge and ability to apply it soundly. As such, they would be less likely to buy assets that are a mismatch with their risk profile.
The last role of the FSMA is to supervise supplementary pensions. That includes both employees and self-employed individuals. It handles complaints from members and beneficiaries. It also covers shortfalls for pensions providers, requiring them to recover and consolidate as soon as possible.