Tag Archives: financial services

Financial Service Act (updated outline)

Book 1 General Provisions

Book 2 The Financial Service Authority

Book 3 Banking

Title 1 General provisions

Title 2 Consumer and Investment Banks

Title 3 Miscellaneous

Book 4 Credit

Title 1 Types of credit and money loans

Title 2 Credit Unions

Title 3 Peer-to-peer loans

Title 4 Pawn shops

Book 5 Insurance

Title 1 General provisions

Title 2 Insurance companies

Title 3 Insurance markets

Title 4 Types of insurances

Title 5 Reinsurance

Title 6 Miscellaneous

Book 6 Securities

Title 1 General provisions

Title 2 Emission of securities

Title 3 Second-hand trade of securities

Title 4 Deposit of securities

Title 5 Miscellaneous

Book 7 Derivatives

Title 1 General provisions

Title 2 Futures

Title 3 Other derivatives

Book 8 Financial intermediaries

Title 1 General provisions

Title 2 Securities brokers

Title 3 Insurance brokers

Title 4 Mortage brokers

Book 9 Asset Management and Mutual Funds

Title 1 General management

Title 2 Individual asset management

Title 3 Institutional assetmanagement

Title 4 Mutual funds

Book 10 Currency Trade

Title 1 General provisions

Title 2 TBA

Financial Services Act (outline proposal)

Full title: “Federal Financial Services Act of JD 2464388.5”

Short title: “Financial Services Act (2035)”

Outline contents:

Book 1 General provisions

Book 2 The Authority for the Financial Markets

Book 3 Banking

-Title 1 General provisions

-Title 2 Consumer and Investment banks

-Title 3 miscellaneous

Book 4 Credit

-Title 1 On the types of credit and monetary loans

-Title 2 Credit Unions

-Title 3 Peer-to-peer lending services

-Title 4 Pawn brokers

Book 5 Insurance services

-Title 1 General provisions

-Title 2 Insurance companies

-Title 3 Insurance markets

-Title 4 Types of insurances

-Title 5 Reinsurance

-Title 6 Miscellaneous

Book 6 Securities

Book 7 Derivatives

-Title 1 General provisions

-Title 2 Trading in derivatives

Book 8 Financial intermediaries

Book 9 Asset management and mutual funds

Book 10 Currency trade

Explanation:

The general purpose of this act is to regulate financial markets. Though financial markets have faced severe criticism, and to a largely extent this had been justified, they are an essential part of a modern economy. Nevertheless financial markets need strict regulation in order to prevent them from becoming a parasitic sector of society. Regulation of the financial markets aims at furthering public interests.

The general provision sections primarily contain definitions. Before one could regulate banks, insurance companies, stock trading and so on, one needs to define these terms before hand.

This act does not deal with accountants. They are not a part of the financial industry, and will be subject of another act.

Ad book 2: The Authority for the Financial Markets (AFM) is the governmental agency charged with the enforcement of this act. For its job the AFM has the power to impose fines, to revoke licenses, and to arrest people for violation of this act. Its activities are partially funded by the revenues generated by the Federal Financial Transactions Tax (FTT).

Ad book 3, 5 and 6: On of the basic principles of the law on banking and on insurance: is the strict separation between banking and insurance, and the strict separation between consumer and investments banks. Another basic principle is that consumer banks and insurance companies should be consumer cooperatives. See also here.

Ad book 6 and 7: Securities and derivatives are two separate financial instruments, hence both require a separate treatment. Securities include shares and bonds, and entail direct investment in businesses. Derivatives include a variety of instruments such as options and futures. They are invented to manage risks, but are mostly used for a type of gambling.

Ad book 8: This book deals with persons who make it their profession to sell financial products of third parties to consumers. The main principle of the law on intermediaries is the prohibition of commission. Since intermediaries have to serve their consumers, they should be paid by their consumers and not by the companies whose products they sell.

However, it does not deal with real estate brokers. They are covered by another act.

Ad book 10: The provisions of this book are aimed at controlling speculative currency trading and protecting the economy against large-scale speculation.

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