FSMA (Financial Services and Markets Authority): Definition


The Financial Services and Markets Authority (FSMA), headquartered in Belgium, is a regulatory agency tasked with informing consumers and safeguarding their interests within the country’s financial sector.

The authority licenses the online trading platforms operating in the country. It also provides licenses to brokers who wish to operate outside Belgium. 

The FSMA in a nutshell

  • The Financial Services and Markets Authority (FSMA) oversees Belgium’s financial sector, ensuring consumer protection and accurate information dissemination.
  • It licenses online trading platforms and brokers operating within and outside Belgium.
  • Listed companies are monitored to prevent scams and frauds, safeguarding investors’ interests.
  • Prohibiting the distribution of high-risk financial derivatives like binary options, the authority prioritizes consumer protection.

The macro-environment today is prone to many scams and frauds. However, the Financial Services and Markets Authority keeps a check on all the listed companies. Let us delve more into the definition and working of this authority. 

The Role of Belgium’s Financial Services and Markets Authority

The Financial Services and Markets Authority supervises financial operations in Belgium. It ensures that all listed companies present the investors with only accurate information. 

Thus, its foremost objective is to protect the investors’ interests. It takes on itself to ensure that all financial institutions in Belgium follow a set code of conduct.  

In addition to this, this regulatory authority also works on imparting effective education to the investors. Also, the transfer of all financial products happens within its purview. 

History

The official logo of the Financial Services and Markets Authority (FSMA)

Before its incorporation, the banking, Finance, and Insurance Commission was the regulator of financial activities in Belgium. However, FSMA replaced this commission in August 2011. 

It has a status of an autonomous public institution and works for the welfare of investors. FSMA is a legal organization appointed by the Royal Decree. 

The basic aim of FSMA is to ensure all listed companies in Belgium present a true and fair view to investors. 

Financial Services and Markets Authority objectives

The objectives of the financial services and markets authority (FSMA)

The FSMA competency is not limited to only seeing whether a company complies with the requirements. Conclusively, it plays a crucial role in the six major domains:

  • Supervision of financial markets
  • Supervision of listed companies and rules of conduct
  • Product supervision
  • Supervision of financial service providers
  • Supplementary pension supervision
  • Financial education improvement

These six principle tasks guide the behavior of the authority. It checks whether the information provided by the listed companies is accurate. Thus, it is vital to protect investors against scams and frauds. 

As for financial service providers, FSMA keeps track of all brokers and intermediaries in direct contact with clients. These intermediaries include:

  • Banking intermediaries
  • Investment intermediaries
  • Insurance intermediaries
  • Management companies for collective investment
  • Portfolio management companies

To maintain healthy trading practices within the economy, FSMA mandates that all brokers should get registered with it. The authority checks from time to time to ensure that the licensed person is fit to carry on the tasks. 

Does the FSMA regulate Binary Options?

Yes, the FSMA does regulate Binary Options along with other high-risk financial derivatives through its Regulation implemented since August 18, 2016. This Regulation prohibits the distribution of binary options, derivative contracts with short maturities (less than one hour), and contracts with leverage, such as CFDs and rolling spot forex contracts, to consumers via electronic trading platforms.

The FSMA aims to protect consumers from unsuitable financial products and aggressive marketing tactics, thereby contributing to the integrity and public confidence in the financial sector.

Wrapping it up!

The FSMA plays a crucial role in protecting the investors’ interests and maintaining their faith in the financial market. Without the Financial Services and Markets Authority, the investment market would perform haphazardly. 

About the author

Percival Knight
Percival Knight is an experienced Binary Options trader for more than ten years. Mainly, he trades 60-second trades at a very high hit rate. My favorite strategies is by using candlesticks and fake-breakouts

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