Financial Services Law

Financial services law can be understood as the normative framework that governs the financial sector. Based on the activities carried out, the financial sector, in turn, has been traditionally subdivided into three sub-sectors, namely banking, securities, and insurance. Thus, financial services law has accordingly been divided into banking law, securities (or capital markets) law and insurance law. In this chapter we discuss first the legal meaning of financial services law, financial services, financial products, financial intermediaries, and financial markets. We then analyse the rationale of regulation, focusing on financial stability, depositor and investor protection, market efficiency and transparency, prevention of financial crime and fraud as well as competition. The chapter also considers the internationalization of financial institutions and services and their liberalization and how the latter interacts with prudential supervision. In doing so, this chapter looks at GATS provisions and other trade agreements and concludes with a discussion of the law-making process at the international level, with particular attention to soft law.