2011 — Regulatory Body Building
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The global regulatory developments just kept coming as 2011 began, with the formation of ESMA replacing the Committee of European Securities Regulators (CESR) on January 1. ESMA’s aim was to establish an ‘EU-wide financial market watchdog’ to improve the functioning of the financial markets across Europe, strengthen investor protection and enhance cooperation between national competent authorities.
At around the same time Turkey passed laws prohibiting non-licenced brokers from handling retail traders or even offering their services in the country, while on April 1, Belgium formed their regulatory authority — the FSMA. It was all go go go as the financial industry reformed towards better investor protection.
Europe however wasn’t the only area of the globe that was adjusting and changing their regulation. ASIC, the regulatory body in Australia launched its consumer website on March 15 to provide the general public with free, independent and unbiased information, tools and resources!
New Zealand was next, and on May 1 the Financial Markets Authority was formed as part of the Financial Markets Bill, passed on the April 7. The changes came about after the previous regulatory regime failed astronomically in halting the failure of a large number of finance companies and in preventing investor losses.
While the globe attempted to recoup from the 2007 financial crisis a few years earlier, the US Federal Government faced its own problems, as Standard and Poor’s downgraded its credit rating. On August 5, the US Government received a rating of below AAA (outstanding) to AA+, four days after the US Congress voted to raise the debt ceiling of the government.
As a result, the events sparked the most volatile week for the markets since 2008! Stock market values fell across Europe and Asia, the Dow Jones fell by 213 points, the S&P500 lost 25 points and the Nasdaq dropped by 73 points. The Bank of America was also affected, dropping by a huge 7.2%. Many investors flocked to safe-haven assets with Gold prices shooting up and hitting highs of $1,700/ounce!
The US wasn’t the only victim of the Standard and Poor’s rating system however, with Greece being downgraded a series of times throughout the year from a BBB- to a CC. The Greek Depression began in the aftermath of the financial crisis of 2007–2008. The country was barraged by a series of sudden reforms and austerity measures that crippled the country. The downgrade by S&P then led the Athens Stock Exchange General Index to fall below 1000 points, its lowest since January 1997.
As the end of the year neared, the global regulatory reforms continued, with the Financial Services Act 2012 in the UK receiving royal asset on the December 19. This meant that a new regulatory framework for financial services was in force and the Financial Services Authority was abolished.
As 2011 ended on a high note on the regulatory front, we ask, ‘what’s in store for 2012?’ Find out tomorrow as we continue our journey through a Decade of Forex!
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