Economic And Legal Requirements For Financial Institutions As Participants Of The Financial Services Market
The article investigates the economic and legal requirements for financial institutions as participants of the financial services market.
The analysis of Ukrainian legislation, governing the establishment and operation of financial institutions in the financial services market, as well as the generalization of the results of scientific studies on this subject, allows making the following conclusions:
- Depending on the functions performed by financial institutions in the financial services market, financial institutions can be divided into: 1) financial intermediaries whose activity is both investment and infrastructural in nature, 2) financial intermediaries performing auxiliary functions related to the movement of financial assets during their accumulation and redistribution.
The system of financial intermediation does not include business entities that do not have the status of financial institutions, although they may provide their own brokerage services in the financial market.
- There are two main groups of economic and legal requirements for financial institutions as participants of the financial services market: basic and additional.
Basic requirements are enshrined in the mandatory provisions of numerous legal acts; those requirements are related to the legal status of financial institutions, and reflect the exceptional nature of their business legal capacity. Amongst those requirements there are: (a) the legal organizational form of the financial institutions, (b) registration, and (c) licensing. Compliance with these requirements is mandatory at the stages of creation and proceeding the financial activity of the financial institution as a financial intermediary.
Additional requirements are enshrined in legal acts as well, and constitute a set of restrictive provisions applicable to the activities of financial institutions in the course of providing financial services. Amongst those requirements there are, in particular, the requirement for accounting and reporting, for data support, for the auditing and financial monitoring, risk management, etc. Despite the derivative nature of those requirements, they cannot be deemed as optional requirements. Conversely, compliance with them is mandatory. However, compared with the basic requirements, they are not of a constituent character.