A hands-on options curriculum covering real trading concepts. Read the lessons, work through examples, and test your knowledge.
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Lesson 9: 2.8: Regulators & Market Oversight (SEC, CFTC)
Investigate regulatory oversight agencies that protect integrity, prevent fraud, and establish trading rules.
1. Protecting Market Integrity
Financial regulation is crucial to establishing public trust. Regulators write and enforce the rules that govern market participants, ensuring transparent reporting, preventing fraud, and restricting insider trading.
They conduct audits, investigate suspicious volume spikes, and carry out enforcement actions to preserve market integrity, preventing manipulation schemes.
★ Key Regulatory Mandate: Insisting on full and fair disclosure of all material financial information by public corporations.
2. Key Global Regulatory Agencies
In the United States, market oversight is divided between specialized agencies:
• Securities and Exchange Commission (SEC): Regulates stock markets, options exchanges, and corporate disclosure.
• Commodity Futures Trading Commission (CFTC): Regulates futures, commodities, and swaps markets.
• FINRA (Financial Industry Regulatory Authority): A self-regulatory organization overseen by the SEC that regulates broker-dealers.
KNOWLEDGE RECONNAISSANCE
Which agency has regulatory oversight over the US stock and options exchanges?
What is the main objective of financial regulators?
More lessons in this module
- 2.0: Overview of Market Participants
- 2.1: Retail Investors & Traders
- 2.2: Institutional Investors (Mutual/Pension Funds)
- 2.3: Hedge Funds & Proprietary Trading Firms
- 2.4: Investment Banks & Underwriters
- 2.5: Market Makers & Liquidity Providers
- 2.6: Central Banks & Monetary Policy
- 2.7: Brokers & Financial Intermediaries
- 2.9: Sovereign Wealth Funds
- 2.10: High-Frequency Trading (HFT) & Algorithmic Firms
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