AFM – Authority for the Financial Markets of Netherlands. State structure financed from the budget (unlike many regulators, whose funding is provided by contributions of its members).
The license of this regulator refers to the number of licenses with an average level of confidence behind the German, Cypriot and Swiss regulator, but still is quite significant in the European space. The organization was founded in 2002 and, being the successor of the Superintendency of securities, initially its aim was to monitor operations on the stock exchange. Now the scope of the AFM includes all of the major financial markets of the Netherlands.
Management of the AFM is carried out by the Ministry of Finance, which supervises the activities of the structure and defines its powers. Despite the autonomy of the Supervisory functions, the state imposes a discipline on the regulator its mark, somewhat undermining his status to foreign companies.
The following activities fall under AFM control:
- Credit policies of the companies;
- The insurance sector;
- Investment activities of the companies.
Implementation of control functions are carried out in close cooperation with the Central Bank of the Netherlands.
The purpose of the regulator is the same for all of these structures – to protect the interests of investors. But, AFM will be able to protect the rights only in case if the contract concluded by the investor with the company, that has registration in the Netherlands. The lack of structure is not only in the fact that it is too dependent from state bodies, but also that it does not cover all markets of the country completely, leaving loopholes for tricky brokers.
This regulator can be called as the Executive body of the Central Bank, which finances the organization, provides the necessary information, etc. When the application of sanctions is needed, in most cases, AFM “consults” with their “older brothers”
- creation of positive atmosphere in the financial markets of the country;
- control of unconditional execution by brokers of their obligations to clients;;
- control over stock exchange activities.
The organization is open to the public. The site provides free list of companies that are licensed, there is also a list of violators and a list of actions that was applied to them.
The AFM has the authority to unscheduled inspections. As a tools of influence the standard methods are used: public warning, fine, revocation of license or liquidation of a broker. By the way, a permit to conduct a particular activity is necessary. An example is a fine of one of the companies in 2013, which led the operation without a certificate.
A separate area of the AFM is a fight against the insiders, the Ministry of Finance helps in it. If detected that a participant of the exchange market turned a profit on the basis of inside information, the transaction will be cancelled and the penalty will be the sum of 2 times the profit obtained. The advantage of AFM is the presence of an insurance Fund from which the money can be paid to investors in case of bankruptcy of the broker.
Official AFM website: https://www.afm.nl