Types of authorisation

SFMA uses several forms of authorisation: licensing, recognition, authorisation, approval and registration. Each category has a different legal effect and leads to a different level of ongoing supervision.

A person or company that wants to accept client assets, operate as an insurer, manage collective assets, run a financial market infrastructure or provide another regulated service must first identify which legal permission regime applies. The distinction matters because the application documents, supervisory obligations and decision process are not the same for every activity.

Licensing

A licence is the most comprehensive form of authorisation. It is typically required for institutions that conduct core financial market activities, including banks and securities firms, insurers, fund management companies, managers of collective assets and certain FinTech business models. Licensed institutions are usually subject to continuing prudential supervision, reporting duties and external audit requirements.

Recognition

Recognition applies where the law entrusts an organisation with a defined function in the regulatory system. This can include self-regulatory organisations in the anti-money laundering field or other bodies that must demonstrate independence, appropriate rules and effective oversight processes before they can perform their role.

Authorisation and approval

Some regulated activities or products require a specific authorisation or approval rather than a full institutional licence. Examples can include fund documents, certain insurance tariffs or market infrastructure arrangements. The review focuses on the legal requirements that apply to the product, function or transaction concerned.

Registration

Registration is used where market participants must be entered in an official register before carrying out a defined activity. Registration usually confirms that statutory conditions have been checked, but it does not always mean the registrant is supervised in the same way as a prudentially licensed institution.

Supervisory intensity

The greater the potential risk to clients, creditors, policyholders, investors or market stability, the more demanding the authorisation and supervisory framework tends to be. SFMA assesses applications against the applicable law and monitors whether authorised entities continue to satisfy those conditions over time.