Define 'regulation' in the context of the financial services industry.

In the context of the financial services industry, 'regulation' refers to the rules established by regulatory agencies to ensure fair and orderly markets. Regulatory bodies, such as the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA), are responsible for creating and enforcing these rules to protect investors, maintain fair practices, and ensure transparency within the financial system.

The importance of regulation lies in its role in promoting confidence among investors and participants in the market. It creates a level playing field where all market participants have access to the same information and treatment, thus enhancing the integrity of financial markets.

The other choices do not accurately reflect the formal and authoritative nature of regulation in the financial industry. For instance, guidelines created by corporations are internal policies and do not carry the same weight as regulations set forth by government agencies. Similarly, discretionary rules set by financial advisors and policies formed by individual firms lack the oversight and enforcement that characterize true regulations.