Although an increasing number of free trade agreements (FTAs) continue to stimulate the global financial services trade, the 2008-09 financial crisis increased awareness that the healthy development of global financial services requires an appropriate balance between the liberalization and prudential regulation of financial services. However, the prudential financial exceptions designed to strike this balance in existing FTAs simply mimicked the relevant provision of the General Agreement on Trade in Services and have been demonstrated insufficient, incongruent with FTAs and intolerant of financial regulatory reform after crises. Therefore, current exceptions could not provide adequate flexibility for countries, particularly developing countries, to implement the necessary regulation. Developing countries should not blindly follow the examples of the prudential carve-out from current FTAs but should design this important article to meet their current stage of development.