It is important to set up rules and regulations is important in trade in order to ensure there is integrity. These regulations are taken very seriously by any person in the financial sector such as banks, the stock exchange and even lending institutions. These regulations are set up revolving around the needs of the customers. For better overall performance of the sector, the regulations do not only focus on the clients but also on improving the environment in which they operate. You will find that the implementation of these regulations has been left to the government in most countries and states. There are some other places, however, that you will find that the implementation of these regulations is left to a non-governmental organization.
It is, however, very important for any client that is engaging in any financial activities that involve securities to understand the working of these regulations. Normally, there are three things that the financial and securities regulations should do for the clients. As a client, you may want to know what these regulations really cover or how they enable business to be done well. The three main objectives of financial and securities regulations have been given below.
Money is one of the most treasured possessions for any company of an individual. This means that to invest in a shares or deposit in a financial institutions, you have to have some trust in them. In order to ensure there is this trust, the regulations set out some stringent measures for any finance or securities institutions before they can be allowed to operate. Any bank or securities firm has to have passed several integrity tests before being allowed to operate. The finance and securities regulations are also tasked with ensuring that the market is stable. Sudden closure of a finance or securities institution can happen just like in any other business. Clients and the economy of a state could be jeopardized in such times. The regulations cover such scenarios and therefore no need to worry. It is mandatory that every finance institutions reports every new development prior to its implementation. No new development is allowed if it is likely to destabilize another institution or the entire sector. This way, the sector is kept stable.
The final objective of the finance and securities regulations is to ensure that the customer is kept safe at all times. A client might be unsafe due to several factors. These could include low interest rates on savings as well as excessively high rates when he has been given a loan. The regulations are made such that there are limits that the finance institution cannot go beyond in either cases.