The need for integrity when people trade is what necessitates the setting up of rules and regulations. 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. The rules, however, do not focus on the clients only but they also ensure that the environment in which these securities institutions trade in is improved for better performance. You will find that the implementation of these regulations has been left to the government in most countries and states. However, it is possible for you to find some places where this implantation is the responsibility of a non-governmental institution.
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. You may as a client want to know how these rules work in ensuring that the business has been done well. Below are the three main objectives of having financial and securities regulations.
A company or an individual can have many possession but what stands out as the most important is money. There is, therefore, some importance in you having to trust the bank or other institution you buy shares form or make deposit to. In an attempt to ensure that clients have trust in finance and securities trade, there are stringent measures that the banks or securities institutions must meet. There are, therefore several integrity tests tart a bank or securities firm must pass before being allowed to operate. The finance and securities regulations are also tasked with ensuring that the market is stable. Finance and securities institutions are like any other business and may be forced to close down suddenly. It is very likely for the clients of these institutions or the economy of a state to be destabilized. One should, however, not be worried as the regulations cover for such. The regulations ensure that every firm as well as its operations or any new developments must be reported beforehand. If the new move is likely to alter the smooth running of the other institutions or the entire sector, it is not allowed. It is possible to stabilize the sector this way.
The final objective of the finance and securities regulations is to ensure that the customer is kept safe at all times. There are several things that may put the client at risk. Low interest being given on a client’s savings or getting an excessively high interest rate on a loan cold be examples. The regulations are made such that there are limits that the finance institution cannot go beyond in either cases.
