It is important to set up rules and regulations is important in trade in order to ensure there is integrity. Any entity in business whether a bank, a stock exchange trader or a lending institution has to take these regulations very seriously. The clients is the most important consideration that is made when these regulations are put in place. Apart from benefiting the client, these regulations will also help to improve the environment of the institutions in the securities trade for better performance. You will find that the implementation of these regulations has been left to the government in most countries and states. In some places, however, you are likely to find a non-governmental organization handling the implementation.
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. 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 stability of the finance and securities market is another objective of the regulations. Finance and securities institutions are like any other business and may be forced to close down suddenly. 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.
Financial and securities regulations are also very important in ensuring that the client is at all times protected. Several factors may lead to the client being unsafe. 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.