Because integrity is an important aspect in trade, it is necessary to have rules and regulations. Banks, the stock exchange, lending institutions and any other person in the financial sector must take these regulations seriously. The clients is the most important consideration that is made when these regulations are put in place. 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. In some places, however, you are likely to find a non-governmental organization handling the implementation.
Any client that is planning on engaging in any form of trade involving an financial or securities institution should understand how these regulations work. Normally, there are three things that the financial and securities regulations should do for the clients. How these regulations work in ensuring that business is done well is something that you as a client would like to know. Below are the three main objectives of having financial and securities regulations.
Among the most treasured possessions any company or an individual can have at any time is money. For this reason, you have to have some trust in the financial institution you invest money as shares or make deposits to. Strict measures have been put in place though the regulations to ensure that there is trust in the banks or securities institutions by the clients. There are, therefore several integrity tests tart a bank or securities firm must pass before being allowed to operate. The stability of the finance and securities market is another objective of the regulations. Just lile any other business, it is possible to find that a finance or securities institution has closed 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. Every institution is monitored in its operations and any new development must be reported beforehand. No new development is allowed if it is likely to destabilize another institution or the entire sector. 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. 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. Limits that the finance institutions cannot go beyond have been set out by these regulations.