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. The regulations have been set up mainly with the client of financial institutions at heart. Apart from benefiting the client, these regulations will also help to improve the environment of the institutions in the securities trade for better performance. In most countries and states, the government single handedly oversees these regulations implementation. There are some other places, however, that you will find that the implementation of these regulations is left to a non-governmental organization.
Any client that is planning on engaging in any form of trade involving an financial or securities institution should understand how these regulations work. Three things are supposed to be delivered to clients through the financial and securities regulations. As a client, you may want to know what these regulations really cover or how they enable business to be done well. There are three main objectives of having these financial and securities regulations have been given below.
Among the most treasured possessions any company or an individual can have at any time is money. This means that to invest in a shares or deposit in a financial institutions, you have to have some trust in them. 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. 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. Sudden closure of a finance or securities institution can happen just like in any other business. It is very likely for the clients of these institutions or the economy of a state to be destabilized. 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. 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. The regulations are made such that there are limits that the finance institution cannot go beyond in either cases.