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 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. 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.
If a person is engaging in business with a financial or securities firm, they ought to understand how these set regulations work. There are normally three things that the financial and securities regulations should do for 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. 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 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. Clients and the economy of a state could be jeopardized in such times. One should, however, not be worried as the regulations cover for such. 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. There are several things that may put the client at risk. 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.