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. 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. There are some other places, however, that you will find that the implementation of these regulations is left to a non-governmental organization.
If a person is engaging in business with a financial or securities firm, they ought to understand how these set regulations work. Three things are supposed to be delivered to clients through the financial and securities regulations. 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.
Money is one of the most treasured possessions for any company of an individual. For this reason, you have to have some trust in the financial institution you invest money as shares or make deposits to. 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. Sudden closure of a finance or securities institution can happen just like in any other business. Clients and the economy of a state could be jeopardized in such times. But one should not be worried as the regulations cover for these. Every institution is monitored in its operations and any new development 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 last and very important objective of the financial and securities regulations is to ensure that the client is at all times safe. There are several things that may put the client at risk. One of the most common ways is when you find that a client has been given a very low interest rate on savings or an excessively high rate on a loan. The regulations are made such that there are limits that the finance institution cannot go beyond in either cases.