Because integrity is an important aspect in trade, it is necessary to have 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 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. There are some other places, however, that you will find that the implementation of these regulations is left to a non-governmental organization.
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. There are normally three things that the financial and securities regulations should do for 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.
A company or an individual can have many possession but what stands out as the most important is money. 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 finance and securities regulations are also tasked with ensuring that the market is stable. Just lile any other business, it is possible to find that a finance or securities institution has closed suddenly. During such times, the clients and the economy of the state could be destabilized. One should, however, not be worried as the regulations cover for such. 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.
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. 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. Finance institutions have been limited to certain boundaries which they cannot go beyond by these institutions.