It is important to set up rules and regulations is important in trade in order to ensure there is integrity. 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. For better overall performance of the sector, the regulations do not only focus on the clients but also on improving the environment in which they operate. 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. 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.
Money is one of the most treasured possessions for any company of an individual. There is, therefore, some importance in you having to trust the bank or other institution you buy shares form or make deposit to. In an attempt to ensure that clients have trust in finance and securities trade, there are stringent measures that the banks or securities institutions must meet. 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. Finance and securities institutions are like any other business and may be forced to close down suddenly. It is very likely for the clients of these institutions or the economy of a state to be destabilized. 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 entire sector or other institutions are likely to be destabilized by the new move, it is not allowed. This way, the sector is kept stable.
The last and very important objective of the financial and securities regulations is to ensure that the client is at all times safe. Several factors may lead to the client being unsafe. 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.