Because integrity is an important aspect in trade, it is necessary to have rules and regulations. Banks, the stock exchange, lending institutions and any other person in the financial sector must take these regulations seriously. The clients is the most important consideration that is made when these regulations are put in place. Apart from benefiting the client, these regulations will also help to improve the environment of the institutions in the securities trade for better performance. The government is in many states and countries tasked with ensuring that these regulations are followed to the letter. 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.
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. 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. 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. Just lile any other business, it is possible to find that a finance or securities institution has closed 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. It is mandatory that every finance institutions reports every new development prior to its implementation. 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 final objective of the finance and securities regulations is to ensure that the customer is kept safe at all times. 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. Limits that the finance institutions cannot go beyond have been set out by these regulations.