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. 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. In some places, however, you are likely to find a non-governmental organization handling the implementation.
Any client that is planning on engaging in any form of trade involving an financial or securities institution should understand how these regulations work. Normally, there are three things that the financial and securities regulations should do for the clients. You may as a client want to know how these rules work in ensuring that the business has been done well. The three main objectives of financial and securities regulations have been given below.
A company or an individual can have many possession but what stands out as the most important is money. 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. 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 entire sector or other institutions are likely to be destabilized by the new move, it is not allowed. It is possible to stabilize the sector this way.
Financial and securities regulations are also very important in ensuring that the client is at all times protected. Several factors may lead to the client being unsafe. 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.