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. 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.
Any client that is planning on engaging in any form of trade involving an financial or securities institution should understand how these regulations work. 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.
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. Strict measures have been put in place though the regulations to ensure that there is trust in the banks or securities institutions by the clients. 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. During such times, the clients and the economy of the state could be destabilized. The regulations cover such scenarios and therefore no need to worry. The regulations ensure that every firm as well as its operations or any new developments must be reported beforehand. No new development is allowed if it is likely to destabilize another institution or the entire sector. The sector is kept stable through such measures.
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. Low interest being given on a client’s savings or getting an excessively high interest rate on a loan cold be examples. Limits that the finance institutions cannot go beyond have been set out by these regulations.