Reasons for Having Financial and Securities Regulations
Rules and regulations are imposed so that there is honesty and soundness in trading. These financial and securities regulations that are imposed on this institutions, have to be regarded with seriousness by these institutions. If there are not regulations for these financial and securities institutions, then clients will be at their mercy but regulations benefit them greatly. While many regulations are given in order to protect their clients, there are also many parts that benefit these institutions when it comes to improving the environment they operating in. Governments should look into strictly enforcing these financial and securities regulations on these institutions. But there are many places where the implementation of these regulations are handled by a non-government organization rather than the government itself.
If you are doing business with a financial or securities firm, then it is important for you to understand what the regulations are and how they work. The basic regulations that are enforced are things that these financial institutions are to do for their clients. If you are a client of these institutions, then you would want to know what these regulations cover or how they enable your business to do well. Here are some reasons why it is important to have financial and securities regulations in place.
Money is one of the most important assets that any person or company can have. And this is the reason why your company should trust a bank or any financial institution where you can deposit your money or buy shares from. In order for clients to be able to trust finance and securities trade, measures have to be set that must be met by these financial or securities institutions. For a financial institution, passing several integrity tests is the only way they can start doing business with their clients.
Financial and securities regulations can help ensure the stability of the financial and securities market. The way financial companies live and die is just similar to any other business. Instability in the financial and securities sector would mean the destabilization of the clients and the state economy. This can be prevented with regulations in place. Reporting any new development before implementing is mandatory for every finance institution. The reason for this is that it is not know how it will affect the entire financial and securities sector; and it the effect is a disruption in the smooth sailing of the entire financial and securities sector, the it will not be allowed to be implemented. With this measure, the finance and securities sector will be more stable and secure.
Clients can be confident doing business with financial institutions because they are protected by regulations. Some of the clients risks that come if there are no regulations include low interest on savings and high interest on loans. With the boundaries set by regulations clients are assured that the financial institutions they deal with will not exceed them.