Looking On The Bright Side of Professors
There are both positive and negative results of regulating the financial markets. Investors love regulation for a number of reasons. For instance, proper regulation protects the investors from losing their money due to rogue practices. Sometimes, one firm may be in charge of regulation of the whole financial industry in a country. Some countries also allow multiple bodies to regulate various sectors of the financial market. Regulation has various advantages and disadvantages.
Countries Follow Different Rules
All countries around the world have rules that govern participation in their financial industry. The main difference among the bodies is the extent to which they are involved in the financial industry.
In some countries, all matters related to the financial sector have been assigned to a single regulatory firm. Participants in the financial sectors of these countries have to engage with the regulators body in different ways. Examples of the areas that a regulators body may be in charge of include insurance, banking and trading securities. The same body may make the rules in all these types of financial activities.
There are a number of benefits of having the financial sector being regulated by a single body. For example, players in the financial industry as well as investors will operate easily when they only have to comply with the regulations of a single body. Both players and investors can easily get the guidance they need regarding specific issues related to the financial sector. Apart from this, making one contact can address all your financial needs at the time.
Countries that have a single regulator find it easy to enforce financial rules. The regulator can also easily address all the concerns that player in the securities or other financial markets may have.
Multiple Regulators in a Market
In some countries, the financial industry is divided into subsectors which are then regulated by different bodies. For instance, the state may be the one regulating the insurance sector. On the other hand, the banking industry may be regulated by the central government. Other sectors of the financial markets, such as securities and futures trading, may be regulated by other bodies.
You should also know the benefits and drawbacks of having more than one regulator in an industry. One of the benefits of having multiple regulators is that participants in the financial markets can get specialized help. If there was only a single regulator in the country, providing specialized help would be nearly impossible. Apart from this, having multiple regulators encourages cooperation since none of the players has unlimited power.
If you want to start trading in securities, you should know about the regulators bodies in your jurisdiction.
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