What is Financial Market Regulation?

* Regulators act as independent parties, which oversee the activities of financial

institutions on the consumers behalf, giving them peace of mind that their interests
rules and laws firms operating in the financial industry, such as banks, credit unions,
have been considered.
insurance companies, financial brokers and asset managers must follow.

• MAINTAIN FINANCIAL STABILITY

What is the goal of regulation?
* Poor regulation can undermine its stability, harm consumers and can damage the
The goal of regulation is to prevent and investigate fraud, keep markets efficient and
prospects for the economy
transparent, and make sure customers and clients are treated fairly and honestly.
* Regulation ensures that the financial system runs as smoothly as possible.

What is the main function of Financial Market Regulation?

• MAINTAIN FAIRNESS, EFFICIENCY AND TRANSPARENCY
Financial regulation is part of ensuring the safety and soundness of the financial
system and protecting consumers. * Financial regulators ensure that the markets are fair, efficient and transparent.
* This reduces risk and promotes best practices.
What are the purpose of financial regulations? * It involves monitoring firms to ensure they transact lawfully and safely, have the
appropriate risk controls in place and are appropriately governed.
• Enforce applicable laws
• Prosecute cases of market misconduct
• IMPARTIAL MEDIATOR
• License providers of financial services
* Regulations provides an avenue for users of financial services as well as financial
• Protect clients
institutions to seek redress in case of abuse by the other party.
• Investigate complaints
* There is the need for an impartial party to mediate between customers and service
• Maintain confidence in the financial system providers. Regulators are empowered by the law to play this role.

Impact of Regulatory Activity

Successful financial regulation prevents market failure, promotes macroeconomic
stability, protects investors, and mitigates the effects of financial failures on the real
economy. Financial regulation can also be used to improve market transparency and
to protect investors, although these ends might simply serve to prevent market failure.

Why is financial market regulations so important?

• CONSUMER PROTECTION
* Government create regulatory bodies that oversee specific industries to protect the
consumer and build their trust in the field.