There are both positive and negative results of regulating the financial markets. Stock market investors prefer regulation of the industry for a number of reasons. For example, regulation protects them from losing their money when engaging in the financial markets. Sometimes, one firm may be in charge of regulation of the whole financial industry in a country. In other jurisdictions, regulation may be carried out by multiple bodies. Regardless of the bodies in charge, regulation has its benefits and downsides.
Regulation Varies Across the World
Every country has regulatory bodies that set up specific rules that have to be followed by participants in the financial sector. The responsibilities and powers of the regulatory bodies vary depending on the countries where they operate in.
Some countries have a single regulator that is in charge of the whole securities industry. In these countries, players in the financial sector have to engage with the regulator in one way or another. Trading securities, banking and insurance are some of the financial sectors that the bodies may be in charge of. All the rules related to the financial sector of the country may be made by the regulatory body.
Having a single regulatory body in charge of the financial sector has its advantages. 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. Getting guidance on different issues becomes easier for both players and investors. Finally, investors can have all their concerns addressed in one go when they contact the regulator.
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.
Having More than One Regulator
In some jurisdictions, different regulators are tasked with ensuring the smooth operation of different subsectors of the financial industry. For example, all matters related to insurance may be regulated at the state level. On the other hand, the banking industry may be regulated by the central government. There may also be other regulatory agencies in charge of sectors such as securities, futures trade and so on.
Multiple regulators in a market also have their pros and cons. For example, with many regulators handling different activities in the financial sector, players can be sure of getting specialized help. If there was only a single regulator in the country, providing specialized help would be nearly impossible. Moreover, since none of the agencies have unlimited powers, they are bound to cooperate with each other.
If you want to start trading in securities, you should know about the regulators bodies in your jurisdiction.