Any operations with securities must obey certain rules and comply with established standards, otherwise there will be complete chaos. That is why state regulation of the market is necessary, which would not only control the order, but also legislatively establish the rights and obligations of the participants in the transaction.
Do not forget that government securities are also traded on exchanges ; therefore , it is in the interests of the government to ensure stable and efficient operation. State regulation of the market is aimed at reducing possible risk to a minimum level, identifying and eliminating all fraudulent attacks, introducing innovations and improving the activities of professional intermediaries.
Securities markets must operate independently, and excessive control by government bodies can lead to lower rates of return on operations. There is a fine line between the unobtrusive direction of the market activity in a positive direction and gross interference with the restructuring of the main structure.
So, state regulation of the securities market can be carried out in the following ways:
- The introduction of legislative acts revealing the basic requirements for the qualification level of participants in operations.
- Establishment of the main standards that a particular security sold on the exchange must comply with.
- Official registration of each batch of issued securities.
- Control over the availability of a special license for each intermediary on the exchange, confirming the acquisition of professional skills and knowledge, and establishing its qualification level.
- Organization of a special unit on the protection of the rights of buyers of valuable documents.
- Settlement of contentious issues, as well as the elimination of participants who do not have a professional license. The establishment of a specific measure of punishment for violation of the basic rules enshrined in applicable law. For intermediaries, such a punishment may be the cancellation of a license and the payment of a fine.
All securities market instruments must undergo a mandatory audit called listing. This procedure is carried out by specialists in order to identify the compliance of a particular security with the requirements of quotations on the exchange. Not all issuers give stocks or bonds for examination; many prefer to sell them on the street market. This is also possible, but it is worthwhile to understand that the risk of non-profit will be much higher, which is not considered beneficial for the buyer. And the issuer should remember that the cost of securities that have passed the listing procedure is much higher, since their risk is significantly reduced. According to the law, it is strictly forbidden to advertise valuable documents until the end of the listing, and a fine may result in a violation.
Professional participants of the exchange are also involved in securing securities owners in the form of collateral, guardianship, and guarantees. In some cases, property insurance is carried out in order to reduce the risk of the project.
The exchange differs from other types of market in its sensitive reaction to the slightest changes in the basic conditions of the circulation of instruments. As a result, government regulation of the securities market should be carried out in special, non-specific ways. For example, in order to increase the level of liquidity on the stock exchange, the method of self-regulation is applied when the controlling body is partially subordinate to both the state and direct intermediaries.
Investing in securities, especially by individuals, plays an important role in the development of the country's economy, since the savings that used to be just stored now began to function and make a profit. Therefore, regulation should be carried out competently, so as not to harm the conditions on the market, but also to ensure strict compliance with standards.