In order to monitor and regulate the processes occurring in the market, to maintain order and create optimal conditions for the work of all actors in the market, as well as to protect all market participants from unscrupulous and fraudulent actions of individual participants, it is necessary to regulate the securities market. Questions arise: who is involved, and by what laws is this regulation carried out?
Stock market regulation process
The regulation of the securities market is the process of streamlining the activities of all market entities and the transactions between them by authorized organizations. Participants can be issuers, investors, professional stock intermediaries, market infrastructure organizations . There are external and internal regulation of market participants. In terms of external regulation, the organization’s activities are subject to state regulations, international agreements, and acts of other organizations. Internal regulation, however, determines the order of subordination of the organization’s activities to internal regulatory documents that determine the activities of departments and the organization as a whole.
The regulation of the securities market defines all types of operations and activities: investment; intermediary; issuing; collateral; speculative; trust and others. From the standpoint of regulation, organizations and bodies authorized to perform regulatory functions are distinguished: state, regulation by professional participants or self-regulation of the securities market, public regulation.
Securities Market Essence
The essence of the securities market and its regulation involves the following objectives:
Creating an open and free pricing process based on supply and demand. Maintaining order in the market, providing acceptable conditions for all participants. Protection against fraud and dishonesty of market participants.
Business incentives with adequate risk reward
In certain cases, support and creation of the necessary market structures, support for market innovations and undertakings. Impact on the market to achieve social goals (reducing unemployment, increasing the rate of economic growth, etc.). The regulation and essence of the securities market also consists in creating a regulatory framework for the operation of the market, in developing laws, instructions, decrees, methodological provisions, rules and other regulations. In the selection of professionals market participants. Not every organization can be a professional intermediary. To do this, you need to satisfy the requirements for experience, knowledge, capital. In monitoring the implementation of the norms and rules of market activity by all its participants. The system of sanctions for deviation from the rules and regulations established in the market. Such sanctions include warnings, a fine, exclusion from the market, criminal penalties. The principles for regulating the securities market largely depend on the country's economic and political conditions, but they also reflect the practice of the global stock market.
Securities market self-regulation
In addition to the state, there is also self-regulation of the securities market, carried out by non-governmental, non-profit organizations created on a voluntary basis. Such organizations are engaged in the development of mandatory standards and rules, provide professional training, establish mandatory requirements for working in this market, monitor the correct observance of established standards and rules, ensure information activities, protect the interests of market participants.