NEED FOR REGULATING

SECURITIES MARKETS IN
INDIA

RISING IMPORTANCE OF SECURITIES MARKET

The role of securities market increased globally

Securities market offer an alternative source of intermediation

Securities markets reduce cost of capital, increase savings and

investment
Investor confidence is the key in securities market
Securities Regulation address this through regulation of issuer
disclosure and accounting and audit standards

Thus the rising importance of securities market and in order to

increase the faith of the investors REGULATION of this market
is essential

WHAT IS REGULATION?
Regulation is controlling human or societal behavior
by rules or restrictions.
Regulation can take many forms:
Legal restrictions promulgated by government
Self-regulation by an industry such as through a trade
association .
Social regulations
Co-regulation
Market regulation

REGULATING FINANCIAL
MARKETS

The financial regulatory bodies control the stock

markets, bond markets, foreign exchange markets, and
various other segments of financial markets.
The financial regulations are laid out for the purpose of
creating a fair and customer-friendly environment in the
financial market of a particular country, which is
conducive for economic growth.
Some of the examples of financial regulatory bodies are
the Federal Reserve Bank (US), RBI, SEBI, the
Financial Services Authority (FSA) in UK, the Securities
and Exchange Commission (SEC) in the US and many
others

NEED AND OBJECTIVES OF

REGULATION
1.

Market confidence:

Sustaining confidence in the financial markets is one of the

most important objectives of the Financial regulatory bodies.
2.

Consumer protection:

Ensuring the most suitable level of consumer protection.

3.

Public awareness:

Encouraging public awareness about the financial markets

through imparting educational programs.

4.

Eliminating financial crime:

The financial regulations are designed for the purpose of

reducing financial crimes and frauds.

BENEFITS OF REGULATION
Regulations, like any other form of coercive action, have costs for
some and benefits for others. Efficient regulations are defined as
those where the total benefits to some people exceed the total
costs to others.

Markets failures:
Regulation due to inefficiency. Intervention due to a classical
economics argument to market failure.
a) Risk of monopoly
b) Collective actions, or public good
c) Inadequate information
d) Unseen externalizations

Collective desires:
Regulation about collective desires or considered judgments on
the part of a significant segments of society

Diverse experiences:
Regulation with a with a view of eliminating or enhancing
opportunities for the formation of diverse preferences and beliefs

Social subordination:
Regulation aimed to increase or reduce social subordination of
various social groups

Endogenous preferences:
Regulations purpose is to affect the development of certain
preferences on an aggregate level

Irreversibility :
Regulation that deals with the problem of irreversibility the
problem which is a certain type of conduct from current
generations results in outcomes from which the future
generations may not recover from at all.

Interest group transfers :

Regulation that results from efforts by self-interest groups
redistribute wealth in their favor, which may disguise itself as one
or more of the justifications above.

REGULATED (CONTROLLED) MARKETS

A regulated market or controlled market is the provision of goods or
services that is regulated by a government appointed body.
In a regulatory market, the government regulatory agency may
legislate regulations that privilege special interests, known as
regulatory capture.
AIMS of Regulation:
The aims of financial regulators are usually:
To enforce applicable laws
To prosecute cases of market misconduct, such as insider trading
To license providers of financial services
To protect clients, and investigate complaints
To maintain confidence in the financial system.

CONCLUSION
The above slides thus highlight the need for
regulation not only in the markets but also the
aims and objectives of the regulatory bodies
regulating these markets.

THANK YOU
- FARHAN KHAN