The importance of financial market regulation is obvious. Typically, unmanageable markets may not yield results, economically optimal, profitable for both participants of the market and the state. In this case, investors will not make the right decisions about optimal targeted investments and it becomes difficult to reduce the risk level in the whole economy. The danger of unregularly financial market is first of all in the false expectations and great losses for the companies.
If the regulation of financial markets is maintained at the proper level then investments will be apparently stable and economic benefits will only increase. In such case the risk of a crisis is distributed by optimal economy in a more secure way. This is the reason why financial markets are especially in need of a good competent regulation. The complexity provided by such financial services market with potentially large sums of money circulating through the market needs not only be regulated by the state government. The crucial thing is to keep this regulation updated, change according to the last economic circumstances and international financial tendencies.
The public policy of financial regulation definitely needs implementing some changes. "Thomson Reuters Accelus tracked an average of 110 regulatory changes every day in the third quarter of 2013, about double the daily updates the tool recorded during the same period in 2010. Through September, the number of tracked regulatory alerts this year has already reached an all-time high of 18,986." (Quartz, par. 1). The main objective of the new public policy for the development of the financial market is to ease the access to financial services reducing the number of those who are forced to abandon their use due to unreasonably high costs, any discriminatory restrictions or non-compliance with potential customers.
Forms and degree of regulation of any market are different and sometimes even contradict each other but, nevertheless, there is some global regulation model. All developed countries' markets in the nearest future need to take the following factors into account when forming their regulation policy:
- Identification of the shortcomings in a particular area of the financial market;
- Support of the effective and target market segments;
- Protection of consumers on the financial markets and services;
- Stabilizing the financial system and supporting trust and confidence in its stability.
Therefore, today's world market relations involve the active participation of state as a manager, supervisory and regulatory authority. According to this subject management systems are subdivided into many subordinate bodies that are endowed with certain powers. They are given the control functions using various entities to manage economic systems. Thus, the processes occurring in the economy can be often effectively resolved only by the state.
In the nearest future the global financial markets are to be evolved in four key areas:
1. Globalization.
2. Functional integration.
3. Financial innovation
4. Implementation of Internet technologies.
These trends should increase the efficiency of financial markets; greatly expand the range of products and services making them more accessible to all categories of investors. However, they significantly complicate the work of regulators, put up new and not simple tasks. They have generated new risks that need to be identified and limited. Regulators have to rebuild the style and methods of operation, dramatically improve its efficiency, optimize the organizational structure, business processes and improve the technology.
Even with the overall improvement in the financial market nowadays and multiple adjustments of the financial system it is still far from complete, and financially stable.
The first major task is to restore the health of the banking system and credit in more general terms. To do this it is necessary that the process of deleveraging, which is currently going on in the banking system remained orderly and did not require such large adjustments that would undermine the resumption of economic growth.
In many countries active process of transformation of financial market regulation is due to the need to adapt to new trends in the development of the global economy and financial markets in particular. Financial globalization is the shared between different countries causes of the current reform of regulatory systems. The impact of financial globalization on financial market regulation system is manifested in the fact that the financial and technological innovation lead to the necessity of improving the structure of regulation.
As the main result of the government's economic policy in the field of financial markets may be the practical realization of the positive potential impact of the financial market on economic development, for example, more effective mobilization of resources for investment in the national economy, the direction of free cash resources for development in the country especially in innovative industries. In the last twenty years of the twentieth century the study of the impact of financial market institutions on economic development has become one of the important areas of economic research. "The G20 is spearheading introduction of tougher and more globally coordinated regulation of the Financial Services industry. Key areas of focus include identification and management of systemic risks, transparency of trading and incentives, as well as new consumer protections and improvements to resolution and recovery of international institutions" (PwC, par.1).
Works Cited
PwC,. 'Regulation'. N.p., 2014. Web. 6 Dec. 2014.
Quartz,. 'How The Rise Of Modern Regulation Is Changing The Finance Industry'. N.p., 2014. Web. 6 Dec. 2014.
