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What are the Benefits of Single and Multiple Financial Industry Regulators

There are both positive and negative results of regulating the financial markets. Investors love regulation for a number of reasons. For example, regulation prohibits rogue activities such as insider trading, which can leave investors with huge losses. 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. Any type of regulation has its pros and cons.

Regulation Varies Across the World
All countries around the world have rules that govern participation in their financial industry. The regulatory bodies have various powers and responsibilities in the markets they are in charge of.

In some jurisdictions, a single regulatory body is in charge of all matters related to the financial industry. Therefore, investors that want to participate in the financial sector have to deal with the regulator in one way or another. Examples of the areas that a regulators body may be in charge of include insurance, banking and trading securities. The body may make all the rules related to all financial transaction aspects of the country.

Having a single regulatory body in charge of the financial sector has its advantages. For example, investors would find it easy to operate when they only have to deal with a single regulatory body. Getting guidance on different issues becomes easier for both players and investors. Apart from this, making one contact can address all your financial needs at the time.

Countries that have a single regulator find it easy to enforce financial rules. Any issues that player in the securities or other areas of the financial markets may have are easy to address.

Working with Different Regulators
Some countries have divided their financial industry into subsectors and tasked various bodies with the regulatory processes. 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. Other sectors of the financial markets, such as securities and futures trading, may be regulated by other bodies.

Multiple regulators in a market also have their pros and cons. One of the benefits of having multiple regulators is that participants in the financial markets can get specialized help. It would be nearly impossible to provide specialized help if there was only one regulator in the country. Moreover, having more than one regulator encourages cooperation among the bodies since there is no one with unlimited power.

If you want to start trading in securities, you should know about the regulators bodies in your jurisdiction.

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