State regulation of the securities market

Any operations with securities must obey certain rules and comply with the 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 fix the rights and obligations of the participants in the transaction.

Do not forget that the stock exchanges are traded and government securities, so it is in the government's interest to ensure a stable and efficient work. State regulation of the market is aimed at reducing the possible risk to a minimum level, identifying and eliminating all fraudulent encroachments, introducing innovations and improving the activities of professional intermediaries.

Securities markets should function independently, and excessive control of state bodies may lead to a decrease in profitability indicators for transactions. There is a fine line between the unobtrusive direction of the market activity in a positive direction and a rough intervention with the restructuring of the basic structure.

So, the state regulation of the securities market can be conducted in the following ways:

• Introduction of legislative acts that reveal the basic requirements for the qualification level of participants in operations.
• Establishment of the main standards, which must correspond to one or another security, sold on the exchange.
• Official registration of each lot of issued securities.
• Control over the availability of each intermediary on the exchange of a special license, confirming the receipt of professional skills and knowledge, and establishing its qualification level.
• Organization of a special unit for the protection of the rights of buyers of valuable documents.
• Settlement of disputes, as well as elimination of participants who do not have a professional license. Establishment of a specific penalty for violation of the basic rules, established by the current legislation. For mediators, such cancellation is the cancellation of a license and the payment of a fine.

All instruments of the securities market must undergo an obligatory check, called listing. This procedure is carried out by specialists in order to identify the compliance of a particular security with the requirements of quotation on the exchange. Not all issuers give shares or bonds for examination, many prefer to put them on sale in the street market. This is also possible, but it is worthwhile to understand that the level of risk of non-return will be much higher, which is not considered beneficial for the buyer. And the issuer should remember that the value of securities that have passed the listing procedure is much higher, since their riskiness is significantly reduced. According to the law, it is strictly forbidden to advertise valuable documents before the end of the listing, and a fine may follow for violation.

Professional participants of the exchange are also engaged in issues of securing owners of securities in the form of pledge, guardianship, and guarantee. In some cases, property insurance is carried out in order to reduce the riskiness of the project.

The exchange differs from other types of the market by its sensitive reaction to the slightest changes in the basic conditions of circulation of instruments. As a consequence, state regulation of the securities market should be carried out by special, non-specific for other methods. For example, in order to increase the level of liquidity on the exchange, a method of self-regulation is applied, when the controlling body is partly subordinate to both the state and the direct intermediaries.

Investing in securities, especially individuals, plays an important role in the development of the country's economy, since savings that were simply stored before, now began to function and make a profit. Therefore, regulation should be done correctly, so as not to damage the conditions on the market, but also to ensure the strict implementation of standards.