Which government agency regulates stock and bond markets
July 16, 0 Comments. It is, however, something that is quite necessary.
The stock market, if left unchecked and uncontrolled, would descend into chaos and a widespread culture of cheating, manipulation, deception, and — in the end —financial disaster. In all seriousness, there are many good reasons why the market is regulated.
One of the main benefits is a controlled environment in which you can trade without having to worry about unfair practices like insider trading and the like. The government agency tasked with overseeing and enforcing regulation in securities markets varies from country to country. In the United States, the preeminent government body is the Securities and Exchange Commission SEC.
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The SEC was created in and currently employs over 3, employees. Its primary mission is to monitor and enforce laws created to govern the existence of securities and other related assets in the United States. It licenses every exchange in the U. The SEC also enforces legislation created by Congress to control securities trading.
It performs this action by investigating alleged incidences of crimes associated with the trade of securities in the U. Additionally, the SEC oversees the publishing of mandatory financial disclosures from corporations on the floor. These disclosures are designed to give investors, regulators, and the public at large all the necessary information they need to make fair and informed trades.
The SEC has jurisdiction over stocks and all publicly-traded companies, but that is only one part of the overall market.
The other part — stock brokers and investment firms — are regulated by the Financial Industry Regulatory Authority FINRA. FINRA regulates trading, controls licenses, informs investors, and supervises compliance from investment firms that fall under its purview.
This is to ensure that investors deal with licensed professionals who abide by the rules and legislation that are there for the smooth operation of the market.
You also have other asset classes that are regulated by various other bodies, including commodities, futures, and the like. One popular asset class — U.
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Treasurys — is monitored by the Bureau of the Public Debt, a body within the Treasury Department. The BPD, along with the SEC, regulates trading of Treasury bills, notes, and bonds, which are involved in countless retirement plans, investment accounts, and diversified portfolios not only in the United States but abroad.
Which government agency regulates stock and bond markets
Commodities and futures are regulated by the Commodity Futures Trading Commission CFTC and National Futures Association NFA , respectively. The truth is probably somewhere in the middle, and the SEC does and has issued significant penalties and punishments to individuals and companies who violate securities laws.
One notable, high-profile example came in , when Martha Stewart was sentenced to a five-month prison term in federal prison for conspiracy, making false statements, and obstruction of justice stemming from a case that looked suspiciously like insider trading even though she avoided being convicted on that particular charge. Still, the presence of the SEC and laws governing stock market trading manage to provide for a relatively-smooth trading experience — one that allows for average investors to trade without having to worry too much about unfairness in the markets.
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