In recent years, over-regulation has become a potential problem in the financial markets which have undergone a plethora of new regulation without stopping. Especially, it has been weakened the competitive position in US as the world’s leading financial market. The normal operating of financial institutions need a certain degree of legislation to regulate otherwise there will be kinds of financial crimes. Nevertheless, what kind of need to control the extent it is difficult to define. This essay will look at dilemma of the regulation in the financial market. In the first part of this essay, it will illustrate what is the regulation and why should be set regulation in the financial markets. Then, it is going to focus on the defects and hazards of over-regulation. How to set up a relatively reasonable measure of regulation will be discussed in the final part.
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Why the financial needs regulation
Regulation is defined as a rule or directive made and maintained by an authority. It includes legal regulation, administrative regulation and self-regulation. Why should set up the regulation in the financial market. Any system of social organization needs the regulation to make it operating healthy. Establish regulation in the financial market because of the following three reasons. The first reason is to provide customers’ profit and maintain the market confidence. The second is reducing financial crime. Ensuring the market fair, efficient and transparent is the third reason. The last but not least reason is that: to reduce the systematic risk of the financial system. The next part will explain details of these factors.
The protection of consumers
As a part of the financial markets, investors are in a weak position. They face being misled, deceived, market ma ...