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Why we need an Effective Regulatory Framework

Alison George

Alison George

Assistant Director of Operations and Administration

Regulatory Framework refers to tax information, essential rules, procedures, and other important information, like laws and governing bodies that act as guides to ensure that businesses are operating by the law.

Regulatory Framework brings about ongoing confidence to the public that sustainable procedures and processes have been put in place to which they participate. It is the backbone to which the economy and the people depend on. These regulations must act or seem to act in the interest of the public (the people).

These regulations are the results of how society understands, sees, and reacts to risk and its possibility. Regulation may be defined as the set of institutions, guidelines, and penalties that produce actions consistent with stable, accountable, and transparent markets.Protecting economies against systemic hazards and protecting the public interest are two of regulation's primary goals. They are the defences of market players against unwelcome, masked, or unrecognized private hazards. This is particularly true of investors who use their savings to fuel the markets. In that light, a sound regulation system should be seen as a motivator for dependable and superior financial services.

When being discussed, a good regulatory framework must have the following criteria before being developed:

  • It must be of necessity
  • It must be transparent
  • It must be proportioned
  • It must be effective
  • It must be flexible

It is also important to develop an effective regulatory framework in which the following must be considered:

  • Recognises the advantages of a steady regulatory environment
  • It also recognises that statutory regulation is not always needed or even the best approach and that deferral to and support of relevant and recognised self-regulatory entities may be the best way to address certain issues.
  • Helps to build efficient, objective, and transparent markets
  • Uses underlying principles of regulation and enforcement that are consistent for similar transactions and activities
  • Hires regulators with the requisite experience and in-depth knowledge of capital markets and the roles and activities of market participants
  • Incorporates sufficient flexibility to respond rapidly and efficiently to changes
  • Maintains sensitivity to the needs of investors when adopting and implementing policies that reduce regulations for certain types of issuers of investment products
  • Keeps cost — in terms of fees, compliance costs, and other burdens imposed on registrants, issuers, and investors — to a minimum
  • Maintains objectivity and accountability with respect to market participants and policymakers

In conclusion a good and effective regulatory framework shapes society towards compliance and provides a certain level of dependency on the system. The culture of adhering to these guides and accepting these guides ensures implementation and sustainability.



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