Write 10 page essay on the topic Examine critically the most important methods of regulating a financial market which is essential for raising finance by public and private entities.
Either these evolutionary trends are being witness in other European states. For instance, the euro zone area has been put under the supervision of European Central Bank while domestic agencies have been mandated to oversee banks and other financial supervision tasks (Blinder, 1998).
Many scholars have argued that, it is imperative to regulate financial markets because of the influence they have on the whole economy. Because of this, different theoretical motivations supporting the need for stringent regulation of financial intermediaries and banks have been advance. (Valdez, 2006) argue that financial market regulation it is imperative in the process of pursuing microeconomic and macroeconomic stability of a nation. Such stability is associated to macro controls, which can translate to securities settlement systems, clearing houses and financial exchanges (Allen and Gale 1998).2 Financial regulation is important in fostering transparency in the financial market and intermediaries hence ensuring investors are protected. Ultimately, financial regulation is important in promoting and safeguarding of competition that is inevitable in the financial markets just like any other market.
Financial markets form an integral part of the sources from which both private and public companies raise their capital to finance their activities. However, the legal framework regulating financial markets and intermediaries stipulate the various procedures and requirements that both the public and private companies should comply with in order to be allowed to raise finance from the financial markets (Frase, 2011).
The major two provisions of this Act regulating public companies relates to the authority of directors in allotting company shares and the pre-emption rights disapplication.3 These key provisions require that shareholders pass an ordinary resolution granting the directors authority to issue and allot shares.