Market regulatory agencies like Securities and Exchange Commission (S.E.C.) in US, have been considered as the enforcement watchdog of the Financial markets to check the discrepancies, unfair trade practices that have been concealed intentionally or otherwise keep a sharp eye on markets movements and its participants. The objective behind is to help checking the manipulated financial practices in the liberalized financial and economic markets with less government interference and smooth running of the financial system.
Before going forward, lets have a quick review on the basic objective in the formation of financial market's regulatory agencies. Which primarily include, investors protection, maintain fair, orderly, and efficient markets, and to facilitate capital formation.
On other hand. in case of developing financial markets, regulatory or enforcement agencies have to remain more vigilant as they are becoming more experienced and try to learn from there counterparts in the developed or matured markets, the cautious approach sometimes attract criticism from MNCs and big international financial houses or FIIs for more interference and as an obstacle towards liberalization in the free markets. The argument here lies, 'Let the markets find their own course'. That's the one reason, why the major portfolio allocations of the international investments attracted toward more capitalist economies. Till now this is what used to get heard and read about the regulatory agencies of financial markets
Now, the whole scenario of unexpected financial turmoil has emerged, that have downgraded the role of regulatory agency and raise a question mark on its role, as seen in US markets, the very first line of this article start with the federal regulatory agency S.E.C. as markets watchdog but its quite ironic that despite the experience and efficiency, there emerge a serious lapse in vigilance. The financial crises demoralized the investors confidence on the S.E.C. and its role in the financial markets.
Christopher Cox, the chairman of the Securities and Exchange Commission, has been under fire for a delayed response to market upheavals and soft attitude toward big institutions, that of course denied by him out-rightly. In the coming months, the S.E.C.. will be expected to sort out whether malfeasance contributed to the current economic crisis—and if so, whose.
Presently, federal government with its full strength trying to get over the credits based financial disaster, this is going to be a major government intervention in financial markets after the great depression. Different options and strategies have been explored and implemented like the bailouts, under which the gov. going to pay the creditors by purchasing everything not salable and bottomed out price.
The testing times has begun and it’s the final countdown towards collapse or overcome from current economic disaster.
