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In this essay I aim to focus mainly on what does greater regulation mean to the financial markets and if there

is a need for greater regulation and from where does this need stem from. I intend to begin the essay with a brief introduction of what is a financial market and what are the various components of it. The next section of the essay will shed light on the present situation of the regulation of the financial markets. The next section will cover from where and why this question of greater regulation coming. It will be accompanied by various examples of how having a lax system of regulation failed some markets and caused major crises. And if it would have been possible to avert these crises if the regulation system would have been stricter. This essay will also highlight the role that globalization of the financial markets plays. It will be accompanied by an example of how the US subprime crisis affected the whole world. In the conclusion I intend to explain what I mean when I say greater regulation.

The markets in which financial assets are traded. These include stock exchanges for trading company shares and government debt, the money market for trading short term loans, the foreign exchange market for trading currencies, and a number of specialized markets trading financial derivatives.(John Black, Nigar Hashimzade, Gareth Myles, 2009) If the term financial markets has to be described in easy words it would be a place where buyers and sellers meet to trade assets. They gather funds from investors and channel them to corporations. Thus this lets the corporations in meeting their financing needs. It eases the whole process of lending and borrowing by providing them a medium. Financial markets can be found in almost all nations now .In

some they are small in size whereas in others they are quite large. These markets are characterized by moments of high prices and also moments of low prices. When an investor invests money through this platform he trusts the platform and therefore invests his money through it. Therefore regulation of financial markets is needed to protect investor interest. The major players of a financial market are: Banks, Insurance companies, Finance companies, Government, Merchant Banks, Mutual Funds, and Companies. The major components of it are: Capital market, Commodity market, Foreign Exchange market, Insurance market, Derivatives market, Futures market, Money market. Though the derivatives, futures and money market is still in its infant stages in many of the developing economies. Given the various components and so many players involved it is important that the financial markets need to be well regulated to ensure stability and efficiency in its working. As in any situation more the number of players, more are the possibilities of complexities to arise, same is the case with financial markets .Since there are so many aspects to it there needs to be a regulatory and supervisory body. A well regulated market is a like a well-oiled machine. It is needed for smooth functioning of the various aspects of the market and to ensure that there is stability and efficiency prevails. Should the markets be let to operate entirely on their own? I personally believe that it is not a wise decision. Many economists have said that the 2008 crash could have been due to a super bubble that had started forming in 1980 when Ronald Reagan had become the President of the United States and Margaret Thatcher was the PM of the United Kingdom. The prevailing trend in the super-bubble was also the ever-increasing use of credit and leverage; but the misconception was different. It was the belief that markets correct their own excesses. Reagan called it the magic of the

marketplace; I call it market fundamentalism. Since it was a misconception, it gave rise to bubbles (George Soros, 2010)