One of the perennial questions in regulating securities markets is how much regulation is too much, and how much is too little. The argument for laissez-faire (French for "let it be") is that markets regulate themselves well, and that outside control hinders economic growth.
Financial institutions tend to prefer a minimum of government regulation. Among other things, they maintain that extensive regulation can limit investors’ gains by driving up the costs of doing business for both brokerage firms and publicly traded companies — costs that are passed on to investors in the form of higher fees and reduced profits.
Legislators who oppose extensive regulation fear that it could stifle competition and drive large investors to less regulated markets. They also argue that taxpayers would balk if the resources needed to supervise the markets reduced money available for other programs. On the other hand, those who support increased government oversight argue that in any profit-driven environment the best interests of the industry are likely to be at odds with the best interests of investors, especially individual investors. Their position is that regulation is essential to prevent abuses and to maintain public trust in the markets.
So regulators and lawmakers strive to find the happy medium in which dishonesty is discouraged and integrity is rewarded.
