Testimony Concerning
Consolidation of NASD with the Member Firm Regulatory Functions of the NYSE: Working Towards Improved Regulation
by Erik R. Sirri
Director, Division of Market Regulation
U.S. Securities & Exchange Commission
Before the Subcommittee on Securities, Insurance, and Investment of the U.S. Senate Committee on Banking, Housing, and Urban Affairs
Chairman Reed, Ranking Member Allard, and Members of the Subcommittee:
Thank you for inviting me to testify today about the proposal by the NASD and the New York Stock Exchange to consolidate their member firm regulatory functions into a single self-regulatory organization, or SRO. I believe that the proposed consolidation represents a positive development in the regulation of our securities markets.
Although there are a number of SROs that perform various functions, only the NASD and the NYSE are responsible for member firm regulation. Currently, the NASD and the NYSE together oversee the activities of more than 5,000 U.S. broker-dealers doing business with the public, approximately 170 of which are members of both organizations. As a result, there can at times be inefficient, duplicative, and potentially conflicting regulation of U.S. securities firms. The proposed consolidation of NASD and NYSE member firm regulatory functions into a single SRO is designed to help eliminate today's duplicate member rulebooks, and the possibility of conflicting interpretations of those rules. At the same time, a single SRO structure would retain one of the fundamental precepts that has characterized the SRO model: that securities regulation works best when the front-line regulator is close to the markets.
See full Transcript.
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