The U.S. Securities Industry Association has come out in favour of a single hybrid self-regulatory organizatoion.
Marc Lackritz, president of the SIA testified yesterday before the House Financial Services Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprise, speaking in support of a hybrid SRO model for the securities industry.
Given the proposed mergers between the New York Stock Exchange and Archipelago and the Nasdaq Stock Market and Instinet, Lackritz argued, “The time is ripe for reform.”
“Combining the SRO broker-dealer regulatory programs into one centrally managed entity – the hybrid SRO – would eliminate regulatory duplication and redundancy that occurs with rulemaking, data reporting, examinations, and enforcement actions. These regulatory inefficiencies consume time, energy, and money, thereby stunting innovation and growth,” explained Lackritz. “Uniform, efficient regulation would allow firms to use their internal compliance resources more effectively, further strengthening investor protection.”
Lackritz noted that today’s model of self-regulation has significant drawbacks, including regulatory inefficiencies resulting from duplication among multiple SROs as well as conflicts of interest between SROs’ roles as both market operators and regulators.
In Canada, the Investment Dealers Association is in the process of spinning off its trade association function — a move that may clear the way for further SRO consolidation here, too.
Beyond SRO reform, the SIA is at least looking for market fee reform in the U.S. “Regardless of the outcome of regulatory consolidation, it is vitally important that the SEC deal immediately with longstanding concerns by market participants about the opaque and non-accountable way in which market data fees are currently set,” Lackritz said. “We have advocated that the SEC adopt a narrow, cost-based approach for funding regulation that does not depend on revenue from market data fees.”
He added, such an approach “will minimize the conflicts of interest that arise from control over a monopoly product with the ability to use the resulting revenue to subsidize other activities.”
SIA head testifies on necessity of SRO reform
Combining broker-dealer regulatory programs would eliminate duplication and redundancy, Lackritz says
- By: James Langton
- November 18, 2005 November 18, 2005
- 10:45