The US Securities Industry Association released its goals and principles that it believes should underlie a restructuring of self-regulation in that country.

It lays out four basic goals for separating broker-dealer regulation from marketplace regulation.

It calls for one SRO rulebook for broker-dealer activities and one source for interpretations, examinations and investigations.

It demands fair representation of members in the governance of the SRO that oversees their affairs. Specifically, it recommends that there should be significant but non-majority member representation on the SRO’s board of directors and, at a minimum, on its regulatory oversight committee.

The SIA says that broker-dealers should pay fees for regulation of broker-dealer activities, through a transparent fee-setting process, to one SRO rather than multiple SROs. Fees for specific services or products, such as market data fees, should be designed to recover the cost of creating that service or product, but should not subsidize either the general cost of regulation or the cost of other services or products, it says.

Finally, it recommends that the SRO’s costs should be contained in a budget that is subject to independent review, such as approval by the SEC after notice and comment.

It also deals a number of principles that it believes should guide SRO reform, including:

  • maintaining investor protection and providing a level playing field regardless of the market or dealer an investor deals with;
  • that competitors should not regulate one another;
  • regulation should not stifle innovation;
  • it should avoid duplication and seek harmonized rules; that the regulators themselves must be staffed with experts;
  • that the cost of regulation should be equitably shared among all constituencies that benefit from it, including broker-dealers, issuers, investors and the markets themselves;
  • fees should be transparent, cost-justified, and should not exceed the cost of regulation;
  • industry participation in self-regulation should be encouraged; and
  • self-regulation should be structured so that the responsibilities of each regulator are separate and clear, and so there are no gaps in regulatory coverage.