Members of the National Association of Securities Dealears have approved the necessary by-law changes allowing the planned consolidation of NASD and NYSE member regulation to go ahead.

“In a critical step toward ending duplication, reducing inefficiency and strengthening the competitiveness of American markets, NASD member firms overwhelmingly approved by-Law changes necessary for the consolidation of the NASD and NYSE member regulation functions into a single, self-regulatory organization,” the NASD reported.

Almost 83% of the 5,058 firms eligible to vote cast a ballot during the 33-day election period, with 64% supporting the by-law changes. The vote was tallied by Corporate Election Services, an independent proxy tabulation company.

The by-law changes, which will facilitate governance changes at the new SRO, are subject to approval by the U.S. Securities and Exchange Commission.

The consolidation plan, which was announced by NASD and NYSE Group on Nov. 28, 2006, calls for the formation of a new SRO that will be the private-sector regulator for all securities brokers and dealers doing business with the public in the US. The new SRO, which will be named later, will consist of the current 2,400-person NASD organization and approximately 470 of NYSE Regulation’s member regulation, arbitration and related enforcement team. The plan is designed to create a single regulator for the country’s nearly 5,100 broker-dealers, eliminating overlapping regulation and reducing costs to the industry.

“The securities industry has embraced replacing an outdated regulatory structure with one that better serves firms and investors in a fast-changing marketplace,” said Mary Schapiro, NASD chairman and CEO. “Firms took the lead in shaping the future of self-regulation, and I applaud them for the mandate they gave this consolidation. I appreciate that so many NASD members took the time to study the proposal and to participate in the voting process.”

The Securities Industry and Financial Markets Association applauded news of the vote. “This is a pivotal victory which will deliver a more effective and efficient regulatory environment — a win for investors and for the financial industry,” said Marc Lackritz, co-CEO of SIFMA. “Firms of all shapes and sizes will reap the benefits of being overseen by a single regulator.”

“The most recent figures available show that compliance costs have doubled in a three year period, to more than US$25 billion in 2005, up from US$13 billion in 2002,” said Micah Green, co-CEO of SIFMA. “A single regulator, with one rulebook, one set of procedures and one set of examinations will eliminate regulatory confusion and reduce wasteful redundancy.”

SIFMA indicates that it has been a vocal advocate of a single SRO since 2000, and it lobbied firms to approve this deal.