The Securities Industry and Financial Markets Association today told the U.S. Congress that the new single self-regulatory organization in the United States should follow a principles-based approach.

SIFMA testified before the Senate Banking, Housing and Urban Affairs Subcommittee on Securities, Insurance and Investments in a hearing to examine the consolidation of NASD and the regulatory functions of the New York Stock Exchange. At the hearing, Marc Lackritz, SIFMA president and CEO, addressed the inherent values of a combined SRO and suggested that the single SRO adopt a principles-based approach to regulation.

“A principles-based approach to regulation involves a regulator moving away, where possible, from dictating how a firm should reach a desired regulatory outcome. This approach considers first whether firms, supplemented by guidance as appropriate, could assume the responsibility to achieve the desired outcomes in the context of their business processes and existing supervisory obligations,” said Lackritz in is oral testimony.

“We suggest that a paradigm whose foundation is more clearly based on principles and the achievement of outcomes tied to those principles may better serve investors, the markets and its constituents,” he added.