Breaking Up the System of Self-Regulation

Traders Magazine, January, 2005 by Gregory Bresiger

The structure of self-regulatory organizations, or SROs, such as the New York Stock Exchange, are in the cross-hairs of the nation's regulators who are weighing unprecedented change.

"In sum, while Congress and the Commission have criticized and modified the SRO system in the past, it has not been radically revised or dismantled since its establishment," says the Securities and Exchange Commission. As Traders Magazine went to press, the nation's top regulator published proposed rules and offered a concept release that could result in comprehensive reforms.

Inherent Conflicts'

The SEC is raising the question of whether an exchange can effectively regulate the same constituency it serves. The SEC said self-regulation, which already has had "inherent...

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