The NASD and NYSE Group have agreed to merge their regulatory operations into a single self-regulatory organization that will oversee all U.S. securities broker/dealers. The name of the organization will be determined at a later date and will begin operating in the second quarter of next year.
All 2,400 NASD employees and 470 NYSE regulatory employees will become part of the new group. NASD Chairman and CEO Mary L. Schapiro will become its CEO, and NYSE Regulation CEO Richard G. Ketchum will become non-executive chairman of the board for a three-year period while remaining CEO of NYSE Regulation, which will continue to oversee market surveillance and listed company surveillance at the NYSE.
The main responsibilities of the new SRO will be to oversee member examination, enforcement, arbitration and mediation, as well as to oversee other stock markets that have contracted for NASD oversight, including Nasdaq, the International Securities Exchange and the Chicago Climate Exchange.
In merging operations, the two SROs are hoping to make regulation more efficient and cost effective for U.S. B/Ds.
In announcing the consolidation, Securities and Exchange Commission Chairman Christopher Cox said, “This is a significant step forward for America’s investors and for our nation’s capital markets. Protecting investors from fraud in today’s complex, integrated markets requires that regulators look across markets to prevent wrongdoers from exploiting the seams in regulatory jurisdiction.” The net result, Cox said, will be stricter investor protection and more competitive financial markets.
