The move to consolidate two broker/dealer self-regulatory organizations–NASD and the NYSE–and their corresponding and sometimes conflicting sets of rules into one unified SRO has picked up momentum and a number of endorsements while also sparking a certain amount of controversy.
Dissent is not always a bad thing, however, and in this instance can even be extremely useful, bringing focus to the differing points of view within the brokerage industry, discussion about how best to serve its many constituents, and ultimately hone the resulting super-SRO and rulebook so that it better serves all involved.
Talk with anyone at a B/D, industry association, or regulator, and they all have passionate views about how this ought to shake out. Generally the consensus is positive: a big step toward more efficient, cost-effective, coordinated regulation, looking forward to seeing the details, which, according to NASD Senior Executive VP Elisse Walter, should have been mailed to each member firm before the end of December. Once firms receive this proxy, they have 30 days to vote. The B/D executives this reporter has spoken with since the joint announcement in November have praised the choice of current NASD Chairman Mary Schapiro to lead the combined SRO; she is well known to many executives because of her work over the years with many NASD member firms.
The largest B/D industry trade organization, the Securities Industry and Financial Markets Association (SIFMA), endorsed the move to a unified SRO, as has the National Association for Independent Broker/Dealers (NAIBD). NAIBD President Lisa Roth said in a November 30 announcement that “a single regulator will result in streamlined regulations and greater efficiencies for firms of all sizes. In making our decision to endorse the proposal, however, we paid particular attention to the effect the proposal would have on small and independent firms. In this respect, we find that the proposal demonstrates awareness on the part of our regulators of the specialized needs of small and independent members.”
The Financial Services Institute (FSI), the B/D association spunoff from the FPA, has endorsed the plan as well: “The FSI Board voted unanimously to endorse the transaction and to encourage its approval by NASD member firms,” said FSI chairman John Poff in a December 13 statement. Poff, also CEO of Mutual Service Corp., said in that statement, “We believe the structure of the proposed organization will provide opportunities for broad and diverse industry involvement in the regulation of our industry, particularly at a time when some regulators and consumer advocates are calling for the elimination of self-regulation.”