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Regulation and Compliance > Federal Regulation

New SIRA Wants Cooperative Effort

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The combined New York Stock Exchange and National Association of Securities Dealers regulatory body will work to ensure the financial services sector is not caught off guard, by measures taken by the bodies to ensure consumers are protected in a rapidly changing environment, according to an NASD official.

“Once the merger takes place, there’s not going to be a dramatic change in the world of the compliance officer,” NASD vice chairman Douglas Shulman said, or the companies they work for; he told the audience at the National Association for Variable Annuities compliance and regulatory affairs conference in Washington on June 27.

When the deal between the NASD and the NYSE closes, it will create a new Securities Industry Regulatory Authority, or SIRA.

Mr. Shulman said those under its jurisdiction won’t notice any changes other than a more coordinated examination force.

“There shouldn’t be any big surprises for you,” he said.

What SIRA will do, he said, is to work towards making its regulation more efficient and flexible. The organization’s “rule book,” he said, will take into account the different business structures and size of firms in applying regulations to them.

Like the industry, Shulman said that regulators are looking at an increasingly changing world and identified some of the trends that will have a major influence on the industry in the future.

He noted the ongoing development of technology, which he said has led to an up-tick in the amount of information investors expect to get and the quality of that information as well.

From a regulatory perspective, Mr. Shulman said “better technology should translate to investor protection,” and he praised efforts such as NAVA’s “straight through processing,” a set of standards that will allow for doing business electronically, involving e-signatures.

NAVA’s work, he said, represents “one of a kind initiatives that can move this industry forward.”

The need for regulatory efficiency and the benefits of technology are all the more important, Mr. Shulman noted, given another major trend facing the industry, the enormous population of “baby boomers” expected to retire over the next 2 decades.

“The stakes are higher than ever before for the financial services industry” to serve that population, Mr. Shulman said, adding that solid financial services can be the difference between “living with dignity” and far more difficult circumstances, now that some of the more traditional retirement vehicles, such as a pension plan, have become less of a certainty.

Overall, as regulators, Mr. Shulman said “our goal is to advance the integrity of the market,” protecting investors while not overburdening companies with regulation. SIRA will continue that principle, he said, recognizing that “one size fits all rulemaking is not always the best approach” and it will try to be proactive in resolving issues before they become a major problem.

SIRA will also be willing to work with financial services companies, both in terms of major issues and in their own compliance efforts.

“We need to assist firms in meeting their compliance needs whenever we can,” he said. A vast majority of workers in the financial services industry, perhaps as high as 98% or 99%, “just want to make an honest living,” he said, and will follow any reasonable regulations to the best of their abilities. It is up to regulators to help them, “get it right,” Mr. Shulman added, and SIRA will operate along that mindset.

“I think you’re going to see us continue in this vein at SIRA because we think it’s incredibly important,” he said.


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