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NASD And NYSE To Merge Regulatory Functions

by Glen Shapiro, LawAndTax-News.com, New York

30 November 2006


The US National Association of Securities Dealers and the New York Stock Exchange Group on Tuesday announced the signing of a letter of intent to consolidate their member regulation operations into a new self-regulatory organization (SRO) that will be the private sector regulator for all securities brokers and dealers doing business with the public in the United States.

By streamlining broker-dealer regulation, the plan aims to increase the efficiency and consistency of securities industry oversight. It also is expected to reduce regulatory costs to the industry by millions per year once the operations are fully integrated.

The new SRO, which will be named at a later date and is expected to begin operations in second quarter of 2007, will consist of the current 2,400-person NASD organization and approximately 470 of NYSE Regulation’s member regulation, arbitration, and related enforcement team.

The new SRO will operate from Washington DC, New York, and 18 District and Dispute Resolution office locations around the country.

NYSE Regulation’s CEO Richard G. Ketchum will serve as the non-executive Chairman of the organization’s Board of Governors during a three-year transition period and remain CEO of NYSE Regulation.

NASD Chairman and CEO Mary L. Schapiro will serve as CEO of the combined organization, which will be responsible for regulatory oversight of securities firms, arbitration, and for, among other things, the professional training, testing and licensing of registered representatives, and of industry utilities like NASD’s Alternative Display Facility, OTC Bulletin Board, and Trade Reporting Facility.

In announcing the regulatory consolidation, Christopher Cox, Chairman of the Securities and Exchange Commission explained that:

"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."

"Eliminating overlapping regulation, establishing a uniform set of rules, and placing oversight responsibility in a single organization will therefore enhance investor protection while increasing competitiveness in our markets.”


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