Self-regulatory organization
A self-regulatory organization (SRO) is a non-governmental entity that has the power to create and enforce industry regulations and standards. SROs are typically granted authority by a governmental agency or through legislation, allowing them to oversee the conduct and practices of their members to ensure compliance with established rules and regulations.[1]
The Securities Exchange Act of 1934 lays out the registration process and reporting scheme for SROs. All securities exchanges in the U.S. must register with the Securities and Exchange Commission (SEC) under Section 5 of the Exchange Act. Additional registration requirements for entities such as security-based swap dealers and major participants were introduced under Section 15F following the Dodd-Frank Act.[2]
In U.S. securities law, the Securities and Exchange Commission (SEC) delegates authority to the Financial Industry Regulatory Authority (FINRA) and to national securities exchanges (such as the NYSE) to enforce industry standards and regulatory compliance. FINRA was formed on July 26, 2007, when the SEC approved a merger of the enforcement arms of the New York Stock Exchange (NYSE) and the NASD to form a new SRO. In addition, Congress created the Municipal Securities Rulemaking Board (the MSRB) as an SRO charged with adopting investor protection rules governing broker-dealers and banks that underwrite, trade and sell tax-exempt bonds, 529 college savings plans and other types of municipal securities.[3] The Dodd-Frank Act expanded MSRB authority to include regulation of municipal advisors.[4]
The National Futures Association is the self-regulatory organization for the U.S. derivatives industry. U.S. futures exchanges also have self-regulatory functions.[5]
References[edit]
- ↑ self regulatory organization. Cornell Law School.
- ↑ Registration Process for Security-Based Swap Dealers and Major Security-Based Swap Participants. SEC.
- ↑ SEC Gives Regulatory Approval for NASD and NYSE Consolidation. SEC.
- ↑ Investor Protections in the Municipal Securities Market. MSRB.
- ↑ Our Mission. National Futures Association.