ICI Supports Efforts to Improve U.S. Self-Regulatory SystemWashington, DC, March 9, 2005 - The Institute supports an SEC initiative to improve the governance and transparency of self-regulatory organizations (SROs) that are national securities exchanges or registered securities associations, noting that such an effort will advance the interests of investors. Background
In late 2004, the SEC proposed rules relating to the governance and administration of self-regulatory organizations and issued a concept release relating to the role and operation of the self-regulatory system. Among other things, the proposed rules would: - impose new governance standards on national securities exchanges and registered securities associations by requiring a majority of the members of the exchange's or association's board of directors to be independent;
- require exchanges and associations to establish policies and procedures to maintain a separation between their regulatory functions and their market operations and other commercial interests, and require that funds received from regulatory fines, fees, and penalties be used for regulatory purposes; and
- prohibit any member that is a broker or dealer from owning more than 20 percent of the ownership interest in the exchange or the association, or a facility of the exchange or association.
ICI Position
The Institute strongly supports the SEC effort to strengthen SRO governance processes and regulatory programs and increase the transparency of SRO operations. In a recent comment letter, ICI states that an examination of the role and operation of SROs is particularly timely, given recent changes to the structure of the U.S. securities markets and in the ownership structure of SROs. At the same time, the Institute recommends that in implementing the proposals, the SEC be cautious to avoid establishing unnecessarily burdensome rules that could prevent SROs from fulfilling their regulatory and administrative responsibilities. Related Links
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