Securities Markets: Competition and Multiple Regulators Heighten Concerns about Self-Regulation

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A letter report issued by the General Accounting Office with an abstract that begins "In the securities markets, competition among self-regulatory organizations (SRO) and their members for customer orders has heightened concerns about conflicts of interest in their roles as both market operators and regulators. Nasdaq--the market run by the National Association of Securities Dealers (NASD)--has been in competition with NASD members that run electronic communications networks. For years, the New York Stock Exchange (NYSE) has faced competition from members that trade NYSE-listed securities off of the exchange. Greater competition has generated concern that an SRO might abuse its regulatory ... continued below

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United States. General Accounting Office. May 3, 2002.

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Description

A letter report issued by the General Accounting Office with an abstract that begins "In the securities markets, competition among self-regulatory organizations (SRO) and their members for customer orders has heightened concerns about conflicts of interest in their roles as both market operators and regulators. Nasdaq--the market run by the National Association of Securities Dealers (NASD)--has been in competition with NASD members that run electronic communications networks. For years, the New York Stock Exchange (NYSE) has faced competition from members that trade NYSE-listed securities off of the exchange. Greater competition has generated concern that an SRO might abuse its regulatory authority--for example, by imposing rules or disciplinary actions that are unfair to the competitors it regulates. Some broker-dealers subject to the jurisdiction of multiple SROs also are concerned that differences among SRO rules and rule interpretations have caused inefficiencies in the use of broker-dealers' compliance resources. No formal process exists, however, for addressing rule differences that might cause material inefficiencies in the regulatory process. The law does not require SRO rules to be the same, and many differences exist for legitimate business reasons according to regulators. Broker-dealers with multiple SRO memberships said that examinations by multiple SROs were unnecessarily burdensome. Securities market participants have discussed alternatives that would address concerns about conflicts of interest and inefficiencies in the current self-regulatory structure. Securities and Exchange Commission officials said that they had no plans to change the current structure, preferring to let the industry reach a consensus on the need for appropriate change."

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Government Accountability Office Reports

The U.S. Government Accountability Office (GAO) is an independent, nonpartisan agency that works for the U.S. Congress investigating how the federal government spends taxpayers' money. Its goal is to increase accountability and improve the performance of the federal government. The Government Accountability Office Reports Collection consists of over 13,000 documents on a variety of topics ranging from fiscal issues to international affairs.

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  • May 3, 2002

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  • June 11, 2014, 5:03 a.m.

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United States. General Accounting Office. Securities Markets: Competition and Multiple Regulators Heighten Concerns about Self-Regulation, report, May 3, 2002; Washington D.C.. (digital.library.unt.edu/ark:/67531/metadc295237/: accessed November 15, 2018), University of North Texas Libraries, Digital Library, digital.library.unt.edu; crediting UNT Libraries Government Documents Department.