|  | | 2006 News and Press Releases | | |
HEADLINE NEWS:
Wall Street's New Sheriff
Liz Moyer
Forbes. November 28, 2006
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EXCERPT: Wall Street is getting a new regulator, but that doesn't mean the potential for conflicts is over. On Tuesday, NYSE Group's regulatory arm and the National Association of Securities Dealers unveiled their long-anticipated plans to combine member firm examination, licensing, enforcement, arbitration and the surveillance of several markets (except the Big Board) into a new self-regulatory organization. The two groups said the combination, which will have one set of rules for 5,100 member firms and one staff for enforcement and examination, would eliminate overlapping regulation and improve investor protection. NASD Chief Executive Mary Schapiro will be the CEO of the combined, as-yet-unnamed group. Richard Ketchum, head of NYSE Regulation, will be chairman. The switch is bound to be a relief to member firms, many of whom have complained for years about the burdens of having to answer to more than one regulator. Firms each will be getting $35,000 after the new regulator is created, and fees will be reduced for a few years. NASD and NYSE Regulation are effectively the Street's two beat patrolmen, with oversight by the Securities and Exchange Commission. Other markets are also self-regulating. Chicago Mercantile Exchange and Chicago Board of Trade, for example, do surveillance with oversight from the Commodities Futures Trading Commission. Global market consolidation and an explosion in new places to trade has put pressure on regulators to streamline and modernize their oversight efforts. "Just as investors no longer trade in a single market, neither do the fraudsters," said SEC Chairman Christopher Cox during a press conference Tuesday. But investor advocates have pointed out that the increased pressure to make profits also makes the system open for abuse. NYSE Group sold shares to the public for the first time earlier this year, raising the potential for conflict as profit motives clash with the need to rein in the activities of member firms. It split off its regulatory function into a separate entity run by Ketchum to avoid the appearance of conflicts. |
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