The new regulator, which will begin operations in the second quarter of 2007, will streamline broker and dealer regulation and reduce industry compliance costs by millions of dollars a year, according to the NASD and NYSE.
An NYSE spokesman said the new SRO will have the power to levy multi-million dollar fines, prohibit individuals or firms from trading and refer cases for criminal prosecution with the US’s federal government authorities.
The new SRO, which will have operations in New York and Washington, will consist of 2,400-person NASD organisations and about 470 of NYSE Regulation's member regulation, arbitration and enforcement team.
NYSE Regulation’s chief executive Richard Ketchum will serve as the non-executive chairman of the organisation’s board of governors during a three-year transition period, and remain head of NYSE Regulation. NYSE Regulation will continue to oversee market surveillance and listed company compliance at the New York Stock Exchange and NYSE Arca.
NASD chairman and chief executive Mary Schapiro will serve as chief executive of the combined organisation. Her responsibilities will include overseeing NASD's Alternative Display Facility, OTC Bulletin Board and Trade Reporting Facility.The NASD pointed out that, of the 5,100 firms it regulates, 200 are NYSE members and thus overseen by both organisations; the merger would save them millions a year once it is completed.
The NASD has promised its members a one-off $35,000 payment when the merger is complete, "in recognition of anticipated cost savings", as well as lower member fees for the subsequent five years. NYSE shareholders will find the deal "financially neutral", the NASD says.
The week on Risk.net,October 14-20, 2016Receive this by email