Exchange shake-up hastens SRO reform

NEW YORK –The Self-Regulatory Organisation (SRO) system that has regulated the US securities markets for decades is in line for reform, following the New York Stock Exchange's announcement of its intention to become a for-profit entity after its proposed merger with Archipelago Holdings, an electronic communications network (ECN) formed in 1996.

The merger will create a public holding company that will be regulated by a more independent, not-for-profit regulatory arm.

Separately, Nasdaq, waiting for SEC approval to become an exchange, intends to acquire Instinet's Inet ECN. Assuming it becomes an exchange, Nasdaq will be completely severed from its regulator, the National Association of Securities Dealers (NASD). NYSE Regulation and NASD regulate the 180 firms that are members of both organisations. The Securities Industry Association