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Strict Oversight Of The SRO Entities By The US

1389 Words6 Pages

There are a slew of incidents that led to the strict oversight of the SRO entities by the SEC. This power is vested in them by the congress in view of the public interest. The participants of the market viz. the stock exchanges, the clearing agencies and the various other association of securities must register with the SEC and file their policy changes with the SEC. The SEC is armed with various tools empowered by the congress in order to effectively oversee the performance of the SROs. The SEC has the power to examine and inspect the functioning of the SROs.
Commissioner Luis A. Aguilar, U.S. Securities and Exchange Commission, in his public statement noted that the SROs need to enforce compliance among their subsidiaries or the participating …show more content…

The SROs, in order to gain more business or sustain the existing business, tend to relax the rules and policies leading to increased risk because of preferential data sharing. For example, there are a lot of incidents in which the SROs favor one member or customer over another by releasing financial information to the member who is ready to pay for the information on a priority basis. After the data is shared with these paying subscribers, it is then let out to the public …show more content…

This act indicated the failure of NYSE in its surveillance of its members and in effectively addressing issues that could involve violations. Thus NYSE violated section 19 (g) of the exchange act by failing to enforce section 11 (b) of the exchange act and Rule 11b-1 and various other NYSE rules including rule 92 and 104.10. Prior to this failure, in 1999 SEC ordered NYSE to comply with a series of undertakings that were intended to improve the NYSE’s regulation of all its floor members, including specialists. This was in accordance to the NYSE’s regulatory failure to detect and stop unlawful proprietary trading including “frontrunning” of customer orders by some of its independent floor brokers in late 1990s. However, NYSE failed to thoroughly investigate indications of possible violations by its specialists. As a result, the SEC ordered NYSE to comply again with a series of undertakings. As per the undertakings, in 2002, the actions taken by NYSE

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