SEC officials urge comprehensive review of U.S. marketplace

NEW YORK Thu Oct 4, 2012 3:54pm EDT

NEW YORK (Reuters) - A comprehensive review of the U.S. stock market is in order because an enormous increase in new rules has exacerbated the risk of an outdated regulatory framework, a commissioner with the Securities and Exchange Commission said on Thursday.

Today's stock market bears little resemblance to almost two decades ago, when the SEC last undertook a thorough evaluation that resulted in the Market 2000 report, said SEC Commissioner Daniel Gallagher.

In particular, the self-regulatory aspect of stock exchanges, many of which are now public companies, needs to be reviewed, Gallagher told a conference of the Securities Industry and Financial Markets Association in New York.

"We are at a crossroads with respect to the status of self-regulation," he said. "For decades now, we've been building upon a self-regulatory framework premised on circumstances that no longer exist, a framework that permeates every aspect of market structure."

It is worth asking whether exchanges should be self-regulatory, especially since they have outsourced many of their regulatory responsibilities to the Financial Industry Regulatory Authority, he said.

The role of FINRA also needs examining, he said, adding, "Is FINRA itself becoming a 'deputy SEC'?"

Gallagher acknowledged the onus of a large-scale review. "Cost-benefit analysis isn't easy, it isn't quick, and it isn't cheap," he said. "If self-regulation is to remain viable, however, it is necessary."

(Reporting by Herbert Lash; editing by Matthew Lewis)

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/
Comments (1)
regsrock wrote:
The 2008 economic collapse demonstrated that self-regulation for Wall Street is not a viable option. These banking firms share a large part of the responsibility for our current situation, yet they continuously stall or resist any attempt at regulation. If policy-makers are not insistent on the new financial regulations that establish standards, transparency, and oversight, Wall Street will continue its reckless pursuit of profits, whatever the costs to society.

Americans need a system of safeguards to protect them against another financial collapse due to irresponsible banking practices and volatile stock-trading behaviors. Banks and corporations have lobbyists working tirelessly to stall these regulations: we need policy-makers to make decisions in the best interest of the people.

Oct 05, 2012 1:48pm EDT  --  Report as abuse
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.