NEW YORK Oct 4 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new rules has exacerbated the risk of an outdated regulatory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 understook a thorough evaluation
that resulted in the Market 2000 report, said SEC Commissioner
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
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."