NYSE Euronext (NYSE: NYX) and the Financial Industry Regulatory Authority (FINRA) today announced that they have agreed that FINRA will assume responsibility for performing the market surveillance and enforcement functions currently conducted by NYSE Regulation. The agreement is subject to review by the Securities and Exchange Commission.
Under the agreement announced today, FINRA would assume regulatory functions for NYSE Euronext's U.S. equities and options markets – the New York Stock Exchange, NYSE Arca and NYSE Amex. FINRA currently provides regulatory services to the NASDAQ Stock Market, NASDAQ Options Market, NASDAQ OMX Philadelphia, NASDAQ OMX Boston, The BATS Exchange and The International Securities Exchange.
The final agreement is expected to be completed in the next several weeks, with an effective date anticipated to be at or prior to the end of June.
"This agreement will strengthen market regulation by consolidating surveillance and enforcement responsibilities across multiple markets into one regulator," said NYSE Euronext COO Lawrence Leibowitz. "Today, trading is dispersed among numerous venues, and no single regulator has responsibility for monitoring data and pursuing activity across markets. Aggregating our surveillance and enforcement functions with those already performed by FINRA for other markets is an important step on the road to creating a consistent and completely integrated approach to regulation."
"This agreement will improve investor protection by establishing a unified approach to market oversight," said FINRA Chairman and Chief Executive Officer Richard Ketchum. "It allows FINRA to have a more holistic, cross-market approach to regulation that addresses the realities of today's trading environment, which is characterized by fragmented markets, aggressive competition and complex trading strategies. This unified view will better enable regulators to detect problematic activity across multiple markets and financial products, and ensures that audit trail data needed for effective regulation is complete, consistently presented and transparent."
"We look forward to working with our colleagues at NYSE Regulation on a seamless transition and integration of our market oversight teams."
"Today's agreement furthers the consolidation of regulatory services under FINRA that began with the consolidation of NASD and NYSE's member-firm regulation that created FINRA in 2007," said James Duffy, Interim CEO of NYSE Regulation and a member of the FINRA Board of Governors. "Our goal is to protect investors and enhance market integrity by addressing gaps in regulatory coverage and moving toward a unified system of regulation."
NYSE Euronext, through its subsidiary NYSE Regulation, will remain ultimately responsible for overseeing FINRA's performance of regulatory services for the NYSE markets. It will also retain staff associated with rule interpretations, and oversight of listed issuers' compliance with the NYSE markets' financial and corporate-governance standards. The agreement involves approximately 225 staff, most of whom will be transferred to FINRA.
