“Combining the SRO broker-dealer regulatory programs into one centrally managed entity – the hybrid SRO – would eliminate regulatory duplication and redundancy that occurs with rulemaking, data reporting, examinations, and enforcement actions. These regulatory inefficiencies consume time, energy, and money, thereby stunting innovation and growth,” explained Lackritz. “Uniform, efficient regulation would allow firms to use their internal compliance resources more effectively, further strengthening investor protection.”
Lackritz noted that today’s model of self-regulation has significant drawbacks, including regulatory inefficiencies resulting from duplication among multiple SROs as well as conflicts of interest between SROs’ roles as both market operators and regulators.
“Regardless of the outcome of regulatory consolidation, it is vitally important that the SEC deal immediately with longstanding concerns by market participants about the opaque and non-accountable way in which market data fees are currently set,” Lackritz said. “We have advocated that the SEC adopt a narrow, cost-based approach for funding regulation that does not depend on revenue from market data fees.”
He added, such an approach “will minimize the conflicts of interest that arise from control over a monopoly product with the ability to use the resulting revenue to subsidize other activities.”
The full written testimony, as submitted to Congress, is available at:
http://www.sia.com/testimony/html/lackritz11-17-05.html
