UPDATE:Finra To Take Over Regulation Of NYSE Euronext Markets
04 Maggio 2010 - 5:12PM
Dow Jones News
The Financial Industry Regulatory Authority will take over
responsibility for policing NYSE Euronext's (NYX) equities and
options markets, further expanding the body's oversight
functions.
Finra, which already provides regulatory services to various
Nasdaq OMX Group Inc. (NDAQ) markets as well as the BATS Exchange
and the International Securities Exchange, will by late June take
over responsibility for watching over trading on New York Stock
Exchange, NYSE Arca and the NYSE Amex markets.
"This is the right thing for the markets and the right thing for
customers," NYSE Euronext Chief Financial Officer Michael S.
Geltzeiler said in an interview Tuesday.
"Moving these types of activities to Finra, coupled with the
business they have from Nasdaq and BATS, marks one step toward the
optimal structure were we have a single market surveiller," he
said.
Finra, the self-regulatory organization for the U.S.
securities-trading industry, has long called for a single regulator
to watch over U.S. equities trading, scattered across a spectrum of
exchanges, electronic platforms and private deals. About 9.8
billion shares changed hands in the U.S. in April as market
volatility pushed trading levels to a monthly high for 2010.
Finra will take over market surveillance and enforcement
functions now conducted by NYSE Regulation Inc. That operation
costs NYSE Euronext about $80 million per year while bringing in
only about $40 million, according to the company.
The move shifts a majority of that expense off NYSE Euronext's
books, Geltzeiler said, though the exchange operator will continue
to perform compliance functions around its listings business.
A final agreement is expected to be finished "in the next
several weeks, with an effective date anticipated to be at or prior
to the end of June," the companies said.
NYSE Regulation, a not-for-profit subsidiary of NYSE Euronext,
will oversee Finra's performance of regulatory services for its
markets, according to a press release.
Finra Chairman and Chief Executive Richard Ketchum said in a
statement that the deal allows the group "to have a more holistic,
cross-market approach to regulation" amid "fragmented markets,
aggressive competition and complex trading strategies."
Ketchum has warned that multiple regulators jockeying to keep
tabs on U.S. trading are working with an incomplete picture of the
overall market, with differing sets of rules creating loopholes and
the potential for some participants to avoid oversight.
Geltzeiler said that eventually he would prefer all U.S.
share-trading volume to go through the same regulatory surveillance
required of exchanges like NYSE Euronext, and that consolidating
these functions could make the overall process cheaper and more
efficient for everyone.
-By Nathan Becker, Dow Jones Newswires; 212-416-2855;
nathan.becker@dowjones.com
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