Under the agreement, FINRA would assume regulatory functions for NYSE Euronext’s US 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.
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.
Lawrence Leibowitz, COO of NYSE Euronext, said: “This agreement will strengthen market regulation by consolidating surveillance and enforcement responsibilities across multiple markets into one regulator. 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.”
Richard Ketchum, chairman and CEO of FINRA, said: “This agreement will improve investor protection by establishing a unified approach to market oversight. 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.”
The agreement is subject to review by the Securities and Exchange Commission.
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 2010.
