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SEC Seen As Necessary Mediator In Push For SRO Merger

Recent testimonies by the heads of the New York Stock Exchange and NASD have compliance officers saying the Securities and Exchange Commission should provide the needed push to combine the regulatory arms into one. ]

David DeMuro, Lehman Brothers
David DeMuro
Recent testimonies by the heads of theNew York Stock ExchangeandNASDhave compliance officers saying theSecurities and Exchange Commissionshould provide the needed push to combine the regulatory arms into one. "The reality is neither [SRO] wants to give up control," saidDavid DeMuro, director of global compliance and regulation atLehman Brothers. "The SEC could exert quiet direction. I wish they would, but I'm not sure they are going to." The SEC has yet to indicate it intends to get involved with this decision.

The one regulator model overseeing regulation for both SROs has been championed by theSecurities Industry Associationand widely endorsed in the industry. "There is so much ground swell support behind this [merger]," saidJohn Sergio, chief operating officer atMaxim Group, a New York-based broker/dealer. "I think they [the SEC] have been the one voice that has been mysteriously silent in all this," he said. Spokesmen for the SEC and NASD declined to comment, but a spokesman for the NYSE said it is "certainly willing to examine ways to further reduce regulatory duplication when it occurs," adding that a joint venture with the NASD could be one solution.

In testimonies on March 9 before the Senate Banking Committee on Self-Regulatory Organizations,John Thain, NYSE Group CEO, andRobert Glauber, NASD chairman and CEO, called for fewer inconsistencies in their rules and better exam coordination, but neither was prepared to endorse a merger into a single regulator.

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