Mutual fund distributors should be under a new regulator by the second quarter of 2007, but at the outset the difference will not be noticeable for fund firms, according to lawyers. NASD and the New York Stock Exchange announced their merger plans on Nov. 28. The new body will include one representative from the mutual fund industry on its 23-member board of governors.

One lawyer pointed out that 80% of the personnel of the regulator would come from NASD, which presently regulates all fund distributors. The fact that the merger is aimed at lessening the regulatory burden and the swiftness with which the merger is to take place suggest to sources that there would be little change in regulatory practice for the time being.

"I'd be really surprised if existing NASD rules would be changed substantially unless they do something like point-of-sale," said one lawyer commented.