Oxymoron of the year December 31, 2012 at 7:21 pm
“Self regulatory organisation.”
The botched initial offering of Facebook Inc. (FB) is the catalyst that should lead to U.S. exchanges being stripped of self-regulatory powers and their related benefits, a Credit Suisse Group AG (CS) executive said.
Nasdaq Stock Market’s claim of immunity from liability for $500 million in brokerage losses stemming from technology problems on May 18 exposes a conflict between the historical, quasi-governmental role of exchanges and their status as profit- seeking public companies, Dan Mathisson, head of U.S. equity trading at Credit Suisse, told U.S. senators in Washington last week. Those tensions can’t be managed fairly and should spur a regulatory overhaul of the securities market, he said.
Legislation that created the Securities and Exchange Commission in 1934 also deemed the main venues self-regulatory organizations, or SROs, overseeing their member firms and trading. Critics say the Facebook mishap shows how changes in the structure of markets have made old regulations obsolete and created an uneven playing field where exchanges are governed by one set of rules and their competitors another.
That, surely, is difficult to argue with. 1934 supervisory architecture is not fit for 2013.