Wall Street’s SRO Police Take A Big Hit
Larry Doyle | Oct 04, 2013 02:36AM ET
Did you feel a sizable tremor running between Washington and Wall Street overnight? I did.
At the epicenter of this tremor was the first SEC’s potential overhaul of self-regulation for our equity exchanges,
This is a big deal,” said Harvey Pitt, a former SEC chairman and now chief executive of consulting firm Kalorama Partners LLC. “The SRO [self-regulatory organization] function was once crucial, but in terms of exchanges it no longer is,” he said, adding that NYSE Euronext and Nasdaq GroupInc. have relegated their regulatory functions “to a back-burner.”
Yes indeed, this is a big deal.
But let’s be straight here, for those who have been watching closely the concept of self-regulation has always been a badly flawed model for Wall Street. To think that the industry — whether equity exchanges or the large banks themselves — might properly police themselves while looking to maximize revenue is a joke. But this joke and many iterations thereof have been played out on investors since Wall Street’s self-regulatory efforts were launched back in 1939.
Who ultimately pays? We all do.
The only reason I believe Ms. White is speaking out now is because the self-regulatory joke has become so egregious and the resulting lack of meaningful trust and confidence show no signs of abating.
Will Ms. White’s questioning of the self-regulatory model lead to meaningful changes in oversight on Wall Street?
We can only hope but I am not holding my breath.
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