Securities Industry Regulatory Authority (SIRA) Will Replace NASD as Name of Combined SRO (But Why?)

The newly formed self-regulatory organization for broker-dealers will be called The Securities Industry Regulatory Authority (SIRA). This “new” organization is actually the same NASD, plus the regulatory functions of the NYSE, which it paid-off NASD members to assume. So a question to the NASD is: Why change your name?)

SIRA is scheduled to launch in the next few months. NASD’s Director Linda Shapiro, slated to head SIRA, said the organization will include more “principles-based and prudential regulation” as part of its focus. She said that NYSE Regulation and NASD will combine their rulebooks.

Shapiro said that the organization will use “proactive” regulation to help firms stay in compliance instead of waiting for them to violate regulations before enforcing the rules. “Proactive regulation” is currently used for overseeing a small group of large firms in the Consolidated Supervised Entity (CSE) Program. SIRA will take the CSE model and push it into the industry more. Use of “proactive” regulation will allow firms to understand SIRA’s expectations, which will hopefully protect investors.

Shapiro says consolidating both SRO’s into one will improve the global competitiveness of U.S. markets and its broker-dealers. SIRA will regulate more than 5,000 brokerage firms and over 650,000 registered representatives. She has called on U.S. regulators to work with their counterparts abroad to create a more harmonized regulation system.

She wants regulators around the world to work together to examine the larger multinational broker-dealer firms. She also doesn’t believe that soft dollars can be eliminated because independent research, which creates market transparency for investors to really understand their investment opportunities, is essential. SIRA will employ 3,000 staff. It will be the world’s largest self-regulator organization.

So why change the name? The NASD, soon SIRA, is the primary regulator of securities firms. Calling it the “National Association of Securities Dealers” just sounds too much like the fox is in charge of the henhouse. The “Securities Industry Regulatory Authority” sounds more like the name of a governmental watchdog, although it is just a new name for the same nationwide association of securities dealers which is owned and operated by its members. To paraphrase Shakespeare: A “rotton tomato” by any oher name would smell as fowl.

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Related Web Resources:

New Name, New Agenda for NASD/NYSE Entity,, June 21, 2007
NASD, NYSE Say They Will Merge Their Regulatory Bodies, Washington Post, November 29, 2006
NYSE Regulation


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