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Vote advances joint regulation plan for brokers

NASD firms OK rule changes that facilitate a proposed combination with NYSE Group.

January 22, 2007|From the Associated Press

WASHINGTON — An effort to consolidate industry self-regulation of U.S. securities brokers and dealers moved a step closer Sunday, the NASD said.

Members of the NASD, formerly known as the National Assn. of Securities Dealers, approved bylaw changes needed to combine with NYSE Group Inc. and form one organization to regulate securities brokers and dealers.

Consolidating the self-regulatory functions of the NASD and NYSE Group into one entity will help end duplication, reduce costs and make U.S. markets more competitive, the NASD said.

"The securities industry has embraced replacing an outdated regulatory structure with one that better serves firms and investors in a fast-changing marketplace," said NASD Chairman and Chief Executive Mary L. Schapiro.

About 83% of the 5,058 NASD member firms eligible to vote did so during the 33-day election period that ended Friday, and 64% supported the bylaw changes, the NASD said.

The Securities and Exchange Commission must also approve the changes.

Plans for the new self-regulatory organization, which would be named later, were announced in November.

It would become the single regulator for the country's nearly 5,100 broker-dealers that had been part of the NASD. About 200 of those firms also are members of the NYSE and have been regulated by both organizations.

Supporters of a single regulator include SEC Chairman Christopher Cox and the Securities Industry and Financial Markets Assn., but not everyone agrees.

The president of the Public Investors Arbitration Bar Assn. has said combining the two regulators is "anti-investor" because it eliminates choice, and others have said the terms of the merger would harm small firms within the NASD.

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