The two organizations that police stock brokers and others working in the securities industry will form a new, single self-regulatory body.
The change is expected to dramatically cut costs for the financial industry by consolidating the operations of the NYSE Group Inc. and the NASD (formerly the National Association. of Securities Dealers.
The Securities and Exchange Commission must approve the merger, but the plan was strongly endorsed by Chairman Christopher Cox in an announcement Tuesday. If the combination is approved as expected next year, the SEC would continue to have oversight responsibility for the new, still unnamed, organization.
All 5,100 U.S. stock brokerages are subject to regulation by the NASD, while another 200 of the largest brokerages are also regulated by a unit of the NYSE Group, the company that owns the New York Stock Exchange.
Under the proposal, the NASD's 2,400-person staff will be combined with 470 people from the NYSE. Wall Street brokerages pay the expenses of regulation, and the plan would give each one a refund of $35,000 upfront. But the bigger savings would come for the larger brokerages -- which would now only have to comply with a single set of rules.
Opponents of the plan are already voicing concerns that more regulation, not less, is needed in the post-Enron era. Proponents of the plan have argued that it makes sense to have a single, strong regulator.
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