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A self-regulatory organization (SRO) is an organization that exercises some degree of regulatory authority over an industry or profession. The regulatory authority could exist in place of government regulation, or applied in addition to government regulation. The ability of an SRO to exercise regulatory authority does not necessarily derive from a grant of authority from the government.


United States

In United States securities law, a self-regulatory organization is a defined term. The principal federal regulatory authority—the
Securities and Exchange Commission The U.S. Securities and Exchange Commission (SEC) is a large independent agencies of the United States government, independent agency of the United States federal government, created in the aftermath of the Wall Street Crash of 1929. The primary ...
(SEC)—was established by the Federal
Securities Exchange Act of 1934 The Securities Exchange Act of 1934 (also called the Exchange Act, '34 Act, or 1934 Act) (, codified at et seq.) is a law governing the secondary trading of securities (stock Stock (also capital stock) is all of the shares into which ow ...
. The SEC originally delegated authority to the National Association of Securities Dealers (NASD, now Financial Industry Regulatory Authority (FINRA)) and to the
national stock exchanges
national stock exchanges
(e.g., the
NYSE The New York Stock Exchange (NYSE, nicknamed "The Big Board") is an American stock exchange in the Financial District, Manhattan, Financial District of Lower Manhattan in New York City. It is by far the List of stock exchanges, world's largest s ...

NYSE
) to enforce certain industry standards and requirements related to securities trading and brokerage. On July 26, 2007 the SEC approved a merger of the enforcement arms of the NYSE and the NASD, to form a new SRO, the Financial Industry Regulatory Authority (FINRA). In addition, Congress created the
Municipal Securities Rulemaking Board The Municipal Securities Rulemaking Board (MSRB) writes investor protection rules and other rules regulating broker-dealers and banks in the United States municipal securities, municipal securities market, including tax-exempt and taxable municipal ...
(MSRB) as an SRO charged with adopting investor protection rules governing broker-dealers and banks that underwrite, trade and sell tax-exempt bonds, 529 college savings plans and other types of municipal securities.


Examples

The
American Arbitration Association The American Arbitration Association (AAA) is a not-for-profit organization in the field of alternative dispute resolution Alternative dispute resolution (ADR), or external dispute resolution (EDR), typically denotes a wide range of dispute reso ...
is also an SRO with official, statutory status. Because of the prominence of the SROs in the securities industry, the term SRO is often used to narrowly to describe an organization authorized by statute or government agency to exercise control over a certain aspect of the industry. The
National Association of Realtors The National Association of Realtors (NAR) is an American trade association for those who work in the real estate industry. It has over 1.4 million members, including NAR's institutes, societies, and councils, involved in all aspects of the reside ...
(NAR) is an example of an SRO that fills the vacuum left by the absence of government oversight or regulation. The NAR sets the rules for
multiple listing service A multiple listing service (MLS, also multiple listing system or multiple listings service) is an organization with a suite of services that real estate brokers use to establish contractual offers of cooperation and compensation (among brokers) and ...
s and how brokers use them. Another example is the
American Medical Association The American Medical Association (AMA), founded in 1847 and incorporated in 1897, is the largest association and lobby group Advocacy groups, also known as special interest groups, use various forms of advocacy Advocacy is an activity by ...
which sets rules for ethics, conflicts, disciplinary action, and accreditation in medicine.


Russia

In 2007 Russia has adopted a law regulating SRO.


See also

*
Industry self-regulation Industry self-regulation is the process whereby members of an industry, trade or sector of the economy monitor their own adherence to legal, ethical, or safety standards, rather than have an outside, independent agency such as a third party entity ...
*
Securities market participants (United States) Securities market participants in the United States include corporations and governments issuing securities, persons and corporations buying and selling a security (finance), security, the broker-dealers and exchanges which facilitate such trading, ...


References

{{DEFAULTSORT:Self-Regulatory Organization Financial regulation * Professional ethics Self-regulatory organizations in the United States