Market Regulation: Self-Regulatory Organizations: 

SRO Organization

 

SRO Boards

Position: A majority of SRO board seats should be held by independent directors, with at least one seat representing investor interests.

Rationale: The board must be structured in a way that allows it to address business issues in an environment free of undue influence from management or other interested parties. The structure also should mitigate other potential conflicts of interest.

Where stated: Centre - SEC SROs (PDF)

 

Separation of Powers

Position: An SRO should separate the position of board chair from CEO.

Rationale: Separation of these two positions should help mitigate the conflicts of interest that arise when one individual is presiding over areas that may create conflicts, both commercially and politically, to each other.

Where stated: Centre - SEC SROs (PDF) 

 

SRO Board Committees

Position: Key SRO board committees, including the nominating, governance, compensation, audit, and regulatory oversight, should be composed entirely of independent directors.

Rationale: Independence of these committees provides added safeguards that committee members will act in the best interests of members, listed companies, and the investing public, and not in response to direct pressure from the SRO’s governing body.

Where stated: Centre - SEC SROs (PDF)

 

SRO Regulatory Oversight Committee

Position: SRO regulatory oversight committees should report to the respective SRO’s Chief Regulatory Officer on matters relating to surveillance, examination, and enforcement, and recommend the compensation for the Chief Regulatory Officer to the compensation committee.

Rationale: Creating procedures of this type will help to ensure that the Chief Regulatory Officer receives relevant information concerning oversight matters from the committee, and that the CRO’s compensation is determined by the committee, not by others who may use compensation to create influence with the officer.

Where stated: Centre - SEC SROs (PDF)

 

No Need for Mutual Fund SRO

Position: The mutual fund industry does not need a new self-regulatory organization to oversee it.

Rationale: Most national governments have regulatory structures in place for dealing with collective investment funds. SROs, in this case, would be a burdensome and costly alternative to what appears to be a reasonably well-functioning system.

Where stated: USAC - SEC IC Governance

 

Professional Associations

Position: Professional associations should not serve as oversight and enforcement organizations.

Rationale: These associations are not equipped to investigate and enforce laws and regulations. It would further require them to amend their current codes of good conduct to meet the rules and regulations, and would require policies and procedures to receive regulatory approval.

Where stated: EAC - AMF Independent Advisor (PDF)