(November 20 – 13:30 ET) – The Wall Street Letter reports that the General Accounting Office in the United States is considering possibility of creating a super self-regulatory organization for the securities industry.

Cecile Trop, assistant director in the GAO’s Financial Markets and Community Investment Group, told the WSL that the GAO is conducting a study because, “a lot of big decisions are likely to be occurring in the markets in the next year”. The study began in September and will continue through January.

The study has reportedly focused on the regulatory structure of the markets. The Securities Industry Association has proposed a hybrid SRO that would centralize most of the SRO duties within a single regulator. It has formed a number of committees to study the plan and written to several members of Congress to gather support for the idea, according to SIA general counsel Stuart Kaswell.

The GAO met with the SIA in September to hear its plan, but Trop said it is only one of several possibilities that the GAO is currently studying. The GAO has also met with the Securities and Exchange Commission and the New York Stock Exchange about the plan. The NYSE is said to be against the idea, while the SEC is open to it.

The WSL reports that the GAO is looking at every major issue facing the U.S. securities industry — from demutualization, to the regulation of demutualized exchanges, and the anticipated conversion of electronic communications networks to exchanges. It is also looking at market structure, ownership of market data and globalization.

“With any issue you choose, it’s like pulling a thread and unraveling a garment, so that [the scope of the inquiry] gets to be questionable. If it’s too small, it’s meaningless. If it’s too big, it’s meaningless.”
-IE Staff