Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

Tuesday, April 1, 2008

Audit Finds SEC Approval of SRO Rules Is Slow

The SEC's Office of Inspector General of the Securities and Exchange Commission conducted an audit of the SEC's process for reviewing Self-Regulatory Organization (SRO) proposed rule changes. It concluded (surprise!) that "the Commission s overall timeliness in processing proposed rule changes needs improvement."  Specifically, the SEC did not approve proposed rule changes within the prescribed statutory timeframe in 8 of 15 instances that it selected to review. Additionally, the Division of Trading and Markets (TM) does not have a policy that outlines criteria to follow-up with SROs on open proposed rule changes, request SROs to withdraw proposed rule changes, and disapprove or reject proposed rule changes.

The report goes on to note that: "Timely processing assists the SROs to remain competitive with foreign and futures exchanges, electronic communications networks and alternative trading systems that can change their trading or trade new products with greater ease and without Commission review."

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