New competitive challenges and continued conflicts of interest require a better relationship between securities SROs and the SEC. Over the past several years, SROs have faced increased competition in the markets where they operate.
SROs face competitive challenges from electronic communications networks and foreign trading markets that have slowly chipped away at the SROs’ market share. The current period has seen advances in fully automated technology, and there continues to be inherent conflicts of interest between the SROs’ regulatory function and their business operations. To stay in business, SRO’s have to attract order flow, and this may lead to SROs being less inclined to enforce rules vigorously against financially supportive members, issuers, and shareholders. The SEC has taken enforcement action against SROs that fail to meet their legal and regulatory obligations.
Accordingly, the SEC expects to continue its strong oversight of SROs.