The NASD announced yesterday that 64% of its members have approved a consolidation of its regulatory functions with those of the NYSE. The consolidation will result in a single regulatory division that will be responsible for member examination, enforcement, arbitration and mediation, as well as market regulation for the NASDAQ, AMEX, ISE, and Chicago Climate exchanges. The Financial Industry Association, a group of smaller firms, objected to the consolidation, arguing that they would not be sufficiently represented, while other opponents of the plan claimed it might erode protections for individual investors. Larger firms favored the plan because it will cut costs and eliminate redundancy. The NASD will pay $35,000 to each member now that the merger has been approved. The streamlined regulatory division will begin operation in Q2. "The securities industry has embraced replacing an outdated regulatory structure with one that better serves firms and investors in a fast-changing marketplace," said NASD CEO Mary Schapiro, who will become CEO of the new entity. SEC Commissioner Paul Atkins favors the merger, calling it "a great step forward for efficient and effective regulation."
• Sources: Bloomberg, Wall Street Journal, MarketWatch, TheStreet.com
• Related commentary: U.S. Exchanges Continue To Trim Expenses Through Consolidation, M&A Activity, A Look At Stock Exchange Stocks, A Unified, Global Stock Exchange May Be Approaching, Treading Carefully In Exchange Stocks, Why I'm Long-term Bullish on the Exchanges (NDAQ, CME, NYX), Exchange Stocks: Beware The Bear, An Investor's Take On The NYSE/Euronext Merger, NYSE-Euronext Merger All But a Done Deal, NYSE Eyes Joint Venture with Toyko Stock Exchange
• Potentially impacted stocks and ETFs: NYSE Group (NYX), Nasdaq Stock Market Inc. (NDAQ), International Securities Exchange Holdings Inc. (ISE). ETFs: First Trust IPOX-100 Index (FPX), streetTRACKS KBW Capital Markets (KCE), Vanguard Extended Market Index ETF (VXF)
Seeking Alpha's news summaries are combined into a pre-market briefing called Wall Street Breakfast. Get Wall Street Breakfast by email -- it's free and takes only a few seconds to sign up.
