Should Exchanges Get Special Treatment?

Association of Wall Street firms claims stock exchanges should lose the legal status that protects them from most lawsuits.

The government should strip U.S. stock exchanges of the legal status that protects them from most lawsuits, a trade group for brokers said.

In a letter to the Securities and Exchange Commission (SEC), the Securities Industry and Financial Markets Association (SIFMA) said the self-regulatory model of organizations such as the New York Stock Exchange and Nasdaq Stock Market is outdated. Though the SEC fined Nasdaq for mishandling Facebook Inc.’s initial public offering last year, the legal protections may shield the market operator from liabilities.

Nasdaq Fine

In the letter, posted on Sifma’s website today, the trade group for securities firms argued that the exchanges’ SRO status works in their favor, in particular in limiting their liabilities. Nasdaq agreed to pay $10 million in May to settle SEC charges that its mishandling of Facebook’s IPO was a violation of securities laws.

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