A modest proposal: Right-sizing exchange immunity

Zachary J. Flati

Journal of Securities Operations & Custody, 2015, vol. 7, issue 3, 218-233

Abstract: The US securities industry is governed by three regimes: federal disclosure rules, state laws and self-regulatory organisations. The self-regulatory scheme is the result of an 80-year-old compromise conceived during the height of the Great Depression. While today’s industry is unrecognisable from that time, the self-regulatory rules remain nearly unchanged. Specifically, the US exchanges — sanctioned as self-regulatory organisations with immunity from private damages suits — evolved from mutually-owned utilities to for-profit enterprises. At the same time, alternative trading systems now execute significant trading volumes outside the traditional exchange venues. Despite these and other developments, the self-regulatory regime remains almost entirely unchanged from its inception. This paper discusses important facets of the US self-regulation debate.

Keywords: Self-regulatory organisation; SRO; securities exchange; exchange immunity; regulatory; regulatory immunity; securities regulation (search for similar items in EconPapers)
JEL-codes: E5 G2 K22 (search for similar items in EconPapers)
Date: 2015
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