Saturday, September 30, 2023
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SEC Plans to Enhance the|Authority of Stock Exchanges

WASHINGTON (CN) - The Securities and Exchange Commission plans to shorten the amount of time in which it must approve or disapprove of proposed changes to rules of practice posted by Self Regulatory Organizations such as the stock exchanges and futures trading boards.

Proposed SEC rules require approval or disapproval within 45 days.

The regulation would implement provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act that were designed to more clearly define the responsibilities of the SEC from which the Self Regulatory Organizations (SROs) derive their authority and to enhance the ability of SROs to respond quickly to problems in the areas they oversee.

The SEC may delegate its regulatory authority under the Securities Exchange Act to SROs, which act as quasi-governmental agencies to enforce industry standards and requirements related to securities trading and brokerage activity.

In addition to shortening the time in which the SEC must approve or reject a formal rule change proposed by an SRO, the SEC also will lose its ability to stop, or abrogate, orders issued by SROs for immediate implementation. Immediate implementation orders bypass the formal rule change process and are intended for urgent conditions in the market.

While SROs can appeal the abrogation of an immediate implementation order, the process resembles the normal process of having rule changes approved by the SEC, so SROs usually just drop the order because it takes just as much time to make a standard change.

Under the proposed regulations, the SEC could temporarily suspend an immediate implementation order, but such a decision will automatically initiate an expedited review process.

Even as it issued the proposal, the SEC warned that the statutory timeline for approval or rejection combined with the automatic appeal to suspended orders would constrain its resources, because the number of rule changes it receives from SROs increases every year.

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