NASD, NYSE Regulatory Hookup a Benefit to Investors

The scheduled merger of the regulatory operations of the NASD and the New York Stock Exchange will benefit investors by streamlining regulations, Mary Shapiro, the chairman and chief executive of the NASD, told a mutual fund industry gathering Friday.

Despite lawsuits and other attempts to derail the merger, Shapiro said she expects the new self-regulatory organization, or SRO, to be up and running this summer.

"Self regulation will continue to play a big role in the U.S. markets," Shapiro told the Investment Company Institute, the fund industry's trade group, at its annual conference in Washington, D.C. "There will be one regulator where there were once were two: one set of rules, examiners and enforcement staff. Duplicate regulation and inconsistencies will become a thing of the past."

Shapiro said she hoped the merger would encourage more cooperation among all financial products regulators. She said the current regulatory environment focuses more on products than investors, and that regulators need to look "beyond our narrow jurisdictions and stand in the shoes of investors."

She said the old paradigm of a different regulator for each product was outdated and that regulators "rarely work in concert." Functional regulation today, said Shapiro, must now be seen from the view of the investor.

"There is no excuse for offering investors second-class protections," she said. "In my opinion, the only thing that will redeem regulation is more cooperation."