The NASD's plan to merge regulatory functions with the NYSE ( NYX) has cleared a crucial hurdle.

The NASD said Sunday that 64% of the 5,058 firms eligible to vote supported changes to the association's bylaws necessary for the merger, which the NASD and the NYSE argue will reduce inefficiency and end duplication of regulatory activities. About 83% of eligible members cast votes during the 33-day election period.

"The securities industry has embraced replacing an outdated regulatory structure with one that better serves firms and investors in a fast-changing marketplace," said Mary L. Schapiro, NASD Chairman and CEO in a statement. "Firms took the lead in shaping the future of self-regulation, and I applaud them for the mandate they gave this consolidation."

The merger plans encountered resistance from some NASD members, who said small firms wouldn't receive adequate representation in a merged regulatory unit.

The SEC must approve the NASD bylaw changes.

The NASD operates the Nasdaq Stock Market ( NDAQ).