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NYSE, Nasdaq regulators to merge

Published Nov. 29, 2006

The companies charged with regulating the two largest U.S. stock exchanges - the New York Stock Exchange and the Nasdaq Stock Market - announced plans Tuesday to combine their operations, calling it one of the biggest changes in the regulatory system since its creation 72 years ago.

The new organization will be the world's largest securities regulator and aim to cut costs for Wall Street by eliminating redundancies within the groups' operations. Stocks will continue to be listed separately on the exchanges.

NASD, formerly the National Association of Securities Dealers, and NYSE Group Inc., combined will regulate all U.S. securities brokers and dealers. NASD regulates more than 5,100 securities firms throughout the U.S., including about 200 that also are members of NYSE and regulated by both organizations.

The new company will begin operations in the second quarter of 2007 although the name of the new group has not yet been decided.

Mary L. Schapiro, NASD chairman and chief executive, will serve as CEO and Richard G. Ketchum, NYSE Regulation's CEO, will be the nonexecutive board chairman during a three-year transition period and remain CEO of NYSE Regulation Inc. He would not comment on his plans after the three-year term.

"When the new organization is in place and fully integrated, there will be one set of rules, one set of examiners and one enforcement staff," Schapiro said, adding that cost savings should be tens of millions of dollars.

The industry's greatest need was the elimination of duplicative compliance rules. "One rulebook instead of two makes life simpler," said John Coffee, a professor who teaches securities law at Columbia Law School.

For investors, the change should be seamless. Some phone numbers or Web addresses may change, but the means to report problems or request information will remain the same, Schapiro said.