Under a Burton proposal to make Finra part of the Securities and Exchange Commission, it’s regulatory functions would go to the SEC’s Division of Trading and Markets and its arbitration would be spun-off.
This approach would provide the transparency, due process protections and congressional oversight typically associated with government,” the Heritage scholar writes.
In the Heritage report, Hester Peirce, whom President Barack Obama had nominated to be a Republican SEC commissioner in the last year and a half of his term, takes a different approach to Finra.
Finra and the other SROs should have competition, says Peirce, director of the financial markets working group at George Mason University’s Mercatus Center.
“Competition among SROs obviates the need for the government to micromanage the approaches that SROs take. SROs can experiment with different approaches, and customers can choose the SRO that establishes the level and nature of regulation they prefer,” contends Peirce and two report co-authors.