SEC Considering Plan to Standardize Exchange Governance

The Securities and Exchange Commission's five commissioners agreed to float a plan released today that would require 10 U.S. stock markets to file quarterly reports with regulators, Bloomberg reported.

The exchanges, which include the New York Stock Exchange, would also have to ensure that a majority of their directors are independent. The new rules would make standard a number of governance rules already in place at some of the exchanges.

Nonpublic reports would have to be filed with SEC inspectors, outlining possible trends or issues the exchanges have discovered in the course of trading, Bloomberg reported.

“After a period of intense focus on public-company governance, we would be remiss if we did not seek to apply the lessons learned to the governance of self-regulatory organizations,'' SEC Chairman William Donaldson told Bloomberg. “Recent history has shown that SROs are not immune from governance missteps.”

The SEC's plan would required to separate their regulatory and marketing functions, Bloomberg reported, adding that only independent directors could sit on nominating, governance, audit, compensation and regulatory committees. The proposal also would limit exchange members' ownership stakes to 20 percent.

“Our securities markets have historically operated under a system of self-regulation,'' Donaldson told Bloomberg. “In light of the importance of the self-regulatory system to the nation's economic well-being and to the protection of investors, recent events and longer-term trends point toward the need for the commission to consider whether changes are needed to improve the system.''


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