NASAA Criticizes National Securities Exchange Regulatory Parity Act as Undermining State Authority

The North American Securities Administrator Association (NASAA), the lobbying group for state securities regulators, published a comment last week regarding the passage of the National Securities Exchange Regulatory Parity Act (HR 5421).  NASAA appears ready to battle the legislation, which passed on a voice vote in the House as it heads over to the Senate.

Current NASAA President Judith Shaw stated;Judith Shaw at SEC IAC

“… we continue to oppose the legislation as it is yet another federal law that erodes state authority to protect investors. Small businesses look to Main Street investors for investment capital. Those investors, in turn, look to their state securities regulators to help shield them from unscrupulous companies and overly risky investments.”


“Overriding these state-level protections through federal preemption undermines the confidence that is critical to supporting small businesses and unnecessarily places investors at risk. We look forward to working with the Senate to further address our concerns with this legislation.”

The bill adjusts how the SEC regulates exchanges. It updates existing law the mentioned the NYSE, NASDAQ and the American Stock Exchange, thus boxing out any other marketplaces that may provide competition to the established marketplaces. Of course, this does not mean the SEC will approve just anyone, an exchange must still qualify under rigorous standards.  In general, competition ends up being good for consumers (oligopolies not quite so much).

Cromwell Coulson, CEO of OTC Markets commented on the bill last week;

“The National Securities Exchange Regulatory Parity Act takes a sensible, standards-based approach that sets the stage for the SEC to consider parity among exchanges, alternative trading systems and other market operators.”


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