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Difficulty: EasyRegulatory Entities and Self-Regulatory Organizations (SROs)

Which of the following entities is a non-governmental self-regulatory organization (SRO) responsible for supervising member broker-dealers and registered representatives in the U.S. securities industry?

  1. Financial Industry Regulatory Authority (FINRA)Answer
  2. B
    Securities and Exchange Commission (SEC)
  3. C
    Federal Reserve Board (FRB)
  4. D
    Depository Trust & Clearing Corporation (DTCC)

Answer

Financial Industry Regulatory Authority (FINRA)
Financial Industry Regulatory Authority (FINRA) is an SRO empowered by federal law to write and enforce ethical and conduct rules for member broker-dealers and registered representatives.

Step-by-Step Solution

1
Identify the structural classification of regulatory entities in the U.S. financial markets
Distinguish between government agencies (SEC, Federal Reserve Board), financial clearing infrastructure (DTCC), and non-governmental self-regulatory organizations (FINRA).
Self-regulatory organizations (SROs) are non-governmental membership institutions granted authority by Congress to regulate member firms and registered representatives.
2
Select the entity that operates specifically as an SRO for broker-dealers
FINRA writes and enforces membership rules for member broker-dealers under SEC oversight.
FINRA satisfies all conditions of the question as an SRO regulating broker-dealer conduct.

Key Concept

Distinction between Federal Government Regulators and Self-Regulatory Organizations (SROs)
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Topics

Regulatory Entities and Self-Regulatory Organizations (SROs)

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