Examkin

Question

Difficulty: EasySelf-Regulatory Organizations (SROs) and FINRA

Match each regulatory entity or Self-Regulatory Organization (SRO) on the left with its correct primary scope of authority on the right.

  • FINRA (Financial Industry Regulatory Authority)Primary non-governmental SRO that regulates member broker-dealers, registers associated persons, and enforces trade practice rules.
  • MSRB (Municipal Securities Rulemaking Board)SRO authorized to formulate rules governing municipal securities market activities, but lacking statutory authority to inspect firms or enforce compliance.
  • SEC (Securities and Exchange Commission)Federal government agency with ultimate statutory jurisdiction over the securities industry and oversight of all SROs.
  • Federal Reserve Board (FRB)Federal entity responsible for establishing margin credit rules, including Regulation T for broker-dealers.

Answer

FINRA pairs with regulating member broker-dealers and associated persons; MSRB pairs with writing municipal market rules without enforcement authority; SEC pairs with federal statutory oversight of securities markets; and the Federal Reserve Board pairs with setting margin regulation credit rules under Regulation T.
FINRA functions as the primary SRO for broker-dealers and registered personnel; MSRB creates municipal rules but lacks direct enforcement power; the SEC exercises federal statutory jurisdiction over the entire industry; and the FRB sets margin rules under Regulation T.

Step-by-Step Solution

1
Identify FINRA's role in securities regulation.
FINRA directly regulates member firms and associated persons, conducting examinations and disciplinary actions.
As the main SRO for broker-dealers, FINRA handles member compliance and trade conduct rules.
2
Identify the key distinction regarding MSRB's jurisdiction.
The MSRB creates rules for municipal securities transactions but has no statutory authority to inspect or enforce.
MSRB rules are enforced by FINRA for securities firms and by banking agencies for municipal bank dealers.
3
Identify the federal statutory regulatory agency.
The SEC holds overall federal statutory jurisdiction over securities markets, exchanges, and SROs.
SROs operate subject to the oversight and ultimate authority of the SEC.
4
Identify the central bank regulatory tool in securities.
The Federal Reserve Board regulates margin requirements and credit extension via Regulation T.
Credit controls in securities markets fall under the statutory jurisdiction of the FRB.

Key Concept

Regulatory Authorities and SRO Jurisdictions in the Securities Industry
Rate this question

Topics

Self-Regulatory Organizations (SROs) and FINRA

More questions from this topic