Nasdaq BX to Assume Operational Responsibility for Certain Enforcement Functions Currently Performed

August 17th | 2020

Nasdaq BX recently filed a proposal to assume operational responsibility for certain enforcement functions that FINRA currently performs. In particular, BX will handle contested disciplinary proceedings arising out of BX Regulation led investigation and enforcement activities. As a self-regulatory organization (“SRO”), BX and other exchanges like it must have a comprehensive regulatory program that includes investigation and prosecution of violative activities.

This filing reflects a trend of exchanges – who mostly contract with FINRA through regulatory services agreements (RSAs) for, among other things, surveillance, investigation, and enforcement – reclaiming some of the day-to-day operations of their regulatory functions. This makes sense because RSAs do not change the fact that BX bears the ultimate responsibility and liability resulting from its conduct and failures as an SRO.

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