On July 12, the New York Stock Exchange (NYSE) proposed an amendment to NYSE Rule 2, which requires that an NYSE member also be a member of the Financial Industry Regulatory Authority (FINRA) or another registered securities exchange. As a part of the consolidation of the National Association of Securities Dealers and NYSE Regulation to form FINRA, NYSE Rule 2 was revised in 2007 to require each NYSE member organization to become a FINRA member. Eventually, NYSE amended the rule so that NYSE members could be members of FINRA or a registered securities exchange.
Following the consolidation, NYSE contracted with FINRA to perform certain market surveillance, investigation and enforcement functions on behalf of NYSE pursuant to a Regulatory Services Agreement. Today, some of the market surveillance, investigation and enforcement functions once performed by FINRA are now carried out by NYSE. Given that the initial reasons for NYSE to require FINRA or exchange membership no longer exist, NYSE is now proposing to amend the definition of “member organization” under Rule 2 to remove the requirement.
More information is available here.