Definition of Self-Regulatory Organization (SRO)

principal means contemplated by the federal securities laws for the enforcement of fair, ethical, and efficient practices in the securities and commodities futures industries. It is these organizations that are being referred to when "industry rules" are mentioned, as distinguished from the regulatory agencies such as the Securities and Exchange Commission or the Federal Reserve Board. The SROs include all the national securities and commodities exchanges as well as the National Association of Securities Dealers (NASD), which represents all the firms operating in the over-the-counter market, and the Municipal Securities Rulemaking Board, created under the Securities Acts Amendments of 1975 to regulate brokers, dealers and banks dealing in municipal securities. Rules made by the MSRB are subject to approval by the SEC and are enforced by the NASD and bank regulatory agencies.