WASHINGTON – The Financial Industry Regulatory Authority, Inc.’s (FINRA) last week released its first framework for cost-benefit analysis of new regulations, authored by the organization’s new Chief Economist. Both the Office of the Chief Economist, and the newly issued guidance document, were created in response to oversight from the House Oversight and Government Reform Committee.
FINRA is one of the most important Self-Regulatory Organizations (SROs) through which the financial industry governs itself. Over the past year, the Oversight Committee has conducted oversight of three major SROs – FINRA, the Public Company Accounting Oversight Board (PCAOB) and the Municipal Securities Rulemaking Board (MSRB) – to strengthen their rulemaking processes. While FINRA is embracing economic analysis, PCAOB and MSRB have still not undertaken similar improvements.
Committee Chairman Darrell Issa, R-Calif., offered the following statement:
“Today’s announcement is a step in the right direction and a recognition of the government-wide consensus that rigorous economic analysis is critical to creating better regulations. The Committee will continue its efforts to ensure that regulators improve their rulemaking processes. I encourage the other major self-regulators to follow FINRA’s example.”
You can read the June 25, 2012 letters from Chairman Issa and Rep. Patrick McHenry, R-NC, to FINRA, MSRB and PCAOB as well as the Committee’s January 10, 2013 follow up to PCAOB at http://oversight.house.gov.