FINRA and BATS Sign Regulatory Service Agreement; FINRA to Conduct Surveillance for Nearly 100 Percent of U.S. Equities Trading (with Lofchie Comment)

FINRA announced that it signed an agreement with BATS Global Markets, Inc. ("BATS") to provide cross-market surveillance services to BATS' four stock exchanges - BZX, BYX, EDGX and EDGA - along with certain other regulatory services.

According to the press release, this will increase the percentage of the market that FINRA surveils from 90% to 99%.

Effective immediately, FINRA will also perform disciplinary and examination services on behalf of BATS. It is expected that BATS will be included in FINRA's cross-market surveillance program during the first quarter of 2015.

Lofchie Comment: The fact that FINRA now has an effective monopoly on "self-regulation" raises an interesting question as to the whole concept. What does it mean when we say that the securities markets are self-regulated when we have a system of for-profit exchanges that have engaged a single organization (which is itself closely regulated by the government) to conduct the exchanges' self-regulation?

See: FINRA Press Release.