SIE practice questionhardSRO Structure
Which of the following statements about the relationship between the SEC and SROs is CORRECT?
- AThe SEC must approve all SRO rule changes before they take effect✓ Correct answer
- BSROs can override SEC regulations when they conflict
- CSROs operate independently without any SEC oversight
- DSROs may set rules that are less strict than SEC rules
Explanation
Why A — The SEC must approve all SRO rule changes before they take effect
The SEC has oversight authority over SROs and must approve SRO rule changes before they take effect. SROs can set rules that are MORE strict than SEC rules but never LESS strict. SROs do not operate independently — they are subject to SEC oversight, and the SEC can modify or abrogate SRO rules. The SRO model allows the industry to self-regulate while maintaining government oversight, creating a dual layer of regulation.
Turn it into reps
Reading one answer is not the same as being ready
Lucky the Banker is a free practice app with 1,867+ SIE questions, weak-area tracking, and timed mock exams. No credit card, no paywall.
Related Regulatory Framework questions
- A customer has a savings account at a bank and a brokerage account at a broker-dealer. Which statement is TRUE…
- The MSRB has rulemaking authority for municipal securities but does NOT have enforcement authority. Who enforces MSRB…
- Which of the following is a self-regulatory organization (SRO) responsible for overseeing broker-dealers and their…
- Which of the following is NOT a function of FINRA?