Question #5
Reading: Reading 7 Economics of Regulation
PDF File: Reading 7 Economics of Regulation.pdf
Page: 2
Status: Unattempted
Correct Answer: B
Question
Which of the following statements regarding self-regulating bodies is least accurate?
Answer Choices:
A. FINRA in the U.S. is an example of a self-regulating organization in the financial markets
B. Self-regulating bodies are recognized by the government
C. Self-regulatory bodies are private organizations that both represent and regulate their members
Explanation
Not all self-regulating bodies are regulators: SRBs are only regulators if they receive
government recognition. In some countries, SRBs are never recognized by the
government. Self-regulating organizations (SROs) differ from standard self-regulatory
bodies in that SROs are given recognition and authority by a government body or agency.
FINRA is an example of a self-regulating organizations (SROs); its purpose is to ensure that
the securities industry operates fairly.