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SRO Functions Flashcards

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  1. What is the primary function of a Self-Regulatory Organization (SRO) in the securities industry?

    Answer: To regulate the activities of its members to ensure compliance with securities laws

    SROs ensure that their members comply with federal securities laws and regulations, but they are not government entities.

  2. Which of the following is an example of a Self-Regulatory Organization?

    Answer: FINRA (Financial Industry Regulatory Authority)

    FINRA is a non-governmental organization that regulates broker-dealers and other members of the securities industry.

  3. What role does FINRA play in regulating broker-dealers?

    Answer: It develops and enforces rules governing securities transactions

    FINRA ensures that broker-dealers adhere to rules designed to protect investors and maintain fair markets.

  4. Which of the following is NOT a function of an SRO?

    Answer: Setting monetary policy for the financial industry

    SROs do not control monetary policy; that is the role of central banks, such as the Federal Reserve.

  5. Which of the following best describes the relationship between the SEC and SROs?

    Answer: The SEC oversees and approves the rules set by SROs

    While SROs have regulatory authority, the SEC provides oversight to ensure that SRO rules are consistent with federal securities laws.

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  1. nyc-business.nyc.gov — Fees, retake policy, score validity · verified Oct 2026
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