SELF REGULATORY ORGANIZATION :
ECONOMY
NEWS : RBI issues norms for recognition of
self-regulatory organisations in financial markets
WHAT’S
IN THE NEWS?
Reserve Bank of India
(RBI) introduced
a framework to recognize self-regulatory organizations
(SROs) in financial markets. This initiative aims to
enhance compliance and create a consultative platform for policymaking.
SRO :
- A self-regulatory
organization (SRO) is a non-governmental entity empowered
to create and enforce its own industry or professional
regulations and standards.
- These organizations operate
independently but may collaborate with government bodies to ensure
compliance and oversight.
Role of SROs
- Develop best practices, standards, and codes
within the RBI's regulatory framework.
- Members
can voluntarily adopt these guidelines, which supplement but do not
replace existing regulations.
Sector Improvement
- Focus on improving sector practices and
addressing industry issues.
- Set
minimum standards and establish professional market conduct conventions.
Collaboration with RBI
- Work closely with the RBI to ensure regulatory
compliance.
- Detect
early warning signals in the market.
RBI's Authority
- RBI can revoke an SRO's recognition if it
harms public interest or deviates from objectives.
Understanding SROs
- Non-governmental entities that create and
enforce industry regulations and standards.
- Operate
independently but may collaborate with government bodies.
Purpose of Financial SROs
- Protect investors by establishing ethical
standards and promoting professionalism.
- Maintain
industry integrity and investor confidence.
Authority of SROs
- Create binding regulations and standards for
members.
- Penalize
non-compliance with fines or expulsion.
- Set
membership requirements and provide educational resources to investors.
Source
: https://economictimes.indiatimes.com/industry/banking/finance/banking/rbi-issues-norms-for-recognition-of-self-regulatory-organisations-in-financial-markets/articleshow/112635040.cms?from=mdr