The Role of Self-Regulatory Organizations in U.S. Markets: Examining FINRA and the MSRB

The GOPFinancialServices subcommittee held a hearing on March 5, 2026, to examine the role and oversight of self-regulatory organizations (SROs) in U.S. capital markets, focusing on FINRA and the MSRB. The discussion centered on the balance between industry expertise and public accountability, the governance structures of these organizations, their funding models, and the adequacy of SEC oversight. Witnesses highlighted concerns about FINRA's expansive enforcement powers without full government transparency, the need for improved fairness and due process in arbitration, and the challenges posed by evolving market complexities such as digital assets and climate risk in municipal bonds. The hearing also addressed potential reforms including enhanced SEC review of disciplinary actions, transparency in FINRA's budget and enforcement processes, and reconsideration of MSRB board composition to better align fee contributions with governance influence. The subcommittee emphasized the importance of maintaining effective self-regulation while ensuring accountability and investor protection in the rapidly changing financial markets.