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Comment by rkangel | Hacker News Reader

An industry regulating itself is different from an organisation regulating itself.

Self regulation of the industry is common as you say. It tends to involve one central body enforcing the standards on the members, and acting as a central point for agreement of the standards.

This is not the case with the Aviation regulation. The FAA is the regulator, and has delegated the testing to the people it is meant to be regulating.

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Prominent examples of "Self Regulating Organizations": The New York Stock Exchange (NYSE), The Financial Planning Association (FPA), Chicago Board of Trade (CBOT), American Council of Life Insurers (ACLI), Financial Industry Regulatory Authority, Inc. (FINRA), Fixed Income Clearing Corporation (FICC), Options Clearing Corporation (OCC), American Institute of Certified Public Accounts (AICPA)

https://www.investopedia.com/terms/s/sro.asp

By organization he clearly meant single for-profit corporation. While the language was imprecise, he surely wasn’t referring to these types of entities.

NYSE and CBOT are single for profit corporations.

NYSE is a for profit entity owned by Intercontinental Exchange. They also own Euronext. And they're regulated by the Sec, but carry out their own regulation efforts too. The parallel isn't that far off.

NYSE is a for profit entity owned by Intercontinental Exchange. They also own Euronext. And they're regulated by the SEC, but carry out their own regulation efforts too. The parallel isn't that far off.

All very upstanding and incorrupt organizations

Would you like to tell us how the NYSE is corrupt?

Or do they just get tarred with 'Well, they work in finance, of course they are all crooks' brush?

Just google what they do when they don't like some trades

The standard for corruption is higher than “I don’t like your decision.”

So you think anyone can get their trades reverted on the stock exchange if they ask nicely? Oopsie, I clicked the wrong button, now please revert the trade that lost me some money. If some get such preferential treatment it's clear cut case of corruption, you don't need to catch them with the proverbial smoking gun to know it

Still waiting for all this evidence of yours.

Much easier to just go by gut feeling though isn't it.

https://www.sec.gov/news/press-release/2018-31

What now? I'm sure you are going to say that they settled because they were innocent, right? And that they halted trades 'by mistake', not on a purpose

The internet's full of garbage. All that'll find me is a mountain of people who don't understand what they are talking about shouting very loudly.

I'm not going to waste my time sifting through it to find evidence for a claim you're making.

Make a specific claim of corruption, and provide evidence for it.

NYSE sells preferential access that allows favored players to skim without risk. The industry regulations around “market makers” and pay-for-order-flow are incredibly crooked.

There’s also a clear tolerance of securities fraud as long as you subscribe to certain ideologies — eg, NYSE allowing Disney to trade when they’re clearly stealing/destroying shareholder assets to advance the ideology of a cabal of executives and fiduciaries.

These examples are arguably qualitatively different from what's happening with Boeing's self-inspection.

I used to work at an organization that was governed by multiple of the SROs you list there. Here's how it worked: They set rules, we followed them, they monitored and audited us. There were also governmental organizations monitoring both them and us.

I think that the key distinction here is not actually public vs. private. It's more of a "sunlight is the best disinfectant" situation. The simple knowledge that you have some external agency that doesn't have moral hazard concerns to compromise its interests that is keeping an eye on you, and that you know is keeping an eye on you, does a lot to incentivize better behavior. Is it perfect? No, far from it. But, at least in the specific case of the financial industry, it's not clear to me that a 100% governmental regulatory system would actually fare any better. I think that the unstated major premise of such an idea is that the people in charge of the governmental regulators - elected officials - are uncompromisable ethical paragons. And if you believe that, I've got some hot penny stocks that I'd like to tell you about.

Self regulation would mean that the org should face much stiffer penalties for failing in its regulation related duties. The increased agency needs to also come with increased responsibility.

Something like notaries, guilds or unions that can speak the truth without retribution ...

No, we need independent regulation. We don't have the societal norms to pull off self regulation.

> Self regulation would mean that the org should face much stiffer penalties for failing in its regulation related duties.

Why? How does this incentivize effective self-regulation?

> No, we need independent regulation. We don't have the societal norms to pull off self regulation.

We do though. This thread even points them out.

Because they have autonomy. By having the regulators embedded, they can continually tell them how to improve. The regulation isn't to punish, but to conform and exceed to the specifications.

Who are the “they”s in this example? The more I read this comment the less I understand it. Can you try again?

We are only talking about organizations that are participating in self regulation.

Those that self-regulation have a greater duty to be truthful and in good faith, attempt to remain in compliance. If they cheat, not only should they lose the right to self regulate, but they should face stiffer penalties for breaking that trust.

That’s largely fine though because the stick to enforce good diligence is the threat that the ability to self regulate is removed. As is being seen.

After (luckily) just a few hundreds of deaths

And it's important to say that generally you want and industry to regulate itself. This prevents the regulation becoming a burden on the people, and maintains the threat that if the industry doesn't regulate itself then the government (the people) will regulate it. No industry wants oversight, so they do their best to stay in the lines.

Also, generally speaking, self regulation involves a third party, like an impartial industry wide organization or a competitor.

Inspecting the self is a bit bonkers.

That's sort of the same with the SEC and (parts of) financial industry?

One can even argue the tax office is sort of like it.

That wasnot the OP question

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