Financial regulators are taking a harder line on exchanges amid concerns over their ability to police the markets they operate, as the SEC prepares to hit one with a record penalty, the Wall Street Journal reported today. In a sign of its more aggressive regulatory approach, the U.S. Securities and Exchange Commission has been putting the finishing touches on a settlement with Nasdaq OMX Group Inc. over its handling of Facebook Inc.’s public offering. Nasdaq is expected to pay a penalty of about $10 million, the biggest fine levied by the SEC against an exchange and only its second such fine ever. Exchange executives have said that their authority to work hand-in-hand with the SEC and other regulators to police markets helps protect investors and ensure fairness in the markets, while also providing valuable, detailed trading information to regulators. They say that they develop new products to serve customers and make markets more efficient. Luis Aguilar, a commissioner with the SEC, last week voiced some regulators' growing concerns that exchanges are falling short of meeting their responsibilities as self-regulatory organizations.
