US SEC must speed up exchange rule approvals-report

By Karey Wutkowski

WASHINGTON, April 2 (Reuters) - An internal watchdog at the U.S. Securities and Exchange Commission said the agency must speed up its approval process for rule changes by U.S. stock exchanges to help them compete globally.

A report by the SEC's Office of Inspector General released this week echoed long-standing complaints from the exchanges and other self-regulatory organizations (SROs).

"The Commission's overall timeliness in processing proposed rule changes needs improvement," the report said.

At the end of 2007, the SEC had 226 pending proposed rule changes, which had been before the agency for an average 229 days. The oldest proposed rule change was pending at the agency for more than four years, the report said.

"Timely processing assists the SROs to remain competitive with foreign and futures exchanges, electronic communications networks and alternative trading systems that can change their trading or trade new products with greater ease and without Commission review," the SEC inspector general said.

The report recommended that the SEC speed up its timetable for issuing a proposed rule for public comment and then finalizing the rule.

Nasdaq OMX Group Inc (NDAQ.O: Quote, Profile, Research) Chief Executive Robert Greifeld criticized the agency last week, saying the SEC has staff lawyers and analysts "who are lacking personal, practical knowledge about the markets deciding what is right for the markets."

Greifeld said at a U.S. Chamber of Commerce event on capital markets that the exchanges have to wait too long for SEC approval to roll out new products and features such as exchange-traded funds, real-time stock quotes and even an options market.