Self-Regulatory Organisation (SRO): Meaning and RBI’s AA Call
Why in the news
RBI asked interested entities to apply by 15 June to become a self-regulatory organisation (SRO) for account aggregators (AA). It said the AA space is complex because data moves among many regulated entities under different regulators.
About an SRO
- A non-governmental body that frames and enforces industry standards; may still face government oversight.
- Power flows from internal governance and agreements among members, not a direct government mandate.
- Aim in finance: protect investors by enforcing ethics and integrity.
Functions
- Compliance: members follow rules; breaches bring penalties or expulsion.
- Membership standards: entry criteria such as education and experience; ethical conduct.
- Protection: investor education and safeguards against fraud.
- Disputes: arbitration services.
SROs versus government regulators
| Feature | SRO | Government regulator |
|---|---|---|
| Authority | Industry-based | Legislative mandate |
| Control | Self-governed, some outside supervision | Fully government-controlled |
| Enforcement | Member-driven | Legally binding |
| Typical names | AMFI, FINRA, NYSE | US SEC, RBI, European authorities |
Examples
- FINRA (US broker-dealers; works under SEC oversight), IIROC (Canada), CBOT (commodities), AMFI (Indian mutual funds).
- Professional SROs: American Bar Association and AICPA.
Exam angle
- Full form: SRO and AA.
- Indian SRO example: AMFI.