Securities Industry Regulatory Authority (SIRA) Overview

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Julia Kagan
Julia Kagan
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Julia Kagan is a financial/consumer journalist and former senior editor, personal finance, of Investopedia.

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Updated May 31, 2022
Reviewed by Caitlin Clarke
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Timothy Li
Timothy Li
Fact checked by Timothy Li
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Timothy Li is a consultant, accountant, and finance manager with an MBA from USC and over 15 years of corporate finance experience. Timothy has helped provide CEOs and CFOs with deep-dive analytics, providing beautiful stories behind the numbers, graphs, and financial models.
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What Was the Securities Industry Regulatory Authority (SIRA)?

The Securities Industry Regulatory Authority (SIRA), now called the Financial Industry Regulatory Authority (FINRA), was the name of a body that combined the regulatory units of the National Association of Securities Dealers (NASD) and New York Stock Exchange (NYSE). The SIRA was formed to govern business practices between securities brokers and the investing public, regulating both its members and the affiliated market.

Key Takeaways

  • The Securities Industry Regulatory Authority (SIRA) has been referred to as the Financial Industry Regulatory Authority (FINRA) since 2007.
  • The SIRA name was used for only three weeks before the regulatory authority was made aware that the name "SIRA" could create confusion or be considered offensive.
  • The SIRA looked to consolidate the NASD and NYSE to eliminate duplicative functions and rule inconsistencies,
  • The SIRA's role was to reduce the cost inefficiencies of the two independent self-regulatory organizations (SROs).

How the SIRA Worked

SIRA's roots as a self-regulatory organization (SRO) can be seen in the regulatory subsidiaries of both the NASD and the NYSE. The aim of consolidating the two independent regulators was to eliminate duplicative functions and rule inconsistencies, as well as to reduce the cost inefficiencies of the two independent SROs. The SIRA was dropped in favor of FINRA in 2007.

Though the regulatory oversight role of SIRA continues to this day under the name FINRA, the SIRA name was especially short-lived—about three weeks in total. After the new name was publicized in previews, the regulatory authority was made aware that the name "SIRA" could "create confusion, or might even be considered offensive by some, because of its similarity to an Arabic term used to refer to the traditional biographies of Muhammad," according to an announcement made by then-NASD Chair and CEO Mary Schapiro.

"Sirah," which refers to biographical texts about Muhammad, prompted the NASD and NYSE to reconsider the name over concerns that it might be perceived as culturally insensitive.

Special Considerations

The NASD had its start in 1939 in response to the introduction of Securities and Exchange Commission (SEC) rules that allowed for the creation of self-regulatory organizations. The rise of modern self-regulatory organizations such as SIRA (and FINRA) can be seen in the adoption of electronic trading systems like the NASD's launch of the National Association of Securities Dealers Automated Quotations (NASDAQ) stock market in 1971.

In 1998, the NASD and AMEX stock markets merged, followed by the NASDAQ splitting off from the NASD in 2000. In 2007, the SEC backed a new SRO to succeed the NASD. SIRA/FINRA was created with the merging of the NASD's regulatory arm with the enforcement, arbitration, and member regulation units of the NYSE. FINRA announced the commencement of operations on July 30, 2007. It is the largest non-governmental regulatory organization for securities brokers and dealers in the United States.

SIRA now refers to the Government of Dubai's security industry regulator, the Security Industry Regulatory Agency, which was launched in 2017 to oversee cybersecurity and other safety issues.

Article Sources
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  1. Reuters. "Broker Watchdog to Change Its Name." Accessed Nov. 13, 2021.

  2. Securities and Exchange Commission Historical Society. "The NASD-Origins, Recent Developments And Future Goals," Page 10-16. Accessed Nov. 13, 2021.

  3. U.S. Securities and Exchange Commission. "NASD Rulemaking: Order Granting Approval to Proposed Rule Changes and Notice of Filing and Order Granting Accelerated Approval to Amendment No. 2, Relating to the Combination of the American Stock Exchange, Inc. and the National Association of Securities Dealers, Inc." Accessed Nov. 13, 2021.

  4. Financial Industry Regulatory Authority. "2001 Annual Financial Report," Page 26-28. Accessed Nov. 13, 2021.

  5. U.S. Securities and Exchange Commission. "SEC Gives Regulatory Approval For NASD And NYSE Consolidation." Accessed Nov. 13, 2021.

  6. Financial Industry Regulatory Authority. "NASD and NYSE Member Regulation Combine to Form the Financial Industry Regulation Authority—FINRA." Nov. 13, 2021.

  7. Messe Frankfurt Exhibition GmbH. "Public Launch of Dubai’s Security Industry Regulatory Agency Features in Power-Packed Conference Line-up at Intersec 2017." Accessed Nov. 13, 2021.

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