Question

The authority function of a self-regulatory organization is most likely characterized by:

A. Creation and enforcement of its own policies

B. The effective management of conflicts of interest

C. Establishment of clear standards of conduct

D. Quick resolution of disputes

Answer 1

To answer this question correctly we should first understand about the self-regulatory organisations:

Self-regulatory Organisations (SROs): It is an entity as a non-governmental organisations which possess the power to create and enforce the regulations and standards on its own.

The financial SROs have the priority to protect investors by formulating rules, regulations and certain set of standards which are defined by them. It is privately owned and held organisations but government can direct their policies to a certain degree.

They don't have to take grant of authority from the government to enforce their regulations.

From seeing the above details about the SROs we are clear that the authority function of a SRO is the "Creation & enforcement of its own policies".

Hence, Option(a) is most likely describing the characteristics of a authority function of SRO.