A long-time fixture in the world of regulation, FINRA's Richard Ketchum previously served as the CEO of NYSE Regulation. He also served as general counsel of the Corporate and Investment Bank of Citigroup, and spent 14 years at the Securities and Exchange Commission. He spoke to Elizabeth Wine about financial reform and a single fiduciary standard.

1. The SEC is studying whether the fiduciary standard should apply to brokers. What's your opinion?
We feel it's time to move to a single standard, and we supported the legislative process. We think Congress made the best decision by giving the Commission the right to move to a single standard, and they did it cautiously. It left the Commission with discretion to make judgments. It makes sense because there's not just one type of financial entity or one type of customer relationship. [We] intend to work closely with the SEC to provide support for their evaluation of those issues.

2. Do we need new rules? Can't we just better enforce the existing ones?
We need both. Financial reform legislation is an extremely broad-ranging bill with many provisions but it clearly does some things absolutely right. It starts moving down the road of creating a single standard for broker-dealers and investment advisors and recognizes that investors don't recognize them as different businesses. When [investors] deal with an investment advisor, they walk into her office with a range of questions from, "I think tech stocks are overpriced, what are some alternative ideas?" to "How do I position myself defensively for a confusing and scary market environment, and how does all that fit with my plan to get my two kids through college 10 years from now and retire at 65?" When you have that type of trust and confidence in a relationship, you're thinking about the overall relationship, not whether they're a broker-dealer or an advisor. It makes sense to regulate it consistently.

3. How will it all affect advisors?
I don't think it will affect them in a very significant way. My expectation is that there will be discrete disclosures on the conflicts that may exist with respect to an account that's both an advisor and a broker-dealer account. There will be a requirement that their recommendations be in the best interests of the customer. It exists today in the form of what is "suitable," but "best interest" is more demanding. It suggests they'll be documenting why a particular strategy is preferable to others with respect to their long-term goals and risk appetite.

4. You created a new office of fraud detection and market intelligence. Is that just combining existing groups, or is it something new?
It's both, but something new is going on. It's from our lessons learned over the last three years. With the whistle-blower initiative, we want to hear complaints and concerns when people see an entity [doing anything suspicious]. We want to be able to step in and stop it. Or, when we don't have jurisdiction, we'll get the information to the SEC. We don't want to be in a position of getting in there and sweeping up the bodies after the damage has occurred.

5. Now you're the only group doing market surveillance. Why is this an improvement?
It's an important consolidation. Over the last 15 years we've been moving away from a world where Nasdaq and the New York Stock Exchange are prime listers. We used to do most of the surveillance with respect to Nasdaq, while the NYSE did its own work. We're now also doing NYSE surveillance together. This allows us to pull back and view at least 80% of U.S. trading activity. That dramatically increases our ability to detect trends and abusive activity. It connects well with where the SEC is proposing to go, which is to move to a consolidated audit trail.