•  SEC technical expertise would improve. Cumbersome enforcement techniques, such as document subpoenas and sworn testimony, are a poor way for the agency to monitor exchanges’ compliance with regulatory requirements and to keep abreast of constantly evolving technology. Continuing informal communications between exchange personnel and tech-savvy SEC examiners would allow the agency to gain expertise, to provide up-to-the-minute guidance on ambiguous rules and best industry practices, and to make sure exchanges address problems right away.

•  Exchanges would have better incentives. In a less enforcement-focused regulatory climate, exchanges would be more open to sharing new ideas with and reporting problems to SEC staff. And if the commission could shut them down immediately for serious failings, exchanges would protect against such a disaster by investing more in compliance, system upgrades and capacity increases.

•  Investors would be better protected. Selective enforcement action can leave the public unprotected and place some exchanges at an unfair competitive disadvantage, if others have similar problems unaddressed by the SEC. By contrast, public disclosure of industrywide inspection results based on objective performance criteria would stimulate competition that would improve the performance of all exchanges.

Granted, nuclear accidents are potentially far more catastrophic than even the most serious stock-exchange malfunctions. But the NRC’s regulatory philosophy is just what the SEC needs to prevent the next stock-market meltdown.

David L. Kornblau, a partner in the New York office of Covington & Burling LLP, was the chief litigation counsel for the SEC’s enforcement division from 2000 to 2005. Covington represents the NYSE in various matters; the opinions expressed are Kornblau’s.