Which organization is the governing authority for the OTC market?

The correct answer is D, which identifies FINRA, the Financial Industry Regulatory Authority, as the governing authority for the over-the-counter (OTC) market. FINRA is a self-regulatory organization that oversees brokerage firms and exchange markets. Its primary responsibilities include ensuring compliance with financial regulations, monitoring trading activities, and protecting investors in the securities industry.

In relation to the OTC market, FINRA plays a crucial role in establishing rules and providing oversight for the trading of securities that are not listed on formal exchanges. This includes monitoring market practices, enforcing regulations, and ensuring transparency and fairness in OTC transactions. By doing so, FINRA helps to maintain the integrity of the market and fosters investor confidence.

Other organizations mentioned, such as DTCC (Depository Trust & Clearing Corporation), while critical in the settlement and clearance of securities trades, do not serve as the regulatory authority of the OTC market. The Federal Reserve Board (FRB) focuses on monetary policy and economic stability rather than direct market regulation. The Municipal Securities Rulemaking Board (MSRB) is tasked with regulating the municipal securities market, which is a different segment compared to the broader OTC market. The specific regulatory role of FINRA in overseeing OTC activities makes it the correct answer to this question.