By Stephen Gandel
January 7, 2013

FORTUNE — Observers have long been worried about the New York Stock Exchange’s ability to police stock trading so that it’s fair for all investors. The acquisition by the InterContinental Exchange (ICE), which in late-December agreed to buy the NYSE (NYX) for $8.2 billion, may make matters worse.

Historically, the NYSE has been what’s called a self-regulating organization. The Securities and Exchange Commission looks over its shoulder, but basically the NYSE is in charge of what goes on on its exchange. It creates and enforces the rules, and makes sure they don’t favor some investors – namely the large banks – over others.

“The challenge for self-regulatory organizations is balancing the public interest and the economic interest of its members,” says Joel Seligman, who is the President of the University of Rochester and an expert on the NYSE and regulation. He is also a board member of FINRA, a member organization that regulates brokerage firms. “The NYSE has done a good job of this, but some organizations have done a better job of the balancing act than others.”

If the takeover by ICE goes through, though, the responsibility of regulating the nation’s largest stock market will ultimately fall on the shoulders of the NYSE’s new owner. And while most observers, at least until recently, believe self-regulation has worked well for the stock market, the same can’t be said of the business in which ICE makes its money – derivatives.

Here’s the issue: even more than the stock business, the derivatives market is dominated by a few players. Four large banks – JPMorgan Chase (JPM), Citigroup (C), Bank of America (BAC) and Goldman Sachs (GS) – account for nearly 95% of all derivatives exposure in the U.S.

Dennis Kelleher, who runs investor advocacy group Better Markets, says those four banks have a large influence over ICE. Even after ICE adds the NYSE’s significant stock business, ICE will still make the bulk of its profits in derivatives. The worry is that the banks might use their influence over ICE to tilt the rules that govern stock trading at the NYSE in their favor, hurting individual investors.

ICE has been accused of collusion before. Competitors such as Bank of New York Mellon and Newedge have complained that ICE and its largest customers – namely those four large banks – have sought to restrict competition. Kelleher and others have said this may be leading to worse prices for investors and users of derivative contracts, which companies buy to hedge everything from energy prices to the risk that one of their suppliers could go out of business.

“It must never be forgotten that the history of these markets is a history of anti-competitive, self-interested, predatory conduct that serves the interest of the exclusive few at the expense of the many and the system as a whole,” wrote Kelleher in a comment letter to the Securities and Exchange Commission on how proposed rules in Dodd-Frank should be applied in the derivatives market.

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Robert Litan, a former top antitrust official at the Department of Justice who is now the director of research at Bloomberg Government, said he didn’t think the merger would change the way the NYSE regulates trading, which has traditionally been done differently in the derivatives and stock markets.

ICE and its main competitor the Chicago Mercantile Exchange have kept all their regulation responsibilities in house. The NYSE has kept rule writing in house, but outsourced the monitoring and regulation of brokers to FINRA, which is a non-profit collectively owned by the brokerage firms, in recent years. Experts say FINRA is likely to retain that regulatory authority at the NYSE. Neither ICE nor NYSE have commented on how regulation will be handled after the merger.

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In the last year or so, lawmakers and even some Wall Streeters have become increasingly worried about the NYSE’s ability to police itself. In September, the SEC fined the NYSE $5 million to settle allegations that the exchange gave access to traded data to certain high frequency trading firms ahead of the general public.

In mid-December, the Senate Banking Committee held a hearing on the NYSE and stock trading. At the hearing, Credit Suisse’s Dan Mathisson argued that it no longer made sense to allow the NYSE and other exchanges to continue regulating themselves. “Exchanges have long been considered by courts to be quasi governmental entities,” Mathisson told the committee. “But exchanges today are clearly not governmental entities. They are for-profit, private companies.”

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The acquisition by ICE, which unlike the NYSE has never been a non-profit, makes it even more clear that exchanges care more about investors than their customers. And it puts the NYSE’s ability to regulate itself that much more into question.

“The emergence of increasingly different trading rules and venues for institutions and individual investors is one of the biggest issues regulators will have to tackle,” Seligman says.

It’s an issue that the NYSE can’t be allowed to tackle on its own.

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