On September 2-3, 2009, pursuant to the recommendation of the Obama administration, the SEC and CFTC held joint meetings to discuss assessments of the current regulatory schemes for futures and securities, a first for the two agencies. Within the next two weeks, the chairmen of the SEC and CFTC plan to issue a joint report to Congress addressing the differences between the regulatory schemes for futures and securities and recommending legislative and regulatory actions to close the regulatory gaps and address the inconsistencies.
A release by the SEC indicated that the report will likely discuss the following issues:
• Product listing and approval
• Exchange/clearinghouse rule approval under rules—versus principal-based approaches
• Risk-based portfolio margining and bankruptcy/insolvency regimes
• Linked national market and common clearing versus separate markets and exchange-directed clearing
• Market manipulation and insider trading rules
• Customer protection standards applicable to broker-dealers, investment advisors and commodity trading advisors
• Cross-border regulatory matters
The upcoming report will surely verify the SEC and CFTC’s efforts during recent months to harmonize the two agencies and “reduce regulatory arbitrage, avoid unnecessary duplication and close regulatory gaps.” We will provide a further update once the report is issued.
For a complete reading of the SEC’s press release, click here.