Regulators Talk Cooperation, but Little Progress by ProQuest


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									 Rules & Regulations

Regulators Talk Cooperation, but Little Progress
By Melissa Klein Aguilar                        cies are committed to bringing the full             One major obstacle is the agencies’
                                                OTC derivatives market under regula-            differing approaches to regulation. The

R    egulators from the Securities and Ex-
     change Commission and the Com-
modity Futures Trading Commission
                                                tion. He urged members of both agencies
                                                to “check turf at the door and figure out
                                                what works best for the American pub-
                                                                                                CFTC uses a principles-based approach,
                                                                                                which is viewed as more flexible, while
                                                                                                the SEC employs a stricter rules-based
got an earful in September on how they          lic.” Sometimes, he said, duplicative regu-     approach. Some panelists, including Chi-
might reconcile some of the differences in      lation from both agencies “stifle compe-        cago Board Options Exchange CEO Wil-
their rules and approaches, and it appears      tition, increase costs, or limit investor       liam Brodsky, expressed support for the
they’ve got their work cut out for them.        protection.”                                    CFTC approach.
    Now that a merger of the agencies is            Still, both he and SEC Chairman Mary            Brodsky said disparities in the ap-
off the table politically, the two are trying                                                   proaches of the agencies “imposes severe
to find ways to harmonize the regulation                                                        competitive disadvantages on securi-
of securities (overseen by the SEC) and                                                         ties exchanges and inhibit innovation.”
futures (overseen by the CFTC). Those                     “Harmonization must not               He said the SEC’s rules-based approach
talks come as the Obama Administra-                                                             leads to unnecessary delays in introduc-
tion pushes ahead with plans to overhaul              be an excuse for inadequate               ing new products and making operational
regulation of the financial markets gener-                                 regulation.”         changes.
ally; the White House told the SEC and                                                              “We’ve experienced interminable de-
CFTC to submit a report this fall iden-                                 —Mark Cooper,           lays in bringing new products to market
tifying differences in their statutes and                           Director of Research,       because of disputes over which agency
regulations, either explaining why those               Consumer Federation of America           has jurisdiction,” he said. He cited the in-
differences are necessary or recommend-                                                         troduction of options on gold exchange-
ing changes.                                                                                    traded funds as an example; approval of
    The September talks were held over                                                          those instruments was delayed more than
two days, one at the SEC and the other at       Schapiro then said that some differences        three years as regulators dickered over
the CFTC. Various market participants,          in regulatory approach are still necessary,     who had jurisdiction. Brodsky suggested
investor advocates, self-regulatory orga-       despite the extra burden for corporations       that the Treasury Department act as a tie-
nizations, academics, and former regula-        and other public filers. Schapiro said some     breaker to resolve jurisdictional disputes,
tors offered opinions aimed at helping the      differences in the regulation of markets        at least until a more definitive mechanism
agencies figure out how to bridge some          for securities and futures “are necessary       is in place.
of the gaps between their regulatory ap-        to achieve underlying policy objectives.”           Mark Cooper of the Consumer Fed-
proaches.                                           Gensler said the SEC and CFTC should        eration of America, however, warned that
    One large issue wil
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