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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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