Report Outlines 'Harmonizing' Regulation of Securities, Futures

Lora Bentley

Back when people first started throwing around the "recession" word, former Treasury Secretary Henry Paulson proposed a sweeping overhaul of the regulatory measures governing the financial industry. As part of that plan, he mentioned the possibility of combining the Commodity Futures Trading Commission (CFTC) with the Securities and Exchange Commission (SEC).

 

The idea was to do away with the inconsistencies that arise when different regulators approach similar issues in completely different ways. It made sense in theory, but it seemed to "die on the vine," so to speak, as the new administration took over and focused on its own priorities. Along the way, some suggested that it wouldn't happen because the SEC had too many friends in high places, or because the agricultural lobby was opposed to the idea. Whatever their reasoning, most observers agreed it wouldn't happen.

 

I nearly forgot such a merger had been proposed at all. But then I caught this piece, written by Compliance Week's Melissa Klein Aguilar. They may not be merging, but the two agencies have been working together to "harmonize" regulation, Aguilar says. The report setting out their joint recommendations was released Oct. 16.

 

Among the suggestions: a joint agency enforcement task force to develop protocols and standards for investigation and enforcement actions when both futures and securities are involved, a joint agency advisory committee to address emerging and ongoing issues "of common interest" to both, and a process for expedited judicial review of situations that arise where it's unclear which agency should take the lead or have the final say.

 

It all sounds good. Whether any of it will actually come to life beyond the pages of the report remains to be seen.



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