Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

Wednesday, September 30, 2009

Update from SEC & CFTC on Harmonization

The chairmen of the SEC and the CFTC announced today that they anticipate, in two weeks, the two agencies will issue a report that will address key areas in which their regulatory schemes are different. The chairmen also expect the report will recommend legislative and regulatory actions to address those differences where appropriate.

On June 17, 2009, the White House released a White Paper on Financial Regulatory Reform calling on the CFTC and SEC to "make recommendations to Congress for changes to statutes and regulations that would harmonize regulation of futures and securities."

Subject to consideration of the Commissions, a report is expected to be issued on October 15 to address harmonization of futures and securities regulation. It is anticipated that the report will include discussion of the following issues:

Product listing and approval
Exchange/clearinghouse rule approval under rules- versus principles-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

In addition, the chairmen expect that the report will contain recommendations to Congress and the President designed to (1) strengthen their respective enforcement powers; (2) enhance and harmonize customer protection standards; and (3) establish an ongoing coordination and advisory process.

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