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October 01, 2009 at 04:00 AM
Gary Gensler, chairman of the Commodity Futures Trading Commission (CFTC), said during the CFTC’s joint meetings with the SEC in early September (to discuss how to harmonize both agencies’ regulations) that three broad areas must be addressed. First, he said, the gaps must be closed that exist between the two agencies’ financial regulatory authorities, including over-the-counter derivatives. Second, the agencies must ensure that regulatory overlap only exists where it is beneficial, such as in joint enforcement, and not when it can be used for regulatory arbitrage. Third, Gensler argued that it’s “paramount to explore where it is appropriate to bring consistency” to the two agencies’ regulation over similar products, practices, and markets. Gensler highlighted the 12 regulatory changes that participant testimony and panelists at the hearings said the two agencies should consider:
o product listing, regarding self-certification or prior approval; exchange and clearinghouse rules, also regarding self-certification or prior approval; risk-based (“portfolio”) margining with cross-margining of futures and securities products;
o fungibility and competition among execution platforms;
o uniform customer account and bankruptcy/insolvency regime;
o market structure, regarding separate versus linked markets;
o standards for prosecuting market manipulation;
o punishing insider trading in derivatives markets;
