Alert October 06, 2009

Update on Report Addressing Harmonization of SEC and CFTC Regulation

On September 30, 2009, the chairmen of the SEC and CFTC announced that the two agencies expect to issue a report on October 15, 2009 that will address key difference between their regulatory schemes and recommend legislative and regulatory actions to address those differences where appropriate.  The announcement identified the following areas to be covered in the report:

  • 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 advisers and commodity trading advisers
  • Cross-border regulatory matters
The report is also expected to include recommendations to Congress and the President designed to (1) strengthen the agencies’ respective enforcement powers; (2) enhance and harmonize customer protection standards; and (3) establish an ongoing coordination and advisory process.  The SEC and CFTC are preparing the report in response to a recommendation in the Treasury’s June 2009 white paper on financial regulatory reform (as discussed in the AlertJune 23, 2009 .)