We would have 3 new regulators in the US:
- a systemic risk regulator
- a market integrity regulator
- an investor protection regulator
-
[...] In a speech at a conference in Chicago, [Acting CFTC Chairman] Mr. Lukken recommended the creation of three regulators to focus on systemic risk, market integrity and investor protection. The roles of the CFTC and SEC would be folded into the new regulators. Under the plan, the systemic risk regulator would police the financial system for risks that could ricochet across companies to have broad economic consequences. The market integrity regulator would oversee safety and soundness of exchanges and key financial institutions, effectively acting as a replacement for existing bank regulators and the SEC’s function of regulating brokerages. The investor protection regulator would protect investors and business conduct across all firms. [...]
Mr. Lukken’s recommendations contrast with those of SEC Chairman Christopher Cox, who has urged Congress to merge the SEC and CFTC and asked for the SEC to have oversight of credit default swaps, a financial instrument that many believe worsened the credit crunch. Mr. Lukken rejected calls to merge the two agencies, saying such a move would be “ineffective and would only reinforce our outdated regulatory structure.” Instead, he advocated a “complete rewrite” of securities and futures laws and recommended the new regulators follow broad principles that could adapt to changing markets and innovation. The current “rules-based regulatory approach” wasn’t able to ” keep up with the speed and innovation of the financial markets,” he said. “Regulation by objective rather than function will ensure that all products and institutions are properly overseen based on identified public risks rather than futile difficult determinations of whether an instrument is a security, a future, or a swap contract,” Mr. Lukken said.
-
I like those recommendations.
-
