Securities and Exchange Commission Chairman Christopher Cox said he strongly supports merging his agency with the Commodity Futures Trading Commission. Posted on October 24, 2008 by admin Excellent.Previously: The CFTC on prediction markets. + Comments made to the CFTC. Related PostsGary Gensler will head the Commodity Futures Trading Commission in 2009.The Commodity Futures Trading Commission and Securities and Exchange Commission will have authority to decide what derivatives must be centrally cleared rather than letting private parties make the call.Barack Obama has chosen Mary Schapiro, chief executive of a non-governmental regulator for securities firms (Financial Industry Regulatory Authority), to chair the Securities and Exchange Commission.
Um, why is that excellent? That doesn’t strike me as excellent at all. The SEC is a strict-rules based regulator that is run by lawyers. The CFTC is a principles based regulator that is much friendlier from an economics perspective.
That’s true, the SEC and the CFTC are managed very differently. However, many voices are in favor of this merger, as it was done in the UK (Financial Services Authority).
Treasury secretary Paulson:
Our Jason Ruspini:
I had a FT link about that merger proposal, some time ago, and I am not able to find it, right now.
I would fear that the end result of the merger would look more like the SEC (rules based) and less like the current CFTC (principles based).
I did say that but it was a long time ago.. before, you know, what I refer to as “The Happening”, not to mention the Concept Release. The idea was that the SEC was on more secure political ground than the CFTC and so would not need to worry about taking on regulation of something controversial like political markets. Cox’s statement reflects the downgraded position of the SEC relative to the CFTC, which I noted recently. Additionally the CFTC was re-authorized in May through 2013. So Bo is right. There is little advantage to such a consolidation from a prediction market perspective now.
Also, I hear that the CFTC’s review of event contracts will be complete in the next month or two, so hopefully we will have a public response by sometime early next year.