US SEC, CFTC push for tougher enforcement laws

By Reuters Staff
October 16, 2009

Mary Schapiro, chairman of the Securities and Exchange Commission,  July 22, 2009. (file photo) By Charles Abbott and Rachelle Younglai
WASHINGTON, Oct 16 (Reuters) – U.S. securities and futures regulators asked Congress on Friday for more authority to police their markets, including legislation to help rein in insider trading in the commodity futures markets.

The Securities and Exchange Commission and the Commodity Futures Trading Commission said it should be unlawful to trade using material non-public information from any government authority.

The market regulators also urged Congress to impose a uniform fiduciary duty on financial professionals who provide similar investment advice or services, regardless of whether the product is a security or future.

The Obama administration had pressured the agencies to resolve long-standing conflicts and come up with recommendations for Congress to align their rules by the end of last month.

The agencies have fought for years over jurisdiction, holding up product approvals and creating confusion and uncertainty in the marketplace.

Among the 20 recommendations to Congress, the regulators said legislation was needed to give the CFTC authority over exchanges and clearinghouses.

“I believe these recommendations will help to fill regulatory gaps, eliminate inconsistent oversight and promote greater collaboration,” SEC Chairman Mary Schapiro said in a statement.

Piecemeal regulation in the United States contributed to Wall Street’s meltdown and the ensuing global economic crisis. In particular, lack of oversight in the over-the-counter derivatives market was exposed when a type of derivative called credit default swaps nearly toppled insurer AIG.

Legislation to regulate the $450 trillion privates swaps market is wending its way through Congress, but it is not clear whether a bill will be signed into law before the end of the year. The House Financial Services Committee approved a bill on Thursday to require many OTC derivatives to go through clearinghouses.

The market regulators urged Congress to establish a process to ensure that products are approved within a firm timeline. The SEC and the CFTC have long argued over whether a product is a security or a future, which has delayed product approvals and angered industry.

The regulators also proposed a number of joint agency squads to oversee the markets.

(Additional reporting by Christopher Doering; Editing by Dave Zimmerman and Steve Orlofsky) ((rachelle.younglai@thomsonreuters.com; +1 202 898 8411)) Keywords: SEC CFTC/

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