–The author is Bart Chilton, a commissioner at the U.S. Commodity Futures Trading Commission. The opinions represent the view of the author and not that of Reuters.

By Bart Chilton

Now that the U.S. has approved the largest financial regulatory reform ever undertaken, it’s time for other nations to join in to ensure more efficient, effective market systems. Here is what we know: free markets without sufficient sideboards led to the global economic collapse.

Banks moved away from traditional lending and into exotic mortgages and foolhardy bets — like naked credit default swaps — and ultimately the American taxpayer was left with the bill for bailing out large institutions previously thought of as too big to fail.

Some speculators used futures and derivatives markets like private playgrounds, contributing to record highs in commodity prices in 2008. Free markets are good, but rational free markets with appropriate oversight are much better (and safer).

On Sept. 15, the European Commission (E.C.) issued a legislative proposal for regulating over-the-counter (OTC) markets that looks strikingly similar to the new U.S. law. Staffs at the U.S. Commodity Futures Trading Commission and the E.C. Financial Markets Infrastructure office have been working closely on ways to make our two sets of laws consistent.