It was probably only a matter of time before someone in Congress whipped up a bill on the current red hot issue in the derivatives industry, credit default swaps (CDS) trading platforms. And today someone did, when Sen. Tom Harkin (D-IA), Chairman of the Senate Agriculture Committee, introduced the Derivatives Trading Integrity Act, which aims to “establish stronger standards of openness, transparency and integrity in the trading of swaps and other over-the-counter financial derivatives.”

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The coming Administration of Barack Obama and Democratic control of the House and Senate raise several questions about futures industry regulation. How will new Congressional committee appointments affect current regulation? Which anti-speculation bills will Congress revisit in 2009? Who will be appointed to lead the Commodity Futures Trading Commission (CFTC)? Will the CFTC even exist by this time next year? A panel of experts tried to untangle these knots at the Futures Industry Association’s annual expo in Chicago yesterday, and the consensus was that anything could happen.

Since the futures industry doesn’t seem to be as broken as the securities side, change could come later rather than sooner, the panelists said. “The new administration…is going to be focused on things that are broke, not things that are not broke,” said Terry Duffy, CEO of CME Group. “I don’t see them going after merging [the SEC and CFTC].”

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In one of his last addresses at the helm of the agency (he will step down at the start of the new Obama administration), Commodity Futures Trading Commmission (CFTC) Acting Chairman Walt Lukken called for an overhaul of the U.S. regulatory system at the Futures Industry Association‘s annual expo in Chicago yesterday. Lukken proposed a three-pronged objectives-based regulatory system consisting of a systemic risk regulator, a market integrity regulator and an investor protection regulator. Under his proposal, the functions of the CFTC, SEC and banking regulators would be dispersed among the three regulatory authorities. Like countless other industry leaders, Lukken vetoed the idea of an SEC-CFTC merger, saying it “would be ineffective and would only reinforce our outdated regulatory structure.”

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