Industry leaders wasted no time commenting on the Obama Administration’s new regulatory reform proposal, “Financial Regulatory Reform: A New Foundation,” released yesterday.
The proposal received mostly a chorus of praise from the industry. CME Group called it “a significant step towards restoring confidence in the integrity of financial markets.” International Swaps and Derivatives Association CEO Robert Pickel said in a statement that it “provide[s] an important framework for financial regulatory reform.” In his statement, Futures Industry AssociationPresident John Damgard “commend[ed] the administration for the thoughtfulness and comprehensiveness of its plan.” In a statement, Chicago Board Options Exchange ChairmanBill Brodsky said, “We are particularly pleased that the plan recognizes the need for greater coordination and harmonization of the SEC and CFTC, including streamlining the approval of new products and rule filings.” But not everyone is singing the proposal’s praises.
The “harmonization” of regulatory agencies is one of the elements that could impact the futures industry the most. Specifically, the plan calls for the CFTC and SECto make recommendations to Congress on how to eliminate differences “with respect to similar types of financial instruments that are not essential to achieving investor protection.” The two agencies must complete a report with recommendations by Sept. 30. If they don’t the matter will be forwarded to the soon-to-be created Financial Services Oversight Council. Some are concerned that the creation of additional agencies will not solve the regulatory problems that exist in the financial system. “In the proposal, there are not one, not two, but three proposed coordinating committees [including] the Financial Services Oversight Council. The better solution would have been to get rid of all of those agencies that require coordiation and consolidate them somehow,” says Gary DeWaal, general counsel of Newedge. “It’s more of the same. The Obama Administration has other priorities and they don’t want to use political capital to make real effective change in the financial services industry,” he adds.
House Agriculture Committee Chairman Collin Peterson isn’t a huge fan of the proposal either. In a statement, Peterson said he was “concerned about proposals to expand the authority and responsibility of the Federal Reserve, a secretive and unaccountable institution.”
Peterson did, however, applaud the proposal’s reforms for over the counter (OTC) derivatives regulation, including credit default swaps, the proposal’s other big takeaway impacting the futures industry. The proposal requires standardized OTC derivatives to be centrally cleared and executed on exchanges and requires transparency for all OTC trades and positions through recordkeeping and reporting requirements, as called for by Treasury Secretary Timothy Geithner in an earlier OTC reform proposal.
Tags: Barack Obama, Bill Brodsky, CBOE, CFTC, CME Group, credit default swaps, John Damgard, OTC, Robert Pickel, SEC, Treasury Department
[...] with many blaming flagging growth for SSFs in the United States on the regulatory overlap. And some industry insiders don’t like the Obama proposal as a whole, calling it “more of the [...]