A merger of the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) “doesn’t make sense” and would be ill-advised, said CFTC Commissioner Bart Chilton last Tuesday.
“Let’s not ‘Dial M for Merger.’ It would be a grave mistake, would not result in the putative efficiencies espoused by its proponents, and would do nothing in the way of improving the competitiveness of U.S. markets,” Chilton said at a Futures Industry Association’s Law and Compliance gathering in New York City.
In October, the Treasury Department asked for public comment on a blueprint to “streamline” financial services regulation, and for “a lot of people ‘streamlining’ is a code word used as justification for, among other things, a merger of the CFTC and SEC,” he noted. One of Treasury’s chief concerns is overlapping and duplicative federal regulation. While this is a problem, Chilton said merging the CFTC with the SEC is not the solution.
“The CFTC and the SEC, while both financial regulators, oversee two completely different types of markets, and consequently have two completely different sets of statutory and regulatory [schemes]. You could put us both in the same building, but we would still have two different sets of laws to carry out, two different sets of regulatory responsibilities and two different congressional mandates. We just wouldn’t have to walk as far to argue about them,” he told the futures trading group.
Chilton noted that the CFTC has a principles-based regulatory approach that “allows innovation and competition to flourish without undue regulatory impediments and get products to market faster.” But the SEC “is an example of the classic, old-style, prescriptive regulator, and the differences between our two systems shows why it would be such a mistake to merge the SEC and the CFTC.”
He said proponents of the merger should be asked to justify what efficiencies and economies would be produced by marrying the two agencies. “Unless and until we see that, I remain firmly on the ‘no merger’ side of the line.”
Separately CFTC Commissioner Jill Sommers, in speaking to the same group last Tuesday, focused on the jurisdictional dispute between the CFTC and the Federal Energy Regulatory Commission that has arisen in the Amaranth Advisors LLC enforcement case. “The situation has generated considerable interest from various members of Congress, but so far there has been no talk of a legislative response” addressing the scope of each agency’s jurisdiction in energy markets, she said.
She noted that CFTC Chairman Walter Lukken “has had discussions” with FERC Chairman Joseph Kelliher on the subject, “and I am hopeful that the two agencies will be able to work cooperatively to resolve things going forward.”
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