Over-the-counter derivatives will become as tightly regulated as exchange-traded products in one of the biggest regulatory reforms in US history, if Gary Gensler, new chairman of the Commodity Futures Trading Commission, gets his way.
But the boundary between the CFTC’s jurisdiction and that of the Securities and Exchange Commission remains blurred and will need to be redefined, either by a new demarcation or by a merger.
Though Gensler studiously avoided saying where the line should be drawn, Mary Schapiro, chairman of the Securities and Exchange Commission, was forthright: the SEC should regulate all OTC derivatives connected with securities, while the CFTC should look after the rest.
Both incoming regulators testified to the House of Representatives’ Financial Services Committee yesterday (Wednesday July 22) on the Obama administration’s proposals for reforming financial regulation.
In so doing, each gave the clearest and most detailed statement yet of their...