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sec-cftc cooperation March 12, 2008

Posted by Bradley in : Uncategorized , trackback

The SEC and CFTC announced the signing of a new agreement to cooperate. Both agencies are about to seek comments on two new products based on the streetTracks ® Gold Trust Shares (Gold Shares): an option to be traded on options exchanges, and a future to trade on a single stock futures exchange. SEC Chairman Cox said:

Years ago, when the dividing lines between our agencies’ regulated products were bright, the high level of coordination we are establishing today was not a priority for the U.S. government. But today, the blurring of these distinctions requires the U.S. government to adopt a more coherent and coordinated approach. To this end, we look forward to enhancing our collaborative relationship with the CFTC within the formal framework covered by the agreement.

Although the MOU begins with the regulators’ obligations to protect investors, market users and the public the driver of this move seems to be the need to promote innovation and competition. The addendum to the MOU which addresses novel derivative products contains a number of principles the regulators agree on, including encouraging innovation and competition and legal certainty, described as follows:

Both agencies shall endeavor to make appropriate use of all available authority, including exemptive and interpretive authority, with a view to increasing legal certainty for market participants and encouraging competing or complementary products to be brought to market expeditiously.

For some reason the SEC has begun to include links to videos in its press releases (the links appear as images on the press release page) and below the video image is a picture reached through a link which states Photo for Print Publications. It’s not a particularly good picture – governmental acts don’t tend to make very good pictures, let alone video. The CFTC press release includes links to pictures too, but it also has some much meatier links, including one to the MOU, another to the addendum, and another to the CFTC’s proposed exemptive order. The SEC’s press release emphasizes the video rather than the meat. So the coordination between the two regulators doesn’t extend to management of public relations.


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