WASHINGTON — Regulators charged with overseeing derivatives markets said Friday that they would need Congress to grant them powers beyond those they stand to gain through a derivatives bill that the House Financial Services Committee passed earlier last week.
The Commodity Futures Trading Commission and the Securities and Exchange Commission released a joint report on ways to harmonize their regulatory responsibilities to better oversee securities, futures and derivatives markets. Among the 20 recommendations in the report were suggestions for a tie-breaking mechanism and a joint enforcement task force that would require more legislation.
The heads of the CFTC and the SEC told reporters during a briefing that they would be working with Financial Services Committee Chairman Barney Frank, D-Mass., and House Agriculture Committee Chairman Collin Peterson, D-Minn., as well members of the Senate, to add the new provisions.
"With everything going on, we're going to have to work up some language and share it with Chairman Frank and Chairman Peterson," CFTC Chairman Gary Gensler said.
The tie-breaking mechanism the agencies recommended differs from the method outlined in the House derivatives bill. If that bill were to pass, the Treasury Department would be responsible for breaking gridlock between the CFTC and the SEC. But the regulators said a better model is one that uses the courts to settle disputes. Their suggestion is based on a template found in the Gramm-Leach-Bliley Act.
The agencies' report also called for a joint enforcement task force, which SEC Chairman Mary Schapiro said would create "a more efficient mechanism," through joint training programs and shared employees, for enforcing rules governing products that "are increasingly converged."
She said the joint enforcement task force was not an indication that the two agencies thought they could not separately enforce new derivatives regulation.
Gensler said that the derivatives bill was "historic," but that the regulations still needed work. "We do want to build upon that to ensure that we narrow some of the exceptions," he said of the bill's clearing and exchange-trading requirements.