WASHINGTON -- Securities and Exchange Commission chairman Arthur Levitt has pledged to deliver to Congress by Dec. 12 a long-awaited report that outlines a framework for regulating derivatives affiliates of securities firms. Levitt, who is working with top-level securities industry representatives, asked two weeks ago for more time to draft the guidelines that had been expected to be released by Thanksgiving.
"We have been making good progress in our negotiations with the securities firms, and we are working toward completing our recommendations on an accelerated basis," Levitt said in a Nov. 1 letter to Rep. John Dingell, D-Mich.
Dingell, currently in his last days as chairman of the House Energy and Commerce Committee, granted the extension but requested the deadline be no later than Dec. 12. "I understand that you have made good progress and that the additional time is being requested in order to accommodate a meeting that has been set between firm principals and yourself for the latter part of November in order to come to closure on several complex issues," Dingell said in the Nov. 9 letter to Levitt.
The lawmaker, as chairman of the House Energy and Commerce Committee, asked the SEC and industry officials last August to submit a plan by November.
Securities industry officials and the SEC had originally hoped to agree on some voluntary standards in September or October and present them to Congress before its session ended.
The drafting of the voluntary standards was an effort by the SEC and securities industry representatives to stave off congressional action that would require the SEC to regUlate derivatives affiliates of securities firms and insurance companies.
At present, SEC oversight is limited to Collecting information from derivatives affiliates on a quarterly basis.
Meanwhile, Levitt, in his most recent letter, said the guidelines will discuss the ability of the SEC and the securities industry to conduct appropriate inspection and enforcement under existing authority, and whether any new legislation would be necessary.
The SEC and industry group's efforts began in an environment where top lawmakers, including Dingell and Rep. Henry Gonzalez, D-Tex., were seeking increased federal oversight of derivatives.
However, the next Republican-controlled Congress isn't likely to pursue stiff derivatives oversight legislation.
Congressional sources say that the use of derivatives, while still a concern due to the many reports of losses, is not going to be high on legislative agendas.
