[JURIST] Finance expert William Brodsky [FIA profile] on Friday called for the merger [testimony, PDF] of the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) [official websites]. Brodsky and others testified before the US House of Representatives Committee on Financial Services [official website] to discuss Obama administration proposals for financial regulatory reform. The Chicago Board Options Exchange [corporate website] CEO maintained that merging the two financial regulators was necessary to account for "increasingly sophisticated technology." Brodsky argued that the failure to modernize the current regulatory system has resulted in unregulated gaps, market congestion, and a lack of regulatory perspective. He agreed with the proposal's recommendation that a single authority should be assigned to supervise firms that potentially pose a risk to financial stability:
It has become increasingly clear over the part two decades that our system of regulating securities and futures under two distinctly different statutory structures - with separate regulatory agencies and different congressional committees - causes needless legal uncertainty and delay, impedes innovation and competition, and imposes unnecessary costs on our financial markets.
Brodsky said that he supported the creation of a Financial Regulatory Oversight Council, which would be chaired by the Treasury, to resolve potential disputes between the SEC and CFTC.
The current economic crisis has been an impetus behind recent calls for financial reform. Earlier this week, SEC Chairwoman Mary Schapiro testified before the House Subcommittee on Capital Markets, Insurance and Government-Sponsored Enterprises that the commission is engaging in more vigorous enforcement [testimony; JURIST report] of its rules and policies. Last week, the CFTC announced plans [press release, PDF; JURIST report] to hold a public hearing on a series of regulatory reforms aimed at curbing excessive speculation in energy commodity markets. CFTC Chairman Gary Gensler said that the different regulatory treatment given to agriculture commodities "deserves thoughtful review." In March, US Treasury Secretary Timothy Geithner said that his department plans to propose [JURIST report] stronger rules in response to the economic crisis. Last year, then-Treasury secretary Henry Paulson Jr. unveiled a plan [JURIST report] to merge the SEC and CFTC to overhaul the nation's financial regulatory system.