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Securities Compliance Sentinel Analysis of cutting-edge securities industry issues

THE SEC AND CFTC WORKING TOGETHER

Posted in Dodd-Frank

Over the last several years, Congress and industry insiders have discussed whether it is time to merge the SEC and CFTC.  After some high-profile regulatory lapses by both agencies, Congressional studies indicated that the lapses were due, in part, to the lack of coordination and failure to share information between the agencies.  In late 2012, Representative Barney Frank introduced a bill to merge the two agencies.  Although combining the two agencies would likely streamline financial regulation, the CFTC has made changes in recent years to its structure to prevent a merger.  The largest stumbling block is the Agriculture Department, which does not want to lose control over the CFTC. 

Despite years of rumors and discussions over merging the two agencies, Congress has not come close to passing legislation for the President’s signature.  However, there are signs that the SEC and CFTC are more closely working together.  For example, the two agencies have worked together to issue final rules implementing the Dodd-Frank Act, and recently, the deputy director of the SEC’s Office of Compliance announced that the SEC and CFTC could “potentially” conduct joint exams. 

While these may seem like baby steps to those who want to see streamlined regulations under one combined agency, there is a possibility that support for combined agency could gain momentum in Congress, especially if another high profile regulatory failure embarrasses one or both organizations.  Most political observers believe that the recent bill proposed by Barney Frank is unlikely to have much support as standalone legislation, but the bill could be attached to more complex legislation in 2013.