Back in March we wrote about the report “Sold Out: How Wall Street and Washington Betrayed America,” published by Essential Information and the Consumer Education Foundation. The report stated that $5 billion in political influence purchasing in Washington over the past decade had led to our current economic collapse.

 The report was anything but shocking as the influence of big money on public policy is no secret. Many depression era reforms were struck down in the past decade, which allowed among other things the merger of commercial and investment banking and an increase in the amount of leverage financial institutions could utilize.

Continue reading ‘Say that again, you must be joking’ »

CME Group CEO Craig Donohue had a very relevant quote during today’s meetings on harmonization between the Commodity Futures Trading Commission (CFTC) and Securities and Exchange Commission (SEC). Alluding to the differences between the securities and futures markets, Donohue said it was like “Greeks speaking Chinese to people who speak Portuguese.” Sorting out the regulatory overlaps between the CFTC and SEC and achieving the harmonization called for by President Obama’s regulatory blueprint is a complicated matter indeed. The two agencies must complete a report on harmonization by Sept. 30. Otherwise, the matter will be forwarded to the Financial Services Oversight Council. CFTC Commissioner Bart Chilton said he was optimistic that the two agencies could “solve their issues without ’Mom and Dad’ in the form of the Treasury Department stepping in.”   Continue reading ‘CFTC-SEC: Hiccups to harmony?’ »

…Principles-based regulation, that is. The Options Clearing Corporation released testimony to be given by their Chairman and CEO Wayne Luthringshausen at a meeting tomorrow on the harmonization of the Commodity Futures Trading Commission (CFTC) and Securities and Exchange Commission (SEC). In his testimony, Luthringshausen calls for “combining the functions of the SEC and CFTC under a new principles-based statute to ensure holistic oversight of all derivatives products.” The battle between the SEC’s rules-based approach and the CFTC’s principles-based approach to regulation has caused conflict in the industry for years.

Continue reading ‘It’s all about the principles…’ »

Monday morning Bernie Madoff received a 150-year sentence for operating an estimated $65 billion Ponzi scheme, the maximum sentence he could have received from the U.S District Court. Hundreds of scathing comments are flowing into blogs and other news venues spewing venom at Madoff for his incredible crime.

We would like to see some of this anger reserved for the agencies whose job it was to regulate Madoff.

Continue reading ‘Madoff gets maximum’ »

In testimony before the Senate Banking Committee today, Commodity Futures Trading Commission (CFTC) Chairman Gary Gensler laid out some objectives for the regulation of over the counter derivatives, including modification of the Commodity Exchange Act (CEA). OTC derivatives are still a hot topic in the industry, especially after President Obama’s regulatory reform proposal last week called for both the Securities and Exchange Commission (SEC) and CFTC to have a hand in regulating them. Continue reading ‘Gensler talks OTC reform’ »

In what is being described as the most sweeping regulatory overhaul since the 1930s, President Obama on Wednesday introduced his blue print for a new regulatory environment in a Treasury document titled: Financial Regulatory Reform, A new Foundation: Rebuilding Financial Supervision and Regulation.  

The size and scope of the recommendations ensured that most of the initial responses by industry insiders were positive affirmations of the general principles. After all there will be plenty of time to tear it apart and given its enormous scope and the realities of the sausage making process of legislation, the likelihood of the recommendations becoming law anytime soon is pretty slim.  

Continue reading ‘A new ball game for regs’ »

Industry leaders wasted no time commenting on the Obama Administration’s new regulatory reform proposal, “Financial Regulatory Reform: A New Foundation,” released yesterday.

The proposal received mostly a chorus of praise from the industry. CME Group called it “a significant step towards restoring confidence in the integrity of financial markets.” International Swaps and Derivatives Association CEO Robert Pickel said in a statement that it “provide[s] an important framework for financial regulatory reform.” In his statement, Futures Industry AssociationPresident John Damgard “commend[ed] the administration for the thoughtfulness and comprehensiveness of its plan.” In a statement, Chicago Board Options Exchange ChairmanBill Brodsky said, “We are particularly pleased that the plan recognizes the need for greater coordination and harmonization of the SEC and CFTC,  including streamlining the approval of new products and rule filings.” But not everyone is singing the proposal’s praises. Continue reading ‘Proposal packs punch’ »

The Securities and Exchange Commission (SEC) has, to put it mildly, had a not-so-great record of keeping fraud in check over the past few years, and now the U.S. government could be taking action. The Obama administration could strip the SEC of some of its powers as part of a regulatory overhaul, according to Bloomberg. While the story merely speculates on the removal of powers, some of which would be handed over to the Federal Reserve, it’s an interesting idea and raises questions about where regulation in the United States is headed. Continue reading ‘SEC stripped?’ »

This week has been a busy one for new regulation affecting the futures and options industry. It started off on Monday with the Treasury’s 2010 revenue proposal that included a proposal to eliminate 60/40 tax treatment for futures and options traders. Then on Wednesday, the Treasury Department released a proposal on regulatory reform for over the counter (OTC) derivatives. That one was less of a bombshell.

Continue reading ‘Regulatory rumblings’ »

Regulatory issues are all the rage today in Weston, Florida, at the 27th Annual Options Industry Conference. At a press breakfast this morning, Chicago Board Options Exchange Chairman Bill Brodsky discussed the changing of the guard at the Securities and Exchange Commission and Commodity Futures Trading Commission. He called new SEC chair Mary Schapiro “as well qualified as anyone in recent history” and said the SEC “has a really good cadre of commissioners.” Meanwhile, confirmation for President Obama’s nomination to head the CFTC, Gary Gensler, is being held up by various political stalemates in the Senate. Brodsky said he “doesn’t know whether [Gensler] will make it” but hopes to see him get the job.

Continue reading ‘Options bigs talk shorts’ »