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U.S. Securities and Exchange Commission

Speech by SEC Commissioner:
Remarks Before the Joint Meeting of the SEC and the CFTC on Harmonization of Regulation


Commissioner Elisse B. Walter

U.S. Securities and Exchange Commission

Washington, D.C.
September 2, 2009

Thank you, Chairman Gensler and Chairman Schapiro. I am very happy to be part of this joint meeting of the SEC and the CFTC to discuss the harmonization of regulation. The SEC and the CFTC have worked together for years—and, yes, on occasion dueled. It has become increasingly obvious, particularly during the recent financial crisis, that the current bifurcated approach to securities and futures regulation is outdated and in need of overhaul. I believe that the discussion over the next two days will be an important step in this direction.

Splitting the regulation of securities markets and the futures markets between two agencies makes it very difficult for either agency to have comprehensive oversight of our financial markets. Regulatory cooperation is absolutely essential if we are to come as close as possible to consolidated real-time information over markets that have become highly interrelated in recent years. That knowledge is necessary if our respective agencies are going to be able to prevent market manipulation, fraud, and other abuses effectively. To put it simply, you cannot regulate what you cannot see.

Also, as financial products become increasingly indistinguishable in economic function and purpose, it is very difficult to determine their correct regulatory treatment. Agency disputes over products that straddle regulatory boundaries serve neither the interests of investors nor the efficiency and competitiveness of our financial markets. The time has definitely come for our two agencies to not only work together, but to successfully harmonize our regulatory regimes where differences are not justified.

Now, as some of you may know, I once served as the General Counsel of the CFTC, back when SEC Chairman Schapiro was CFTC Chairman Schapiro. My experience at the two agencies has given me the good fortune to observe—and on more than a few occasions participate in—these debates and discussions from both sides of the regulatory table. Whatever the differences that may need to be ironed out and the gaps that need to be filled in, I believe that each agency has a unique perspective to bring to the table. For example, when I was at the CFTC, I was always struck by the extent to which economists played a central role, which is—I believe—a great benefit to the agency. I cannot help but believe that more cross-agency pollination of thought would be beneficial for both agencies.

Thank you to our staffs. I look forward to the discussion.


Modified: 09/18/2009