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Speech by SEC Chairman:
Opening Remarks before the SEC-CFTC Joint Meetings on Regulation Harmonization


Chairman Mary L. Schapiro

U.S. Securities and Exchange Commission

Washington, D.C.
September 2, 2009

Good morning. I am pleased to be here today with my fellow Commissioners from both the SEC and CFTC. And, I want to thank Chairman Gensler and the CFTC for hosting this first day of joint meetings. We look forward to continuing the dialog tomorrow at the SEC.

I would also like to extend our appreciation to our distinguished panelists who are with us to share their insights, advice, and recommendations. We are truly grateful that so many have agreed to participate in these meetings and share their views with us.

Today's hearing will build upon the progress that both agencies have made in discussing harmonization matters, as well as designing a framework to regulate OTC derivatives. I believe it will move us further down the road of harmonizing our regulations, which should in turn, help to increase transparency, reduce regulatory arbitrage and rebuild confidence in our markets.

As you know, the Obama Administration's financial regulatory plan laid out proposals that seek to ensure comprehensive regulation of our financial markets and that seek to fill in gaps that came to light in the wake of the financial crisis.

One important component of the Administration's white paper - and the reason that we are here today - is a recommendation that we harmonize the existing regulatory regimes for futures and securities products. Specifically, the Administration asked our agencies to complete a report that identifies all existing differences in statutes and regulations. Where such differences exist, we must either explain why those differences are necessary or recommend changes to those statutes and regulations.

To advance this important harmonization initiative, we, at the SEC, have been engaging in a continuing dialogue with the CFTC, and staff from both agencies have been developing a coordinated approach to this task. They have undertaken a combined effort to complete a comprehensive evaluation of our regulatory systems to find ways to align the oversight and regulation of similar types of financial instruments.

We have made much progress. We both recognize that enhanced coordination and cooperation concerning issues of common regulatory interest is necessary in order to protect investors, foster market innovation and fair competition and to promote efficiency in regulatory oversight. I am confident that we will also be able to work towards the goals expressed in the Administration's white paper as we seek to build a common foundation for market regulation.

As noted in the white paper, securities regulation and futures regulation share common ground with respect to the broad public policy objectives of protecting investors, ensuring market integrity, and promoting price transparency.

The mission of the SEC is to protect investors, maintain fair, orderly and efficient securities markets, and facilitate capital formation. The mission of the CFTC is to protect market users and the public from fraud, manipulation, and abusive practices related to the sale of commodity and financial futures and options, and to foster open, competitive, and financially sound futures and option markets.

While the securities and futures regulatory regimes share broad public policy objectives, differences do exist in the regulation of markets for securities and futures. I believe that some of these differences are necessary to achieve underlying policy objectives. However, I also believe that many benefits could be achieved through greater coordination and harmonization between the SEC and the CFTC for regulation and oversight of similar types of financial instruments. Some of these benefits include increasing transparency, reducing regulatory arbitrage, promoting product innovation, and rebuilding confidence in our markets.

I believe that the joint meetings that we are holding over the next two days will serve as a foundation for this process. We will have the opportunity today and tomorrow to hear from a wide variety of panelists with varying perspectives.

We are honored to have with us expert representatives from the investor community, market participants, self-regulatory organizations, academia, and the legal community. With such a broad spectrum of constituencies represented, we look forward to an engaging conversation on this topic.

So thank you in advance for your participation. The insight that you provide today will be extremely valuable to the SEC and CFTC as we take further steps towards harmonizing our regulations.


Modified: 09/02/2009