Rep. Barney Frank, D-Mass., the retiring co-architect of the Dodd-Frank Act, proposed legislation that would merge the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) to create one regulator that oversees the securities, derivatives, options, futures and other markets.
The bill, HR 6613, would establish an independent five-member commission known as the Securities and Derivatives Commission. The commission would inherit current SEC and CFTC employees and functions.
Frank said the existence of a separate SEC and CFTC is “the single largest structural defect in our regulatory system.” However, he said if such a merger had been included in the Dodd-Frank Act, the provision “would almost certainly have caused the defeat of that legislation.”
Title VII of the Dodd-Frank Act set forth a new regulatory framework for over-the-counter derivatives and directed the CFTC to promulgate rules intended to enhance the transparency of the swaps markets. The CFTC and SEC were required to coordinate on many foundational rules related to swaps and security-based swaps. Title IX of the Dodd-Frank Act mandated several SEC rulemakings including those related to proxy disclosures, executive compensation and corporate governance.
“Now that the basic policies have been adopted to cover security and derivatives regulation we can focus on the structural issue,” Said Frank, who will retire from Congress when his term ends in January. “I file this bill now because I believe it is time for this to be on the agenda of the next Congress.”
Introduced on Nov. 29, the measure is co-sponsored by Reps. Gary Ackerman, D-N.Y. and Michael Capuano, D-Mass.
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