As part of a broader effort to better coordinate efforts meant to support lawful innovation and uphold market integrity, the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) entered into a memorandum of understanding (MOU), the agencies announced on March 11.
In conjunction with the MOU, the agencies launched a “Joint Harmonization Initiative” to advance coordinated oversight and promote regulatory clarity in areas of common regulatory interest, according to a joint press release.
SEC Chairman Paul Atkins said the aim of the MOU and corresponding initiative is to end “regulatory turf wars” between the two agencies. He acknowledged the need to address duplicative agency registrations and varying sets of regulations between the SEC and CFTC, which have “stifled innovation and pushed market participants to other jurisdictions.”
“This updated Memorandum of Understanding will serve as a roadmap for a new era of harmonization between the agencies – one that is critical to support U.S. leadership in this next chapter of financial innovation,” Atkins said in the release. “By aligning regulatory definitions, coordinating oversight, and facilitating seamless, secure data sharing between agencies, we will ensure our rules and regulations deliver the clarity market participants deserve.”
CFTC Chairman Michael Selig compared the agencies’ need to evolve their regulatory frameworks to the evolution the U.S.’s financial markets are constantly undergoing in terms of scale and adaptiveness to meet investor demands.
“Like our markets, the CFTC’s and SEC’s regulatory frameworks must also evolve and modernize to accommodate the needs of our market participants,” Selig said. “This MOU solidifies the agencies’ commitment to harmonize regulatory frameworks to provide comprehensive and seamless financial market oversight. By working together, we’ll eliminate duplicative, burdensome rules and close gaps in regulation for the benefit of all Americans and usher in a Golden Age of American finance.”
The initiative will support coordination across the policymaking, examination and enforcement functions of each agency, particularly for joint applications and shared policy efforts, including:
- Clarifying product definitions through joint interpretations and rulemakings.
- Modernizing clearing, margin and collateral frameworks.
- Reducing frictions for dually registered exchanges, trading venues and intermediaries.
- Providing a fit-for-purpose regulatory framework for crypto assets and other emerging technologies.
- Streamlining regulatory reporting for trade data, funds and intermediaries.
- Coordinating cross-market examinations, economic analyses, risk monitoring, surveillance and enforcement.