In This Section

Legislative Updates: October 2009


Capitol Call

Congress returned from its long recess in September to a backlog of work that could keep it in session until Christmas. Often the real work does not happen in D.C. until the fall, when deadlines are approaching and negotiations begin in earnest. This fall, health care is front and center, and most other topics have been delayed until next year.

Financial regulatory reform, however, may still be debated on the floors of Congress, if the Committees in both chambers can get done on time. As a result, staffs are hard at work putting legislation together for review by Committee members.

One provision that will not be included in any final financial regulatory reform legislation is a merger combining the CFTC and SEC; jurisdictional issues proved too much to overcome. Instead, the Administration asked the agencies to make recommendations to Congress on areas where they can harmonize their statutes in order to reduce regulatory arbitrage and enhance consumer protection. The agencies announced on September 30—the original due date—that their report to Congress will be ready on October 15. It remains to be seen what recommendations will be included in the legislation working its way through Congress.

As part of the harmonization project, the CFTC and SEC held two days of joint hearings on the issue in early September. It was the first time the two agencies had held joint public hearings. The goal of the hearings was to "solicit views from industry participants, experts, and the public on the current regulatory scheme, harmonization of the agencies' rules and recommendations for changes to statutes and regulations." Wayne Luthringshausen, OCC's CEO, was one of the 30 witnesses who provided expert testimony on OCC’s unique position on harmonization, the result of being regulated by both agencies. CBOE CEO Bill Brodksy and Larry Liebowitz, NYSE Euronext SVP, also shared their views on what issues can be harmonized between the two agencies.

A couple of weeks later, the House Agriculture Committee held two hearings on the Administration’s proposal to regulate OTC Derivatives. Chairman Collin Peterson (D-MN) passed his own version of OTC derivatives legislation out of his committee in February, and this hearing was a continuation of his Committee's work with both the House Financial Services Committee (HFSC) and the Administration on this issue. SEC Chairman Mary Schapiro and CFTC Chairman Gary Gensler both appeared before the Committee to repeat their refrain that more transparency and integrity must be brought to the OTC derivatives markets. Congress is continuing to craft legislation to regulate OTC derivatives traders and bring these contracts onto clearinghouses whenever possible. We expect a bill to be considered by the full House by the end of the year.

Lastly, with Senator Chris Dodd (D-CT) remaining as Senate Banking Committee Chairman, Senator Tom Harkin (D-IA) resigned his Chairmanship of the Senate Agriculture Committee to take over the Senate Health Committee, which was open after the death of Senator Kennedy. As a result, Senator Blanche Lincoln (D-AR) assumed the Chairmanship of the Senate Agriculture Committee, which has jurisdiction over the CFTC. Industry observers reacted favorably to this news, as she is expected to take a moderate position on the issue of OTC derivatives.

No ratings yet
Email Options Professionals

Questions about anything options-related?
Email an options professional now.
Speak to an Options Professional!
Chat with Options Professionals

Questions about anything options-related?
Chat with an options professional now.

Start Live Chat


  • Free, unbiased options education
  • Learn in-person and online
  • Advance at your own pace