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“One of the great challenges facing the financial services industry is the need for regulatory reform in the U.S.,” said Marc Lackritz, SIFMA president and CEO. “This process, initiated by Secretary Paulson, provides an excellent opportunity to reform an antiquated system and simultaneously move financial services regulation in the U.S. into the 21st century. With a regulatory landscape plagued by duplication and conflicting standards, the need to improve regulation couldn’t be greater. Doing nothing is not an option.”
“Our businesses and our markets are increasingly converging and driven by technology. It’s time for regulation to catch up,” Lackritz added. “The U.S. regulatory regime is in need of both substantive and structural reform. We need reform to move to principles-based regulation, coupled with prudential supervision and liability reform, to ensure that regulation becomes flexible, encourages innovation and competition, protects against systemic risk, and protects investors.”
Substantive Reform:
- Consider Competitive Effects – The competitiveness of the U.S. economy should be made a priority when approaching regulatory reform. Significant benefits would be achieved through a regulatory approach that specifically seeks to protect investors, strengthen competition, and promote safety and soundness.
- Embrace Principles-Based Regulation – A shift from a rules-based approach to regulation to a more principles-based approach should provide firms with the flexibility to respond appropriately to new market developments and innovations, without compromising investor protection.
- Enhance Efforts to Implement Prudential Regulation – Regulators should build upon current efforts to implement a more prudential approach to regulation. By “prudential regulation” SIFMA means a consultative relationship between the regulators and regulated, where the regulators proactively assist the regulated in developing a robust control and compliance environment and in resolving potential issues without resorting to enforcement actions as a first step.
- Address Differences in Wholesale and Retail Markets Comprehensively – Regulators should undertake a comprehensive effort to tailor their rules and regulations to address the differences between wholesale and retail markets.
- Streamline Introduction of New Financial products – Eliminate the prior review process for new financial products, and replace it with a more flexible approach that both protects investors and recognizes the competitive issue related to new products.
Structural Reform:
- Implement a More Effective and Efficient Regulatory Structure – Effective and efficient regulation of financial institutions is likely to be achieved through a reduction in the number of financial regulators, the regulation of similar firms in a similar manner, and the creation of a framework in which each financial institution is supervised by only one primary regulator.
- Consolidate CFTC and SEC – Consolidate the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), bringing the oversight of many financial products (whether or not characterized as securities or futures) under one agency.
- Evaluate Need for Additional Financial Regulation Reforms – Extensive financial regulation reforms involving not only the SEC and CFTC, but also the banking, state and insurance regulators may be warranted.
- Update Cross-Border Regulations – SIFMA supports a phased and tiered approach to cross-border regulatory reform, which addresses pressing issues facing investors and markets under current law in the short term, and works toward broader reforms in the longer term.
Follow the link below to view SIFMA’s full letter:
http://www.sifma.org/regulatory/comment_letters/58152600.pdf
