By Karey Wutkowski
WASHINGTON (Reuters) - The chairman of the U.S. Securities and Exchange Commission said on Thursday he "strongly" supported a merger between his agency and the Commodity Futures Trading Commission.
SEC Chairman Christopher Cox said a select committee on financial services regulatory reform should be appointed and should explore the merger of the two agencies.
"It could tackle the challenge of merging the SEC and the CFTC, which I strongly support," Cox said during testimony before a Congressional hearing. "This would bring futures within the same general framework that currently governs economically similar securities."
Cox's comments mark the first time he has publicly supported such a merger. His remarks echo recommendations from U.S. Treasury Secretary Henry Paulson who stated in his regulatory reform blueprint in March that the SEC -- the U.S. markets watchdog -- should merge with the CFTC, which is charged with overseeing the activities of the nation's futures market.
Such a merger has been proposed for years, but jurisdictional battles among lawmakers have prevented the idea from gaining much traction.
The SEC and CFTC in March signed an agreement to increase cooperation between the agencies and streamline the approval process for new products.
While the regulators' responsibilities were once clear cut, the lines have blurred as technology and cross-ownership increasingly intertwine the two markets.
The memorandum established a permanent liaison between the agencies, requires staff from both agencies to meet every quarter and sets up a framework for sharing information.
Cox said on Thursday that split legislative jurisdictions have created gaps among financial regulation. "This long-running turf battle is one of the reasons that credit default swaps aren't regulated," he said.
Cox, who has headed the SEC since August of 2005, on Thursday reiterated pleas to give the SEC authority to regulate the fast-growing $55 trillion credit default swap market, which has been blamed for exacerbating the financial meltdown.
Used to insure against bond default risk, swaps are so large and their terms are so poorly understood that they played a key role in freezing up the credit markets.
(Reporting by Karey Wutkowski and Rachelle Younglai)
