Newspaper article THE JOURNAL RECORD

Agency Should Lead in Regulating Markets / Says Sec Head

Newspaper article THE JOURNAL RECORD

Agency Should Lead in Regulating Markets / Says Sec Head

Article excerpt

WASHINGTON (AP) - The chairman of the Securities and Exchange Commission said Wednesday his agency - not the Federal Reserve Board - should have the lead role in regulating the nation's financial markets in order to avert another stock crash.

David S. Ruder, testifying before the Senate Banking Committee, rejected a key recommendation of the presidential task force headed by former New Jersey Sen. Nicholas Brady.

``The Federal Reserve lacks the necessary expertise regarding both equity and futures markets,'' Ruder said during the second of four hearings by the committee on the Oct. 19 stock market plunge.

Brady, who appeared before the panel Tuesday, argued that the explosion of computer technology has inextricably linked the stock markets, regulated by the SEC, with the futures markets, regulated by the Commodity Futures Trading Commission. Since they function as one market, they should be overseen by one agency, preferably the Federal Reserve, he said.

Federal Reserve Chairman Alan Greenspan, in testimony Tuesday, also rejected the notion that the Fed should oversee the markets, saying that involvement of the Fed in the securities market might leave the mistaken impression it stood ready to bail out bankrupt stock brokerages.

Ruder said Congress may eventually want to give the SEC jurisdiction over stock index futures, currently regulated by the CFTC. But, as an interim step, it should give the SEC limited power to resolve SEC-CFTC disputes in trading halts and other areas that affect both markets, he said.

``The first thing that should happen is cooperation and if there's any tie-breaking that should be done, it should be done by the SEC,'' Ruder said.

The hearings are part of the continuing debate over what to do to prevent a reoccurrence of the October crash, which saw the Dow Jones industrial average plunge 508 points in a single day. The various agencies are each striving to maintain their traditional powers and duties. …

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