US capital markets can be sluggish over new products. So lawyers are encouraged by a new agreement between the SEC and the CFTC (Commodity Futures Trading Commission) that could speed up deals and help the US compete internationally.
"It came as a surprise. It was not anticipated," said Anna Pinedo at Morrison & Foerster.
The hope is that conflicting regulators will come together to make the process of approving new products more efficient. Slower approvals hurt the competitiveness of US capital markets with foreign exchanges, where new financial products come to market faster.
On the SEC side, with lots of the exchange traded funds (ETFs), exchange-traded notes (ETNs) and structured products linked to commodities, there was concern that the SEC wasn't the best place to have products reviewed.
"I'm hopeful that with products that the CFTC is more familiar with, the SEC will let them take a leading role and that will speed up the process," said Pinedo.
Generally, the CFTC's principles-based system is faster in getting new products out to the market than the SEC, which is rules-based.
"The SEC chairman has talked for a long time about moving to a more principles-based system. Hopefully the pendulum will swing more in that direction," said Pinedo.
There is speculation that this may be the first step towards the two entities merging, though the CFTC has opposed suggestions of a merger.
The US Treasury is also in the process of devising a reform plan that would change the way the US regulates financial institutions, including more disclosure for banks and Wall Street firms. LB