The U.S. Senate passed sweeping legislation Thursday to curbabuses in the nation's futures trading pits and toughen theregulatory powers of the federal agency that oversees them.
The 90-8 vote climaxed two years of political wrangling over theSenate bill, which seeks to end a jurisdictional dispute betweenrival regulators.
The bill, which would reauthorize the Commodity Futures TradingCommission, gained approval after extensive debate about whether theCFTC or the Securities and Exchange Commission should regulate newfinancial products with aspects of both futures and securities.
Chicago exchange officials applauded the bill's approval, as didthe CFTC.
Under the legislation passed by the Senate, a new hybridfinancial product would be regulated by the SEC if it is more like astock and by the CFTC if it is more like a futures contract. Presentlaw says an instrument with any futures contract aspects falls underCFTC jurisdiction.
The compromise, reached last month, was largely proposed by CFTCChairman Wendy Gramm. SEC Chairman Richard Breeden and FederalReserve Board Chairman Alan Greenspan opposed it.
The Senate bill also would give the Fed authority to set marginsfor stock-index futures. Margins are upfront money required totrade.
A House-Senate conference committee will consider the Senatebill along with a House bill that includes similar market reforms butdoes not change stock-index futures margin authority or address thefight over other hybrid products. Chicago Mercantile ExchangeChairman Jack Sandner said he expects House-Senate conferees to meetwithin the next couple of weeks.
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