There Can Be Only One - SEC vs. CFTC Just saw this and it got me thinking about the whole oversight debacle in the options markets. Is it me or does the SEC not have a freaking clue when it comes to options? They are so busy trying to chase Spitzer's tail that they don't do a damn thing about insider trading in options, regulating new products, etc. Worst of all, they just don't understand these markets. IMHO, they should stick to stocks and leave the hard stuff to the big boys, like the CFTC. At least they seem to have a clue as to what a derivative is....
I have to come down on the side of the CFTC. As an options guy, I've seen how the SEC has almost ruined this business. In fact, the options markets seem to be growing these days in spite of the SEC, not because of it. From not acting on payment for order flow to not understanding the product itself, the SEC is just too little, too late. While the CFTC is far from perfect, at least they understand the product that they regulate. They know futures and can handle them accordingly. Giving the SEC oversight of options is equivalent to giving the FCC oversight of the automobile industry. It's a completely different product that is outside their core competencies (e.g. - equities), so they just don't have a clue. Whoo...glad I got that off my chest.
This is an easy one - CFTC wins hands down. They are vastly superior as a regulator. In fact, I'm down here at the FIA Expo in Boca as I write this. Greenspan just finished giving a talk where he completely trashed the SEC and praised the SEC as the superior regulator. If that doesn't answer the question, then I don't know what does.
I have to agree. The SEC is just a joke. Greenspan even trashed them at the recent FIA Expo in Boca Raton. When someone asked him what he thought of the CFTC vs. the SEC, he turned to the audience and said "Are there any defenders of the SEC in the audience?" That got a nice chuckle from the crowd.
Consider any job applicant in the occupational food chain. Who ends up at the SEC? A typical government flunkie who works 9 to 4 and doesn't really give a shit about his job.
That's true. Government agencies typically don't get the sharpest tools in the shed. However, I think there is an argument to be made here for specialization. The CFTC only regulates derivatives, and they are a much more streamlined and efficient organization because of it. The SEC has proven time and again that they can barely handle stocks, let alone stocks and options. So let's create a separate organization to regulate options and let's be done with it. Either that or merge the SEC & CFTC and let's be done with it. But, either way, let's just be done with the SEC.
I think anyone in the futures business would cry out with rage if they read that post. The last thing any futures trader, broker or exchange wants is the SEC messing up their marketplace!! They've worked long and hard to set up a situation that works well for them, and they laugh at all the frustration people on the options and equity sides have to deal with. There's no way powershouses like the CME or CBOT would ever let a regulatory merger happen. It would be the death knell of their business.
Quite true. Somehow, I don't see the futures industry lining up and saying "please bring that trainwreck known as the SEC into our lives." They've got a good thing going. Why would they want to ruin it?