The US Federal Reserve and Securities Exchange Commission (SEC) are discussing an agreement to revamp the regulation of the US financial markets, which could include drawing up data sharing agreements between the two bodies.
The agreement, which is rumoured to be announced this week, is intended to fill gaps in regulatory oversight and increase cooperation between the Fed and the SEC in the aftermath of last year’s credit crunch and the resulting market downturn.
The type of information to be shared between the two regulatory bodies is due to include data regarding settlements, trade and positions. The SEC will also get information from the Fed on short term financing from the banks that clear trades and hold collateral for the securities firms.
This would allow the Fed to see an investment bank’s trading positions, its leverage and its capital requirements and expand the central bank’s oversight to include investment banks. Under the current system, the SEC has oversight of brokerage firms, while the Fed has oversight of bank holding companies and commercial banks.
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