With more and more listings going overseas, U.S. Treasury Secretary Henry Paulson asked participants in the financial services industry to submit comments on issues ranging from broad subjects, such as what participants expect from regulation, to whether we should follow a rules-based approach or principles-based approach to regulation, to what major developments of the last 20 years have altered the role of regulators. The questions delved into issues relating to banks and deposit insurance and the role of the central bank, but the hot-button question was whether we should follow the UK example and create a single regulator for securities and futures. Among the questions posed were the following:
*Is there a continued rationale for distinguishing between securities and futures products and their respective intermediaries?
*Is there a continued rationale for having separate regulators for these types of financial products and institutions?
*What type of regulation would be optimal for firms that provide financial services related to securities and futures products? Should this regulation be driven by the need to protect customers or by the broader issues of market integrity and financial system stability?
*What is the optimal role for the states in securities and futures regulation?
*What are the key consumer/investor protection elements associated with products offered by securities and futures firms? Should there be a regulatory distinction among retail, institutional, wholesale, commercial, and hedging customers?
*Would it be useful to apply some of the principles of the Commodity Futures Modernization Act of 2000 to the securities regulatory regime? Is a tiered system of regulation appropriate? Is it appropriate to make distinctions based on the relative sophistication of the market participants and/or the integrity of the market?