Lukken calls for regulatory overhaul as he prepares to step down

Walter Lukken, acting chairman of the US Commodity Futures Trading Commission, today called for new oversight arrangements and defended the independence of the CFTC, in one of his last speeches before he leaves his post in January.

Lukken said that, as a political appointee, he would step down as acting chairman at or before the inauguration of President-elect Barack Obama on January 20, 2009 and would leave the CFTC shortly afterwards.

He supported the US Treasury's plan for a three-part regulatory framework - consisting of offices responsible for systemic risk, market integrity and investor protection - in place of the present arrangement, but reiterated his earlier opposition to the proposed merger of the CFTC and the Securities and Exchange Commission.

"This is code for the larger SEC - along with its rules-based model and culture -taking over the principles-based CFTC. In my view, this would be ineffective and would only reinforce our outdated regulatory structure. Simple merger is a recycled idea when bold solutions are needed," he said.

Instead, while the regulatory structure is overhauled, the government should create a national regulatory board, comprising the heads of the Federal Reserve, the CFTC and the SEC, he said.

He also supported efforts to create a central counterparty for over-the-counter credit derivative trades, and advocated a global standard for sharing market data between national regulators.

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