TREASURY SECRETARY NICHOLAS BRADY last week may have had his final say before Congress considers legislative action on the controversial jurisdictional question of stock index futures regulation.
Congress probably will consider the legislation, known as the Brady bill, to shift stock index futures regulation to the Securities and Exchange
Commission from the Commodity Futures Trading Commission before it goes into an extended recess in late August for the fall elections.Mr. Brady, who has pushed for a regulatory switch, reiterated his position before the Senate Banking Committee. That position, he reminded lawmakers, is that SEC jurisdiction over stock indexes would curb the likelihood of major market stock market disruptions.
The Bush administration has proposed the shift as a way of preventing further episodes of severe volatility in equity markets, such as the stock market crash in October 1987.
Mr. Brady said the shift "makes it more likely the CFTC will survive as an independent agency." He may have offered his Congressional remarks again to allay fears at the CFTC that the power of the futures overseer is being whittled away. The CFTC has fought the administration's proposals.
The administration's proposal also would transfer margin authority for stock-index futures to the SEC.
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THE NATIONAL INVESTORS RELATIONS INSTITUTE, a Washington-based liaison group between corporate managers and company shareholders, said the Brady bill has an even chance of passage in the Congress.
Louis M. Thompson Jr., president and chief operating officer of the National Investors Relations Institute said most of his organization's membership favors a shift of regulatory powers for stock index futures products to the SEC.
The organization earlier this year surveyed the membership and found that 89 percent said that program trading contributed to stock market volatility, and while 59 percent opposed regulations eliminating stock index arbitrage, they believed margin requirements for stock index futures should be increased. A majority of members held the belief that SEC should be the agency to establish margin requirements for stock futures products.