WASHINGTON The two major U.S. financial market regulators need additional authority to oversee over-the-counter derivatives, the Senate Agriculture Committee chairman said on Wednesday.
"We need to remember our over-arching goal -- increasing transparency and accountability in the nation's financial markets," Chairman Blanche Lincoln said at a hearing.
Lincoln said "a certain amount of 'market re-engineering' will be in order as a result of changes in financial market oversight."
Lincoln said she was working with the panel's Republican leader on a comprehensive bill on OTC derivatives, Saxby Chambliss, a Georgia Republican. He said commercial end users should not face additional costs under reform.
Treasury Secretary Timothy Geithner said some exemptions from mandatory clearing might be justified for nonfinancial end users. He said they should be narrowly written and available only to companies such as airlines and manufacturers.
Lincoln said she has not decided if an additional hearing was needed on regulatory reform and said, "We don't know" when asked when she and Chambliss would offer a draft. She said any legislation approved by her committee probably would be melded into an overall reform bill.
Many issues must be weighed in writing the bill, said Lincoln.
"To address systemic risk and ensure fully transparent markets, we will have to speak to issues relating to the scope of mandatory clearing, the definition of 'standardization,' segregation of collateral, open access, enhanced capital and margin requirements, resolution authority, and conflicts of interest, just to name a few," she said in a statement.
"We need to strengthen our financial market oversight bodies -- the (Securities and Exchange Commission) and the CFTC (Commodity Futures Trading Commission -- to give them needed authorities over the currently opaque OTC markets, and we need to find the right balance of powers between federal financial oversight authorities to ensure that both markets and regulators operate efficiently," Lincoln said.
(Editing by James Dalgleish)