ETF News

UPDATE 1-US SEC creating new division to police market risk

* To be headed by law professor Henry Hu

* Combines existing risk and economic offices (Adds comments from Schapiro and Hu, background)

WASHINGTON, Sept 16 (Reuters) - The U.S. Securities and Exchange Commission is establishing a new division to help the agency better identify risks and trends in financial markets.

University of Texas School of Law Professor Henry Hu will head the Division of Risk, Strategy, and Financial Innovation, the SEC said on Wednesday.

The new group combines the SEC’s current Office of Economic Analysis, the Office of Risk Assessment, and other functions. It comes at as the agency is trying to better police over-the-counter derivatives and other financial products.

SEC Chairman Mary Schapiro said in a statement that combining economic, financial, and legal analysis in a single unit will improve the agency’s expertise.

The division will cover three broad areas: risk and economic analysis, strategic research, and financial innovation.

Hu has written extensively on regulation of banks, derivatives, hedge funds and mutual funds.

“The derivatives revolution, the rise of hedge funds and institutional investors, technological change, and other factors have transformed both capital markets and corporate governance,” Hu said in a statement.

The SEC is seeking increased authority over an array of financial products and sectors, such as the hedge fund industry, after the global financial crisis highlighted the mispricing of risk by investors and other market players. (Reporting by Karey Wutkowski; editing by Tim Dobbyn)