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March 2, 2012

Trading Desks Get FSOC Visits

By Peter Chapman

Trading desks are starting to get visits from Washington's new super regulator: the Financial Stability Oversight Council. Formed in 2010 as a result of the Dodd-Frank Act, FSOC is an interagency regulatory body chaired by the U.S. Treasury and charged with identifying risks in the U.S. financial system. Its role is to support the primary financial industry regulators with information and rule-making proposals. Among other initiatives, the group is taking the lead in pushing the Volcker rule.

"FSOC is spending a lot of time meeting with firms and learning about market structure," Brendon Weiss, a regulatory attorney at NYSE Euronext, said at a recent industry conference. "They are trying to understand how exchanges and their members interact. They want to know how trading desks are structured-whether it is a bank or prop trading desk."


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FSOC is overseen by a group of 10 voting members and five nonvoting members, taken from the major regulatory bodies in Washington. Mary Schapiro, chairman of the Securities and Exchange Commission, and Gary Gensler, chairman of the Commodity Futures Trading Commission, are board members.

Weiss, who was speaking at a Security Traders Association event, noted that the FSOC staffers are "pretty sharp people who have spent time in the industry." He added that they are not just attorneys, but have spent time on trading desks and the business side of the banks.