Senate Clears Bill Broadening SEC Regulatory Power
WASHINGTON -- The Senate passed a compromise bill that broadens the Securities and Exchange Commission's ability to gather Wall Street information and for the first time sets guidelines for how the agency can curb forms of program trading.</br></br>The measure, passed by voice vote, is the first Senate-approved legislation to include provisions about program trading, in which computers help trade baskets of stocks and futures on those stocks. The bill, which is expected to breeze through the House in the next few days and be signed by President Bush, also gives the SEC the clout to close down the stock market in periods of extreme stress, provided the president doesn't oppose such a move. Currently only the president can order such a closure.</br></br>Much of the SEC-sponsored bill is direct fallout from the 1987 crash. The bill was first proposed by the SEC under Chairman David Ruder in 1988 but progressed slowly after being introduced in March 1989. It then was jump-started by the market drop in October 1989 and Drexel Burnham Lambert Inc.'s collapse earlier this year, and reflects reactions to those drops and the Drexel bankrupcty filing.</br></br>One section of the bill, for example, would allow the SEC to set up record-keeping procedures for large securities transactions. After the 1987 crash, the SEC complained that it didn't have sufficient information to determine risks to the overall financial system.</br></br>The bill also would allow the federal regulators to strengthen the clearance and settlement system for stocks, options and futures, again in an effort to reduce risks to the financial markets.