Legislative Action On Market Reform Isn't Expected Soon
WASHINGTON -- Before initiating legislation to change the way the financial markets work, the Senate Banking Committee seems inclined to give the existing regulatory structure a chance to implement some of the reforms recommended by the Brady task force.</br></br>Four days of hearings by the panel last week made it clear that, less than a month after being released, the task force's central conclusion -- that the separate financial markets actually operate as one -- has become part of Washington's conventional wisdom. And the recommendations the presidential commission on the crash drew from that conclusion have effectively become the congressional agenda for change.</br></br>But not for legislative action -- at least this year.</br></br>Most members of the banking panel reacted favorably to several of the Brady report's recommendations -- especially its calls for better clearing systems; for coordinated intermarket regulation; and for cross-market "circuit breakers," such as trading halts. But before trying to implement those changes themselves, by giving either the Federal Reserve Board or the Securities and Exchange Commission new powers, the lawmakers indicated they want to see if the current regulatory system can do the job.</br></br>"Try to do what you can, working cooperatively with the other bodies involved, to make the necessary changes in the markets without congressional action," Sen. Christopher Bond (R., Mo.) told John Phelan, the chairman of the New York Stock Exchange, in a comment typical of several made during the hearings. "We are willing, if it's absolutely necessary, to move legislation. . . . But we would hope that this process could move along with self-initiated efforts."