The SEC and the CFTC today proposed requiring advisers who recommend commodities to adhere to a fiduciary standard as part of a 20-point plan to improve regulation.
The SEC and the CFTC today proposed requiring advisers who recommend commodities to adhere to a fiduciary standard as part of a 20-point plan to improve regulation.
“We need to cover consumer protection,” said Commodity Futures Trading Commission Chairman Gary Gensler. “All activities or persons, whether regulated by the [Securities and Exchange Commission] or CFTC, whether they be a commodity-trading adviser or a broker-dealer or investment adviser, should … be governed by the same standards.
“The public really sees financial advisers, whether they're regulated by us or regulated by the SEC, in a similar context, and right now, it can be confusing.”
A fiduciary duty requires that advisers put clients' interests before their own.
The agencies today released a 94-page report to Congress that outlined 20 recommendations aimed at harmonizing SEC and CFTC regulation.
Consistent standards should apply to commodity-trading advisers, futures commission merchants, introducing brokers, broker-dealers or investment advisers who provide similar services, the report said.
Fiduciary standards do not currently apply to CFTC regulations, and most futures customers are generally sophisticated institutional or commercial investors.
However, the report concluded, “if a fiduciary standard were imposed on broker-dealers who provide personalized financial advice, it would seem arbitrary for a different standard to govern [futures commission merchants] or [introducing brokers] that perform functionally equivalent services for a customer.”
