One of the best ways to understand the difference between the Commodity Futures Trading Commission's "principles-based" regulations and the Securities and Exchange Commission's "rules-based" governance is simply to attend a public meeting held at each of their respective headquarters.
Principles-based oversight, such as the CFTC's Commodity Exchange Act, is conceptual, offering a set of guidelines that may not be applicable in every situation. The SEC's rules-based oversight, however, is defined by a set of rules that must be strictly adhered to, virtually all the time.
Keeping this in mind, when one attends a public meeting at the CFTC, one simply walks through a revolving door, signs in and mingles with commissioners, speakers and public alike. The atmopshere is easygoing at the breaks, but all business when the time comes to begin. .
At the SEC, one speaks to no less than three security guards, walks through a metal detector and sends items through an X-ray machine -- including taking out and turning on any accompanying laptop, to prove that "it is what it is," according to a security guard. If press, you show your valid government ID or press pass, get your photo taken for a temporary visitor's tag -- which you need to return before you leave for the day -- and head up to your little box overlooking an auditorium, sequestered from the rest of the room. Sometimes one needs an escort (though this wasn't the case at Thursday's hearing on harmonization), even to attend a public hearing or a well-publicized press briefing.
Even food and drink are 'regulated' by similar principles. If there's a rule against having it at the CFTC's meetings, no one has said anything yet. Meanwhile, although the SEC had better coffee (this reporter is easily placated by java from Dunkin Donuts), you couldn't bring it into the meeting with you, according to numerous signs posted around the auditorium.
Is it a safety issue, given that the SEC has more than two times the staffing as the CFTC and deals with some pretty influential markets? Or perhaps the SEC is far too used to its rules, including when and how one can head out the door -- through a set of turnstiles a security guard must activate, no less.
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