SEC and Federal Reserve Agree to Improve Information Sharing

The Securities and Exchange Commission and the Federal Reserve agreed on an information-sharing pact on Monday, which aims to better detect potential risks to the financial system.

U.S. Treasury Secretary Henry Paulson released a brief statement saying the memorandum "is consistent with the long-term vision of Treasury's Blueprint for a Modernized Regulatory Structure and should help inform future decisions as our Congress considers how to modernize and improve our regulatory structure."

The agreement stipulates that the SEC and the Fed will co-operate on issues of common interest such as anti-laundering efforts, bank brokerage activities, and clearing and settling financial transactions conducted by investment firms or banks.

Fed chairman Ben Bernanke said, "I am pleased with this agreement. It formalizes and strengthens the ongoing cooperation between our two agencies to enhance the stability of the financial system."

SEC chairman Christopher Cox added that the agreement should "help ensure that regulated entities receive a coherent message from Uncle Sam."

A press release from the Fed said the agreement should help the SEC "to perform its role as primary supervisor of Consolidated Supervised Entities and Primary Dealers, and improve the ability of the Federal Reserve to perform its role in overseeing the stability of the financial system."

The two agencies have been working together more closely since the Bear Stearns credit crisis in mid-March.

By Patrick McGee and edited by Cristina Markham