To mitigate against any future financial catastrophes, the Investment Company Institute on Tuesday called for two new regulators that would focus on systemic risk and the capital markets, bridging the functions of the Securities and Exchange Commission and the Commodity Futures Trading Commission.

The ICI also believes that all major sectors of the capital markets should be represented on a Capital Markets Advisory Committee. In addition, the ICI believes the regulatory structure for banking should be consolidated and insurance companies should submit to a federal charter.

The Systemic Risk Regulator would act as an inter-agency body to help assure greater overall stability for the financial system. However, the regulator should be sensitive as to not stifle innovation or competition, or impose needless regulation or bureaucratic burdens.

The Capital Markets Regulator would be the “regulatory standard setter for all registered investment companies, including money market funds, and the first line of defense with respect to risks across the capital markets,” according to the ICI. Specifically, it would address gaps in regulation relating to hedge funds, derivatives, and municipal securities, as well as to harmonize the legal standards applicable to investment advisors and broker/dealers.

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