How are disparities in SEC and CFTC regulatory regimes impacting innovation in financial markets, and what are the regulators’ plans to improve collaboration?

SEC-CFTC Joint Roundtable Discussion on Regulatory Harmonization

The US Securities and Exchange Commission (SEC) and US Commodity Futures Trading Commission (CFTC) hosted the Joint Roundtable on Regulatory Harmonization Efforts (the Roundtable) on September 29, 2025, the first such session in nearly 15 years. [1] SEC Chairman Atkins and Acting CFTC Chairwoman Pham explained in a joint statement that the catalyst for holding the Roundtable was to reverse the “fragmented oversight and legal uncertainty” that was pushing companies to pursue the launch of novel products overseas and to reestablish America as the “home of financial innovation.” [2] The joint statement also outlined potential areas of focus for the Roundtable discussion including 24/7 markets, event contracts, perpetual contracts, portfolio margining, and innovation exemptions and decentralized finance.

Regulators and registrants have long called for improving regulatory harmonization to promote greater alignment and transparency between SEC and CFTC regulatory regimes. The industry’s appeal for harmonization has been amplified due to the speed of innovation and proliferation of novel financial products in today’s financial markets. Innovators have faced obstacles in navigating US regulatory structure in a timely and efficient manner and, in many cases, have chosen instead to build their businesses outside of the US. The SEC and CFTC leaders recognize the need to work together to facilitate progress and regulatory clarity to ensure that the US remains a leading financial market competitor going forward. However, both agencies also agree that harmonization cannot come at the expense of their core mandates to protect investors and maintain a fair and orderly marketplace.

The financial industry’s support for regulatory harmonization efforts was evident during the Roundtable’s panels, which included former staff and commissioners from both agencies, platform leaders, and industry market participants. The panels covered a wide range of topics including perpetual futures, prediction markets, cryptocurrency, artificial intelligence, decentralized finance (DeFi), and blockchain, but there were five key themes that arose across nearly all of the panels, as summarized below.

New Product Registration Requirements  

Panelists emphasized the difficult and time-consuming nature of bringing new, innovative products to market under the current US regulatory framework. Panelists specifically called for harmonization around the requirements and speed of new product approvals between the two agencies and more transparency around product jurisdiction. Panelists noted that currently the CFTC has faster paths to market with its product self-certification process, but insufficient oversight within that process has led to products being pulled from the market soon after they were listed. Conversely, the SEC’s approval process is viewed as lengthy and burdensome. Panelists noted that disparities in approval processes may encourage firms to design new products to “forum shop” for the most conducive regulatory regime.

Panelists also cited how past conflicting statements between the SEC and CFTC on whether certain products fell within their respective jurisdictions were particularly challenging. They agreed that jurisdictional questions should be clear to the market at the outset; having regulators change directions on a product after it has been launched is disruptive and costly to innovators. Another panelist stated that legal uncertainty and conflicting regulatory guidance in the US can leave firms in the position of having to make their best educated guess about applicable requirements, rendering it more difficult to take a “compliance first” approach.

The Roundtable panelists emphasized that the current US regulatory framework for new product approvals is driving innovators to go offshore, where they can be more efficient in their routes to market and receive better regulatory clarity. Other regions, some of which have only one regulatory point of contact, are overtaking the US as leaders in financial markets innovation. 

Innovation Exemptions

The Roundtable featured discussion on innovation exemptions, which are an initiative by the SEC and CFTC to issue certain regulatory safe harbors and exclusions to foster innovation. The panelists engaged at length on potential pitfalls and merits of innovation exemptions.

Panelists expressed apprehension that innovation exemptions may not be implemented in a manner that allows a level playing field between new entrants and established firms. For example, there is concern that traditional finance (TradFi) platforms, such as NASDAQ or CBOE, may be put at a competitive disadvantage if they are bound by their existing regulatory requirements while newer venues, such as Polymarket and Kraken, could use innovation exemptions to bring client solutions to market faster and with less scrutiny. Panelists pointed out that permitting a new product under an innovation exemption even though it is substantially similar to an existing product that would require onerous regulatory review could lead to market fragmentation.  

Panelists agreed that innovation exemptions can be valuable, so long as they do not create double standards. The SEC and CFTC have signaled plans to consider such exemptions in the DeFi space and, particularly, to fast-track adoption of digital asset products. Further, panelists reported that other countries have already started implementing innovation exemptions, increasing the appeal of non-US jurisdictions to launch new products and platforms unless US regulators can keep pace.

24/7 Markets

Panelists repeatedly addressed the importance of getting to 24/7 markets, driven by crypto advancement, retail demand, and international trading. Panelists also discussed the potential impact of 24/7 markets on corporate America and farmers.

Roundtable participants agreed that continuous trading was here to stay, and technology exists to support it. 24/7 trading already exists abroad and is offered in certain products, such as crypto and FX. However, moving to 24/7 markets in the US will require firms to consider how they will effectively manage risk and access collateral on a 24/7 basis. A staged approach was favored to confirm that necessary market infrastructure is in place to support an always-open market.

Impact of Overlapping SEC and CFTC Regulatory Requirements

The Roundtable discussion highlighted pain points of dual registrant firms that are subject to overlapping regulatory regimes, each with different recordkeeping, reporting, and exam requirements, among others. These dual registrants can face further oversight from SROs like FINRA and the NFA, where additional regulatory asymmetry exists. Moreover, these firms may also have to manage numerous international registration requirements.

Panelists raised past instances where failure to harmonize regulations compounded burdens for firms, including increased fees, filings, and compliance and reporting requirements. In some cases, panelists noted that firms have been faced with conflicting requirements, not just duplication.

Firms that must adhere to both CFTC and SEC trade reporting requirements identified this as a specific area ripe for regulatory harmonization, as the amount of data fields and differences in formats make reporting a costly area for compliance. Panelists suggested that the agencies could review reporting requirements to bring them closer together and focus on the information needed for effective oversight.  

Panelists noted that aligning definitions and requirements for similar products would go a long way toward resolving issues for dual registrants.

Cross-Margining Approvals

Cross-margining processes were also raised various times throughout the Roundtable. Panelists discussed difficulties with cross-margining approvals, specifically in the swaps realm. They generally view current processes as lengthy and disparate. Panelists pointed to upcoming changes in the US Treasuries market as a potential driver for regulatory harmonization in this area. Roundtable participants also suggested that it could be helpful to cross-train agency staff in cross-margining processes.

Looking Forward

Throughout the Roundtable, panelists opined on measures that could be taken to improve regulatory harmonization. They recommended that the agencies consider the inefficiencies and points of contention that the industry has raised in relation to existing policies and requirements to try to minimize similar instances in the future. Panelists called for the agencies to bring the right decision-makers together, including Congress, to create accountability and advance harmonization efforts. All agreed that regulators need to encourage innovation and foster competition and do so in a way that maintains strong protection for customers and the financial system.  

The Roundtable concluded with hopeful commentary from SEC Commissioner Peirce on the move toward regulatory harmonization. Some tangible action has already begun; for example, the SEC’s Project Crypto and the CFTC’s Crypto Sprint are currently working collaboratively toward implementing recommendations from the President’s Working Group on Digital Asset Markets. Operationalizing more of the SEC’s and CFTC’s regulatory harmonization priorities will soon be on the horizon.

The industry will be watching for the next steps following the Roundtable. Stakeholders look forward to understanding how the commentary received by the agencies will influence the shaping of more cohesive and agile regulatory frameworks. 

How A&M Can Help

Market participants need to be prepared for significant changes in market structure and the regulatory environment. A&M has extensive experience working with all major US regulatory agencies and is well-positioned to provide tailored, risk-based solutions for clients across different sectors of the financial services industry. A&M is ready to support your firm in understanding changes and implementing enhancements that arise from this regulatory harmonization initiative.

Our Services:

• Regulatory change management guidance and implementation
• Compliance program evaluations
• Risk assessments
• Control testing
• Surveillance program review and remediation
• Systems calibration and enhancement
• Regulatory data reporting
• Data governance, mapping, and validation

Learn more about A&M Disputes and Investigations offerings.

[1]. Additional information about the Roundtable, including webcasts of the panels and published statements, is available on a dedicated page on the SEC’s website.

[2]. "Joint Statement from the Chairman of the SEC and Acting Chairman of the CFTC,” Commodity Futures Trading Commission, Sept. 5, 2025.