In a move that further confuses the issue of the jurisdiction of the Commodity Futures Trading Commission, the General Accounting Office recommended to Congress late last week that some of the CFTC's authority be given to the Securities and Exchange Commission.
The recommendation, made in a report released to certain key congressmen on the House and Senate agriculture committees, is a turnabout from the GAO's stance during CFTC reauthorization hearings last month. At that time, GAO comptroller General Elmer Staats and other officials told congressmen that they would support reauthorization of the CFTC in its present form, without diluting its authority.
The GAO study is expected to carry substantial weight with the Office of Management and Budget, which is reviwing its own option paper on the CFTC's structure before sending a recommendation to the president.
Earlier last week, before the nature of the GAO recommendation had become known, OMB officials indicated they supported reauthorization without change rather than backing the SEC's request that it be given the authority over the growing financial futures markets.
Sources said it now it is unclear what OMB will recommend to the president.
The GAo report urges that the SEC be given complete regulatory authority over any futures contracts on stocks anc corporate bonds as well as joint authority with the CFTC over government securities now traded on the Chicago Board of Trade, Chicago Mercantile Exchange and proposed for trading on the new Amex Commodity Exchange.
The document also proposes to give the Sec jurisdiction over futures contracts based on the Dow JOnes industrial average and other stock indexes. The Kansas City Board of Trade already has submitted such a contract to the CFTC for approval, the Chicago Board of Trade reportedly is considering applying for a similar contract, and the Philadephia Stock Exchange has sent a similar application to the SEC for approval.
The GAO report refers to securities and issues "defined by the Securities Exchange Act of 1933." But the act does not define indexes of stocks as securities themselves.
The GAO's intent to include the indexes, however, is clear, and the definition of securities could be clarified by redrafting, securities lawyers said.