On May 11, 2010, the Chairmen of the Securities and Exchange Commission (“SEC”) and Commodity Futures Trading Commission (“CFTC”) announced the formation of a joint advisory committee (the “Committee”) to address emerging regulatory issues.1 The Committee will conduct public meetings, submit reports and recommendations to the SEC and CFTC, and serve as a vehicle for discussing regulatory issues of mutual concern. The Committee’s duties will be solely advisory, with each agency separately deciding whether to take any action and, if so, the action to be taken and/or the policy to be expressed.

The Committee has a broad charter, which empowers it to identify emerging regulatory risks and assess and quantify their impact and implications for investors and other market participants. The Committee will also work to further the agencies’ efforts to harmonize their regulations. Its first order of business will be to review the events of Thursday, May 6, 2010, when the U.S. equities market experienced an unexpected rapid decline, with the Dow Jones Industrial Average dropping nearly 1,000 points in a short period of time, and partially rebounded shortly thereafter.2 The Committee also intends to review and make recommendations regarding market structure issues that may have contributed to that day’s extreme volatility, and differences in trading rules and conventions across markets generally. SEC and CFTC staff members will provide their preliminary findings regarding May 6th to the Committee.

The Committee will be chaired jointly by SEC Chairman Mary Schapiro and CFTC Chairman Gary Gensler, who will appoint between 10 and 15 members, including one CFTC employee and one SEC employee who will serve as “co-designated Federal officers” of the Committee. The codesignated Federal officers will attend all meetings (including any subcommittee meetings), and will work jointly to call Committee and subcommittee meetings, prepare and approve agendas, adjourn meetings when they determine it to be in the public interest, and chair meetings when so-instructed. The Committee’s membership will be balanced in terms of points of view represented, and the functions to be performed. Already named as members are Former CFTC Chairman Brooksley Born; Former SEC Chairman David Ruder; Current FINRA Chairman and CEO Richard Ketchum; Former Vanguard Chairman and CEO Jack Brennan; and Professors Robert Engle of the NYU Stern School of Business, Maureen O’Hara of Cornell University, and Susan Phillips of the George Washington University School of Business.

The Committee will operate for two years unless, before that time, its charter is re-established or renewed, or either Chairman determines that its continuance is no longer in the public interest. The Committee will meet at intervals deemed necessary to carry out its functions, currently estimated at six times per year. Comments regarding the Committee’s activities may be submitted to either agency, as they will jointly review all such comments. There is no deadline for the submission of such comments.