Before he leaves his post as Chairman of the Securities and Exchange Commission (SEC), Christopher Cox intends to promote a series of reforms to finish the siege against the derivatives market— one of the major triggers for the recent global financial crisis.

On November 14, Cox signed a memorandum of understanding among the SEC, the Federal Reserve board and the Commodity Futures Trading Commission (CFTC), to facilitate cooperation among the agencies in handling information related to credit default swaps (CDS). “The virtually-unregulated over-the-counter market in credit default swaps has played a significant role in the credit crisis. Bringing transparency to this market is vitally important”, said Cox on the SEC’s official website.

The initiative prescribed creation of a CDS-specific “central counterpart”. This would be an entity to serve as an intermediary between buyers and sellers and to guarantee operations. Among its main obligations would be calculation, control and mitigation of risks. Several institutions are already under evaluation, so that a central counterpart can begin operating before 2009.

Cox also wants to unify market regulators before he leaves the SEC in January 2009. By joining the SEC and CFTC under the same roof, Cox intends to eliminate faulty communications between the two agencies, especially as regards jurisdiction over CDSs.

Regulatory unification depends on Congressional approval. As January already draws very near, this latter wish of Cox’s sounds impossible. The recent discussion about financial aid to the automobile industry, however, may force a session in Congress before January. Nancy Pelosi, Speaker of the House, has already said that the regulatory merger is on the session’s agenda.