U.S. lawmakers reached a deal early Friday on a bill to reform financial industry regulation.

The reconciliation of reform bills passed by the U.S. House of Representatives last year and the Senate earlier this year was achieved and will be voted on by the full Congress before being sent to the president for final approval.

Among myriad changes to industry regulation, the bill aims to improve monitoring of systemic risk, impose new regulations on derivatives and proprietary trading, and enhance consumer protection.

Following the conclusion of the House-Senate Conference on the bill, Senate Banking Committee chairman, Chris Dodd, issued a statement, saying, “This is a tremendous day. After great debate, we have produced a strong Wall Street reform bill that will fundamentally change the way our financial services sector is regulated.”

“The American people have called on us to set clear rules of the road for the financial industry to prevent a repeat of the financial collapse that cost so many so dearly. This bill meets that challenge,” Dodd said.

He noted that it boosts consumer protection, attempts to end too big bank bailouts, and brings greater transparency and accountability for over-the-counter derivatives, asset backed securities, hedge funds, mortgage brokers and payday lenders.

Mixed opinions from industry, regulators

Securities industry lobbyists gave the final deal a mixed review. Tim Ryan, president and CEO of the Securities Industry and Financial Markets Association, said, “Much of this new law should help to restore and maintain confidence in U.S. financial markets, including several important provisions such as the establishment of a systemic risk regulator, resolution authority and a new federal fiduciary standard for retail investors. But this is a tough law that will also have profound effects on the operations and cost structure of most financial services companies and financial markets.”

State securities regulators expressed disappointment that the bill doesn’t impose a fiduciary standard on brokers, although it does give the U.S. Securities and Exchange Commission the authority to do so.

“Main Street investors should be disappointed that Congress decided not to provide them with the much-needed immediate benefit of the fiduciary standard of the Investment Advisers Act, which would ensure that their interests come first when receiving investment advice from their broker or insurance agent about securities,” said Denise Voigt Crawford, president of the North American Securities Administrators Association and Texas Securities Commissioner.

With the SEC empowered to extend the fiduciary standard to brokers, she added, “We expect the agency to stand up for Main Street investors by promptly promulgating a rulemaking imposing the strong fiduciary standard of the Investment Advisers Act to all who provide personalized investment advice about securities.”

IE