Any study by the FRB should be conducted in conjunction with the SEC's proposal to mandate central clearing of U.S. government securities trades and repos. The FRB should publish the results of such a study and allow public comment before the SEC moves forward with any rule proposal.  

There is no little irony to the SEC proposing a rule that purports to benefit small broker-dealers in light of the damage that the SEC's rule making rampage does to small and medium sized firms. As an alternative to adopting this rule, the SEC should consider withdrawing its set of trading rules that the SEC itself concedes are going to hammer smaller firms.  

This year there have been three major bank failures resulting in massive draws on the FDIC deposit insurance fund and there very likely would have been other bank failures had the U.S. government not effectively given assurances that it stood  behind all depositors at every FDIC-insured bank. Legislators might want to focus their immediate attention on regulated bank risk rather than on hedge funds.  

A good portion of the SEC's adopting release is taken up by explaining that the rule as adopted is not as burdensome as the version that was proposed. That is certainly correct. To put this in a somewhat more jaundiced way, there were aspects of the rule proposal that were so burdensome and so inconsistent with market practice (for example, real time reporting of stock loans) that they should never have made it into any proposal.  

Even this modified version of the rule proposal…