Fed, SEC to work more closely

Financial regulators announced Monday an information-sharing agreement aimed at better detecting risks to the financial system.

The pact between the Federal Reserve and the Securities and Exchange Commission should enhance regulatory cooperation between the two agencies, enabling them to more effectively carry out their regulatory duties, officials said.

Data to be shared include banks’ and investment firms’ cash and trading positions, proportion of debt to capital, financing resources and risk-management systems. The Fed is the main regulator of banks, while the SEC oversees Wall Street investment firms.

The agencies have been working together more closely, especially since the near collapse in March of investment firm Bear Stearns Cos. JPMorgan Chase & Co. took over Bear Stearns after it plunged to the brink of bankruptcy.

Under the pact the Fed will get a role in setting capital cushions at securities firms. The agencies also are to collaborate in designing risk management systems.