The two main regulators of U.S. financial markets should merge, the chief executive of America's largest options exchange says in remarks to be delivered to a congressional panel on Friday.

William Brodsky, CEO of the Chicago Board Options Exchange (CBOE), says in a written statement that there is a compelling need for the merger of the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC).

CBOE is the largest U.S. options exchange and Brodsky is a veteran of the bustling Chicago financial markets.

He is scheduled to testify at a House of Representatives Financial Services Committee hearing on Friday on the Obama administration's plan to reshape financial regulation amid the worst banking and capital markets crisis in generations.

A few months ago, the administration had been expected to seek an SEC-CFTC merger as part of its push for reform.

But in the face of political resistance in Congress and from the agencies themselves, the administration's reform plan released on June 17 did not seek the combination.

We support the reform proposal's recommendation for the creation of a Financial Regulatory Oversight Council, chaired by Treasury, to resolve disputes between the SEC and CFTC, Brodsky says in the statement released by the committee.

He says the CBOE also supports the administration's goal of harmonizing the underlying statutes of SEC and CFTC. But he says harmonization can only go so far.

Consolidation of the agencies is the only truly comprehensive solution, he says.

Brodsky also says the CBOE agrees with the administration's proposal that the Federal Reserve should take on the duty of regulating systemic risk in the economy.

Another witness scheduled to appear at Friday's committee hearing is Richard Baker, a former member of Congress who is now chief executive of the Managed Funds Association, a lobbying group for the $1.5 trillion hedge fund industry.

Baker says in prepared remarks that his group supports requiring the SEC registration of currently unregistered investment advisers to all private pools of capital, subject to a limited exemption for the smallest investment advisers.

He says private capital pools include not only hedge funds, but also private equity funds, venture capital funds, commodity pools and real estate funds.

We strongly encourage policy makers also to consider the issue of registration in the context of all private pools of capital and the unregistered managers of those pools, Baker says.

Likewise, we strongly encourage regulators to consider regulations that apply to all private investment firms and not just hedge fund managers.

(Reporting by Kevin Drawbaugh; editing by Andre Grenon)

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