US SEC's Cox urges regulation of CDS market

(Adds details from Cox testimony)

WASHINGTON, Sept 23 (Reuters) - The top U.S. securities regulator urged Congress on Tuesday to pass laws to regulate the $58 trillion credit default swap market and said lack of oversight was a cause for great concern.

Securities and Exchange Commission Chairman Christopher Cox said there is a regulatory hole in supervision of the credit default swap (CDS) market and said there was potential for unfettered naked short-selling.

Credit default swaps are used to hedge against a borrower defaulting on its debt or to speculate on the borrower's credit quality.

"I urge you to provide in statute the authority to regulate these products to enhance investor protection and ensure the operation of fair and orderly markets," Cox said in prepared testimony to be delivered to the Senate Banking Committee.

"Neither the SEC nor any regulator has authority over the CDS market, even to require minimal disclosure to the market," he said.

Cox also said the SEC was probing broker-dealers and institutional investors with significant trading activity in financial companies and with positions in credit default swaps.

Cox said the SEC had more than 50 subprime investigations open. (Reporting by Karey Wutkowski, Rachelle Younglai, editing by Dave Zimmerman)