While You Were Working - March 15

CFTC’s Behnam calls on FSOC to tackle cryptocurrencies, fintech

CFTC Commissioner Rostin Behnam used his remarks in Boca to touch on the hottest topic of the week: cryptocurrencies. And while the regulation of cryptocurrencies – and the broader fintech space – has been at times a regulatory hot potato, Behnam called on the FSOC to take the lead.

Fintech certainly took center stage in 2017. Whether the meteoric rise of bitcoin, or the equally swift development of distributed ledger technology, the general public and policy makers have taken notice across the globe. I hope that the U.S. will take a leading role in paving the way for a well-defined, fair, and balanced regulatory regime. The Financial Stability Oversight Council is perfectly suited to address the promise and risks posed by fintech. Regulators must take a leading role in this journey to ensure market participants do not too quickly develop systems and rules that may carelessly run afoul of core policy: safety and soundness; transparency; and prohibiting fraud and manipulation.

Behnam shared more of his thoughts about the regulatory landscape on the sidelines of Boca.

Washington insiders share surprising insights about regulatory engagement

A move by the Senate yesterday to advance a bill aimed at revising Dodd-Frank was a hot topic during the Washington Outlook panel here in Boca. The panel, which included policy experts from DTCC, ICE, OCC and Capitol Counsel, agreed that the current bill likely represent the last chance Congress will have at making any significant changes to Dodd-Frank.

The conversation also covered the regulatory environment in Washington now that the Trump administration is into its second year. All the panelists agreed that various regulators have shown refreshingly strong levels of engagement. Mark Wetjen from DTCC said one factor that has helped maintain positive dialogue is the fact that many of the people now atop some of the regulatory bodies were already at the those agencies before they ascended to the top post. Case in point is CFTC Chairman J. Christopher Giancarlo, who was in the audience today.

After initial concerns about how engaged the Trump administration would be with international standards setters like IOSCO and the Basel Committee, Wetjen said he has been impressed with how engaged US regulators like the CFTC have been. Wetjen, who is a former CFTC commissioner (and one-time acting chairman), said that engagement is important because everyone understand that there is no point in having international regulatory negotiations if the US is not at the table.

CME Group is eyeing NEX

In a bit of late-breaking news here in Boca, CME Group has approached NEX Group about a possible acquisition. The talks, which were confirmed by NEX, are apparently at an early stage. CME Group declined to comment about a possible deal and CME Group boss Terry Duffy, who is usually a fixture at FIA Boca, was unable to attend this year’s conference.

All eyes on China

Despite the threat of a possible trade war, China still looms large in the derivatives landscape as the country continues to open up to foreign investors and also prepares to launch a long-anticipated oil futures contract. The China experts on hand in Boca also noted the significance of the upcoming launch of the Shanghai International Energy Exchange, even going so far as to predict the would enjoy a prosperous 2018.

Decoding the fintech landscape

One of the panels at FIA Boca did a deep dive on a recent report about fintech in capital markets released by The World Federation of Exchanges (WFE) & McKinsey. The report, titled FINTECH DECODED: Capturing the opportunity in capital markets infrastructure, highlights likely future innovations & opportunities in the space. The panelists agreed on an interesting premise that goes against traditional practices: People are innovating because of regulation now.

The need for advancement in the tech space is more a requirement now than any time in the past. “My strong advice is to build a clear, structures, strategic approach towards fintech,” said Matthias Voelkel of McKinsey. As the saying goes, “nobody gets fired for using Microsoft,” but other companies will bypass you and you’ll get left behind, noted Symphony’s Goutam Nadella. If you want to be a leader in this space, then you have to lead from the front by taking acceptable risk in order to leapfrogging ahead.

The Winklevii invade Boca!

The main ballroom was packed for a session on cyrptocurrencies that featured the Winklevoss twins ... and most of the audience spent much of the hour trying to figure out which twin was which. The twins, who are behind the Gemini crypto exchange, discussed trends in the hottest industry in Boca and discussed their recent SRO proposal.

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