Basel Committee’s Coen talked about the complexity of market reforms
In a keynote address at ISDA’s Annual General Meeting in Miami, Basel Committee Secretary General Bill Coen made some interesting comments about complexity as it relates to financial regulations.
“I worry that it is often assumed that increased risk sensitivity is a priority of the banking industry and the pursuit of simplicity and comparability are goals of supervisors. But, the financial crisis demonstrated quite clearly that if the risk-weighted regime is too opaque, market participants will simply stop using risk-weighted ratios to assess the health of banks. Put another way, the more complex the risk-weighted regime becomes, other measures such as the leverage ratio will grow in importance as an indicator of bank strength.
It seems, therefore, that it is in the interest of the banking industry itself to ensure that the regulatory regime is robust throughout the cycle. Further, that it can be clearly understood by supervisors, banks and market participants.”
Crafting global regulations isn’t easy. And to his credit, Coen called on the industry to play an even more active role in finding the amount of complexity that is … shall we say … just right.
“Grotesque” red lights flashed
I write a lot in this space about the growing chorus of experts shouting from the rooftops about the dangers afoot in the markets. But Andrew Lapthorne, SocGen’s global head of quantitative strategy, is getting downright lyrical:
“Leverage in the U.S. is grotesque for this stage of the cycle. At the moment you’ve got peak leverage at peak prices. It’s not like you have to dig deep to find a problem.”
Buckle up!
C’mon Mick, don’t you know better than that?
The first rule of taking bribes is you don’t talk about taking bribes. Much less, brag about it!
Tom Brady – The QB that went VC
Ahead of his double-dip appearance at next week’s Milken Institute Global Conference, New England Patriots QB Tom Brady looks primed to ride a wave of good press after the VC fund he co-founded with fellow NFL alum Michael Strahan announced it had received $3 million in VC backing.
Or to put it another way, the fund received the kind of money Brady usually views as spare change on his nightstand.
Speaking of famous venture capitalists…
… Old school is meeting new school as a venture capital firm with links to the Rockefeller fortune has made a play in the cryptocurrency startup sector.
And speaking of cryptocurrencies…
… Nasdaq is pondering the launch of a cryptocurrency exchange. I don’t think Nasdaq will actually end up launching its own crypto exchange. Since it already has a surveillance partnership with the Winklevoss twins and their Gemini crypto exchange, I bet Nasdaq just acquire that one instead.
WYWW Appetizers
- Cue Commerce Secretary Wilbur Ross and his handy dandy TV props.
- Money and guns.
- NYSE’s plan to floor-trade securities listed on other exchanges stumbled out of the gate.