All Articles Finance While You Were Working - March 15

While You Were Working – March 15

FIA Boca welcomes Giancarlo, Lukken on equivalence, exchange leaders exchange ideas and Harvard tracks the SEC

4 min read


CFTC Chairman (nominee) J. Christopher Giancarlo

CFTC Chairman (nominee) J. Christopher Giancarlo - Photo credit: CFTC

Light-touch regulation from the CFTC got underway

Just hours after being nominated to become the chairman of the CFTC, Christopher Giancarlo took to the stage to deliver his keynote address at FIA’s International Futures Industry Conference in Boca Raton, Fla. Giancarlo laid out his vision for the future of the CFTC and that vision includes a principles-based approach to regulation; with an eye toward “right-sizing” existing regulatory frameworks. On the internal front, Giancarlo announced the launch of “Project KISS” within the CFTC, which stands for Keep It Simple, Stupid. It has been predicted that Giancarlo would be very friendly toward the industry, but today’s appearance proved the love is mutual. At the end of his speech, Giancarlo received a hearty standing ovation from the crowd in Boca.  

I chatted with the boss of FIA

Following Giancarlo’s keynote address, I sat down for a conversation with FIA President and CEO Walt Lukken. Lukken said he welcomed the news that Giancarlo would be chairman at the CFTC and pointed to the aforementioned ovation from the crowd as an indication that the industry has been thirsting for a regulator to hit the notes Giancarlo did.

As my conversation with Lukken turned to other issues affecting the markets, Lukken expressed a bit of concern about the future of regulatory equivalence. As regulators in the world re-visit existing regulations, there is a possibility that subsequent changes will endanger the existing equivalence arrangements between international regulators.

Exchange leaders exchanged ideas

The Exchange Leaders panel is one of the most-anticipated sessions each year at FIA Boca. This year’s panel did not disappoint.

The London Stock Exchange-Deutsche Borse merger that appears to be on life-support weighed on the minds of the panelists. Nasdaq CEO Adena Friedman said nationalism will present a challenge for any future cross-border financial market exchange tie-ups.

There is no way the panel was going to get through the day without discussing blockchain. While some view blockchain as some sort of existential threat to exchanges, Friedman rejected that notion, adding that blockchain will actually be an enabler for exchanges.

On the sidelines of Boca, Friedman told Reuters Nasdaq is touting it technology strength as part of its pitch to win the IPO for Saudi Aramco.

The future of SEFs isn’t as bright as the sun in Boca

Walt Lukken, InterncontinentalExchange boss Jeff Sprecher and CME Group CEO Terry Duffy all commented on the status of SEFs and offered the same diagnoses as to what is ailing the entities:

Lukken: “Regulations can’t make markets. Markets make markets.”  

Sprecher: “SEFs are a regulatory concept, not a market concept.”

Duffy: “The rules for SEFs as constructed under the previous administration were too prescriptive.”

Duffy wasn’t all doom-and-gloom as he expressed hope that Giancarlo might make the kind of changes needed to resuscitate SEFs.

CBOE funnies

The award for the funniest line of the day goes to Chris Concannon, the president and COO of CBOE. When asked how the exchange will help manage the reputational risk that accompanies the scandal-laden world of FX trading, Concannon deadpanned: “By not having people.”

Concannon cracked a fast smile and said he was just kidding. But good comedy makes people laugh when it features a wee bit of truth.

Noyer said Brexit means Brexit

Christian Noyer, the former chairman of the Bank for International Settlements and the former governor of the Bank of France, penned an op-ed in the Financial Times outlining why UK banks will lose their access to the single-market after Brexit.

Harvard published its review and outlook for the SEC

According to the Harvard Law School Forum on Corporate Governance and Financial Regulation, 2016 was a banner year for the Securities and Exchange Commission:

“In total, the SEC brought 868 enforcement actions, the most in the agency’s history. Of the 868 actions, 548 were “stand alone” cases, another SEC record. The actions resulted in over $4 billion in disgorgement and penalties, down just slightly from fiscal year 2015’s record of $4.19 billion.”

Call me crazy, but I reckon we will see a downturn in SEC actions and fines in 2017.

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