When Rules Collide Financial Services Firms Feel the Pinch

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The over-riding theme of the annual meeting of the Securities Industry and Financial Markets (Sifma) held in New York today was the impact of new rules and regulations stemming from Dodd Frank and Basel III. And whether or not these rules were doing more harm than good to the financial services industry.

For example, Sifma chief executive Tim Ryan said the Commodity Futures Trading Commission’s (CFTC's) proposals to make “non-U.S. persons” register as swap dealers in the United States go too far. Ryan says the CFTC's plan to oversee swaps made by foreign firms with U.S. participants departs from international standards and needs to be re-thought.

On the other hand, Chairman of the Commodities Futures Trading Commission, Gary Gensler, said, "the industry has gone through so many fundamental changes in terms of market participants and they have direct market access through electronic means to the trading platforms that as regulators we owe it to the American public to stay abreast of that and move forward.

"That's why we put out concept releases on high frequency trading, and direct markets," Gensler added, "so we can ask questions like should there be trade filters, or testing and supervision of some of these algorithms? We're just trying to figure out the best way to protect the markets?"

Unfortunately, as SEC Chairman Mary Shapiro put it, sometimes what's best for one market isn't for another. As an example, she pointed to the rules covering derivatives. She noted that the CFTC has already put forth their rules, but the SEC is still trying to figure out what's best for equity derivatives and that sometimes they are in opposition to the CTFC rules. She added that so far she has only been able to hire one person for her staff who understood derivatives.

CEO of Raymond James Global Private Client Group, Chet Helck, who serves as the chairman of Sifma's board, said financial services industry employs nearly eight million people. And while we have helped build roads, hospitals and schools and has helped businesses raise $1.6 trillion used to create new jobs, the public doesn't always appreciate what we do."

He then warned about how new regulation reforms that may potentially help or harm the industry. “We all agree that regulation is necessary," said Helck, "but more regulation does not equal better regulation."

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