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January 20, 2017
#sef #events
Brian Liston

On January 18, 2017, Profit & Loss hosted its 7th annual swap execution facility conference, aptly named SEFCON VII. Given recent elections, and forthcoming administrative changes, the theme of the conference centered on the how the incoming President-elect might encourage and initiate reform in the swaps industry. 

The Chairmen

Chairman Massad

To date, I have witnessed Chairman Massad speak on a number of occasions before a variety of audiences, and I have always been impressed by his ability to deliver clear and neutral remarks – an impressive feat given his position. True to form, the now former Chairman held the room with an air of experience, speaking mostly of the accomplishments that have been achieved under his oversight. He concluded with a forward-looking discussion on what should be on the horizon and had a clear message: “don’t dismantle the framework.” This is a theme that was repeated throughout the conference, and one which I had also expressed recently in an article by Crain’s on the subject. 

A transcript of his full speech can be viewed on the CFTC website.

Commissioner Giancarlo

Whilst the President-elect has not yet given the official nod to Giancarlo, as the only Republican commissioner leading the CFTC, he is certainly a leading candidate. His views on Dodd-Frank and the broader implementation of market regulation outlined in his white paper, Pro-Reform Reconsideration of the CFTC Swaps Trading Rules: Return to Dodd-Frank (2015), resonate with what the President-elect has expressed over the past year. Accordingly, the audience listened keenly to his vision for the Commission. 

Giancarlo took the stage and dove into his vision of reform, whilst simultaneously throwing out a campaign slogan Trump would be proud of: “Making Market Reform Work for America”. Answering Massad’s presentation in many ways, Commissioner Giancarlo was clear with his demand for reform, rather than dismantling, of Dodd-Frank under five tenors: 

  1. Providing Customer Choice in Trade Execution
  2. Fixing Swaps Data Reporting
  3. Achieving Cross-Border Harmonization
  4. Encouraging Fintech Innovation
  5. Cultivating a Regulatory Culture of Forward Thinking

Thankfully, Commissioner Giancarlo expanded on each of these for clarity. I will let you read his speech directly for more detail, but the main takeaways are a desire to improve the efficiency and vitality of swaps markets.

A focus on “encouraging fintech innovation” sounds excellent in theory, but is sufficiently vague enough to mean nothing at all. Likewise, the need for a “do no harm” approach in regulating new technologies and startups – referencing the United Kingdom’s Financial Conduct Authority Regulatory Sandbox – was indeed encouraging, as true innovation can too easily be halted by regulatory hurdles if nothing else but for the additional time it adds to launch. It is yet to be seen how and when that shall be implemented, but I find it an exciting development nonetheless.

Crowdsourcing the Future 

Finally, whist there were a few other sessions throughout the day, one that stood out to me was the hour in which Tabb Group Founder and Research Chairman Larry Tabb presented to the audience his findings from a post-election online survey conducted by his firm. Survey participants were from the finance industry, made up from traders to regulators, and were asked a number of policy-related questions, in the format of “should Trump/will Trump?” and others in the format of “more/less?”. Some of the most arresting statistics were:

I’ll let you make your own determinations on whether the above is good/bad.

This blog entry was prepared or accomplished by Brian Liston in his personal capacity. The opinions expressed in this entry are his own and do not reflect the view of Seed CX Ltd., or any affiliate thereof.