Hi Frank -
On appearances, some positive steps. There were explicit statements about risk and damage, or potential damage, from certain market activities.
Banning naked CDS was to be expected, especially in the context of PIIGs and debt Euro problems. In a general sense, it's not clear how far EU proposals exceed Dodd-Frank, especially in derivatives. D-F, of course, was seriously weakened by financial sector lobbying, and in the opinion of many experts is insufficient. So the relative strength of EU regulatory measures is important.
It seems some attention has been focused on derivatives, HFT, non-linear and systemic risk, a subject followed closely. In general nobody is sure but it's a mistake to think that those who rushed in to HFT gave any thought whatsoever to its dangers. Despite cosmetic corrections HFT continues to grow; we see Flash Crashes almost every day.
Recency effect aside, the public has every reason to challenge assertions by industry participants that they are operating ethically and prudently, or making a positive contribution to the economic virtuous circle. Perhaps too late, regulators are now making serious inquiries about concerns expressed for years.
Jim |
